Travel and tourism companies are upping their guidance for the rest of the year thanks to strong leisure-travel demand.
This is an indication that recent data showing soaring year-over-year growth in foreign visits to B.C. is likely to continue. Statistics Canada data for February showed that the number of foreign visitors to Canada in February who arrived via B.C. ports was up 147.5 per cent, compared with the same month in 2022 – to 364,096 from 147,090.
The positive outlook among tourism companies comes from airlines, cruiselines and hotel operators.
Canada's largest airline, Air Canada (TSX:AC) today upped its guidance for earnings before interest, taxes, depreciation and amortization (EBITDA) for the rest of the year.
The airline said that it expects earnings to be up because of more travellers and a higher profit margin on the average ticket sold. This comes from "stronger-than-anticipated demand" and is combining with "lower-than expected fuel [prices,]" the airline said.
Despite Air Canada able to charge more for flights, its capacity is not expected to be substantially more than previously forecast, it added.
Air Canada expects its planes this year to have a capacity that is about 90 per cent of what they carried in 2019, before the pandemic caused travel restrictions and fostered a general reticence to travel.
"Air Canada assumes moderate Canadian GDP (gross domestic product) growth for 2023," the airline said in a release. "Air Canada also assumes that the Canadian dollar will trade, on average, at $1.34 per U.S. dollar for the full year 2023 and that the price of jet fuel will average $1.09 (Canadian) per litre for the full year 2023."
The airline's optimism comes on the same day that cruiseline Royal Caribbean Group (NYSE:RCL) raised its annual profit forecast after announcing strong quarterly earnings. The cruise operator cited higher ticket prices and pent-up leisure-travel demand – news that helped send its share price up more than seven per cent.
Royal Caribbean rasied its forecast for earnings in the current quarter far above what analysts were expecting, and said bookings in the first four months of this year were above the 2019 level by "a very wide margin."
Other cruise lines are also signalling that they will have a banner 2023.
On Monday, Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) reported that its first-quarter revenue more than tripled, compared with last year, when there were COVID-19 restrictions, and that its revenue was at a level that was above what analysts had expected. The cruise line still struggled to turn that revenue into profit, however, but losses in the quarter fell to US$159.3 million from US$982.7 million in the same quarter a year ago.
Higher-than-expected cruise-line bookings is welcome news for Vancouver, where the Vancouver Fraser Port Authority (VFPA) has said that it expects to welcome a record number of cruise passengers this year - between 1.2 million and 1.3 million, depending on occupancy levels on ships.
The previous record for cruise passengers in a year was 1.1 million, set in 2019, according to VFPA data.
The port authority's figures show that Vancouver's cruise industry injects an average of almost $3 million into the local economy for each ship that visits Canada Place, generates nearly 7,000 jobs across Canada, $300 million in wages and contributes $840 million to national GDP.
Cruise Lines International Association - North West & Canada (CLIA) spokesman Barry Penner told BIV that B.C.'s cruise sector is responsible for 17,000 jobs and $2.7 billion to the provincial gross domestic product.
Hoteliers are also cashing in on the tourism boom.
News from Tuesday included that the world's largest hotel chain, Marriott International (NYSE:MAR) generated revenue and profit that was higher than analysts' estimates. The chain also raised its guidance for the rest of the year because it said demand for rooms from leisure travellers is compensating for a sluggish recovery in business travel.
Marriott's revenue for each available room night was up 34 per cent, compared to one year ago.
Its CEO, Tony Capuano said on the company's conference call that "while macroeconomic uncertainty persists, it has not weighed on travel demand to date. In fact, demand continued to rise across all customer segments in the quarter. Forward bookings are solid, though our transient booking window is still short term, at around three weeks, so trends could change relatively quickly."