NEW YORK ( TheStreet) -- Consumers may not love having to pay more for their summer cruise this year, but for the world's largest cruise line operator, the trend has been a nice boost to the bottom line.
"In general, pricing has strengthened," said Carnival (CCL) - Get ReportCEO Arnold Donald in an interview with TheStreet. Donald added, "We definitely have been more disciplined in our revenue management practices in terms of late booking to mitigate the patterns of the past, such as deep discounting."
Less frequent discounting on tickets and more marketing emphasis on the value of taking a cruise vacation, which are also tactics being used by Royal Caribbean (RCL) - Get Report and Norwegian Cruise Line (NCLH) - Get Report, helped Carnival deliver much better-than-expected second-quarter earnings on Tuesday. Further, pricier tickets have not hurt future bookings, giving Carnival confidence to hike its full-year earnings forecast.
However, the fact Carnival didn't hike its earnings guidance even further sent the stock down by about 1% in afternoon trading Tuesday.
Carnival reported second-quarter revenue of $3.59 billion and non-GAAP EPS of 25 cents, while Wall Street was looking for earnings of 16 cents a share on revenue of $3.56 billion.
Excluding the impact of currency fluctuations, net revenue yields increased 4.1% for the quarter. Three months ago, Carnival forecast a rise of 2% to 3% in net revenue yields. Carnival now expects full-year non-GAAP EPS of $2.35 to $2.50 compared to $2.30 to $2.50 previously. Wall Street had estimated full-year EPS of $2.51, based on falling fuel prices and a strengthening U.S. economy.
According to Donald, Carnival doesn't have many rooms left to sell for the remainder of the year, and he is cautiously optimistic on the pricing environment for 2016.
Stronger ticket pricing in North America, and U.S. travelers spending more at the casino, bar and on high-speed Internet access, will go a long way to offset some spending weakness on the part of international vacation goers.
"Europe is not up as much as North America," conceded Donald, referring to revenue yields, or the amount of net revenue generated per day a ship is out at sea. Although revenue yields for Europe this year are not up as much as in North America, they aren't down, Donald was quick to point out.
Carnival pins the blame of more sluggish performance on the uneven economic conditions in most European countries, which has also weighed on the travel industry at large.
One notable company that may soon be competing with Carnival is Virgin. Richard Branson's newest venture, Virgin Cruises, announced plans on Tuesday to launch cruise ships starting in early 2020. The company said it has signed a letter of intent with the Fincantieri shipyard in Italy to build three ships with room for more than 2,800 passengers each.
Estimated delivery dates for the ships are early 2020, 2021 and 2022.
Said Donald on the arrival of a new competitor with futuristic looking new ships: "I love it, it gets more people talking about cruises. We are delighted Virgin is having press events years ahead of them having a ship to put people on."
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.