Norwegian Cruise Line Holdings Lackluster Q2, Negative Guidance Drags on Hotel ETF | ETF Trends

Norwegian Cruise Line Holdings Ltd (NYSE: NCLH) shares plunged, pulling down hotel-related exchange traded funds, after the cruise line’s second-quarter results missed expectations and warned of continued losses until next year.

On Tuesday, the Defiance Hotel Airline and Cruise ETF (CRUZ) fell 2.2% and the AdvisorShares Hotel ETF (BEDZ) dropped 3.2%.

Meanwhile, Norwegian shares declined 11.5% on Tuesday. NCLH makes up 3.3% of CRUZ’s underlying portfolio and 1.7% of BEDZ.

Norwegian posted second-quarter losses of $509.3 million, or $1.22 per share, or better than the $717.8 million loss in the same quarter year-over-year.

Looking ahead, the cruise line projected third-quarter revenue of $1.5 billion to $1.6 billion, compared to expectations of about $1.88 billion, according to FactSet estimates.

“As a result of the COVID-19 pandemic, the effects of the Russia-Ukraine conflict, and current macroeconomic conditions, while the Company cannot estimate the impact on its business, financial condition, or near- or longer-term financial or operational results with certainty, it will report a net loss for the third quarter of 2022,” according to a press release.

Furthermore, the company underscored increased costs associated with rising operating expenses in response to the increased demand for travel. Total cruise operating expense rose in 2022 compared to 2021 due to the resumption of voyages, which resulted in higher payroll, fuel, and direct variable costs of fully operating ships, compared to the prior year when no voyages operated during the second quarter, according to Norwegian. The company also highlighted costs associated with inflationary pressures and continued COVID-19 testing.

“Our entire team is united around our key priorities which include accelerating our ongoing operational and financial recovery, delivering outsized top and bottom-line growth from our disciplined and cash-accretive newbuild pipeline, and preserving liquidity and financial flexibility against a rapidly evolving macroeconomic backdrop,” Mark A. Kempa, executive vice president and chief financial officer of Norwegian Cruise Line Holdings Ltd, said in a note.

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