NEW YORK ( TheStreet) --  Investors who didn't abandon ship on Royal Caribbean (RCL) - Get Report after it issued a disappointing outlook back in April are probably patting themselves on the back.

Shares of the cruise line operator surged 8% on Friday following second-quarter earnings and 2015 guidance that were significantly better than expected. Since hitting a recent bottom in early May, shares are up almost 35%.

Boosted by better pricing for its cruise packages and improved demand in the important Caribbean market, second-quarter earnings came in at 84 cents a share. Analysts were looking for 73 cents a share. Total revenue was $2.06 billion, relatively in-line with consensus estimates.

After slashing its full-year earnings guidance in April due to concerns over the strengthening dollar and a modest rise in fuel costs, Royal Caribbean reversed course this time around.

Citing lower fuel costs and beneficial currency exchange rates, the company now expects full-year adjusted earnings of $4.65 to $4.75 a share. In April, the cruise line lowered its earnings forecast by 20 cents a share to $4.45 to $4.65. Looking to the rest of the year, there are several things that are putting wind in Royal Caribbean's sails.

First, the company is seeing improved pricing dynamics in the Caribbean market, which represents about 44% of its capacity. "It's a very different pricing environment in the Caribbean, and it's even better than a few months ago," a Royal Caribbean executive said on an earnings call with analysts.

Second, the emerging Chinese cruise market, where Royal Caribbean's new Quantum of the Seas is stationed, is experiencing an extremely favorable response in the marketplace, according to the company, despite the recent plunge in China's stock market.

Investors also may have embraced Royal Caribbean's comments that initial cruise demand for the first quarter of 2016 is running well ahead of last year. 

The drivers of that demand are multiple.  According to Fain, the company is opening up the ability for folks to book future cruises -- and marketing the packages to prospects -- earlier than in the past. Further, Royal Caribbean's new pricing program seems to be working. "We do think by pricing where there is not this steep drop at the end is encouraging people to book earlier because they feel more confident," Fain said.

In a bid to boost profits by doing away with last-minute discounts on cruise packages, the company unveiled its "pricing integrity" program in March. The program stated Royal Caribbean would not do any last-minute discounts on North America bookings. Similar philosophies on discounts are being employed by competitors Carnival Cruise Line (CCL) - Get Report and Norwegian Cruise Line (NCLH) - Get Report.  

Royal Caribbean executives on the call did concede that the program is costing the company some money in the short-term, likely from those people balking at the lack of a discount. But, the company did reaffirm that over time its no-discount policy should eventually drive healthier sales and profits.

And so far so good for Royal Caribbean in China, in spite of the country's stock-market volatility and the arrival of new competitors. The company is about 95% booked for the year in China due to a favorable reception to the Quantum of the Seas. Next summer, the company will debut Ovation of the Seas in China, joining competitor Carnival in going after the fast-growing Chinese cruise market.

"I think in any market you worry about trying too hard and having too much capacity, but we haven't yet seen signs of that, so we are still very encouraged," Fain said when asked about risks from new entrants into the Chinese market. "There is no question you see what has happened in the Chinese stock market, and that is the sort of thing one has to look out for, but China is such an embryonic cruise market that it has continued to grow at a fast pace."

Wall Street is banking on Royal Caribbean continuing to build on its early success in China. "We believe the company will benefit in 2015 and 2016 from the new ship introductions in more profitable and high-growth markets, such as China and the Asia Pacific region," JP Morgan analyst Kevin Milota wrote in a May 19 note. The analyst upgraded his rating to overweight, the equivalent of a buy rating.

Carnival now has four vessels in the Chinese market in its Costa and Princess lines and will debut two others in 2016. The company projects 2.5 million passenger cruise days in China this year, jumping to 4 million or so next year. It has also been rumored that Carnival could establish a new cruise line solely for the Chinese market, as well as work closely with the government to develop port infrastructure.  Norwegian Cruise Line is also exploring an entry into Chinese waters.

The number of cruise vacationers in China could top 8 million per year by 2020, according to Cruise Lines International Association (CLIA). In 2014, a mere 700,000 out of China's 110 million leisure travelers booked a cruise.