Norwegian Cruise Line Holdings' shares fell 11% on Tuesday after it forecasted a fourth-quarter profit that was below expectations, citing cost uncertainty and a reduced consumer appetite for sea vacations.

After a surge in demand for cruises following the pandemic, consumers are hesitant to spend big on cruises due to persistent inflation and uncertainty caused by tariffs.

Demand is also affected by the U.S. Government shutdown which affects port activity, travel plans and holiday travel, particularly as the critical holiday season approaches.

Cruise operators are also under pressure from fluctuating fuel prices due to geopolitical tensions escalating, especially in the Middle East. They must also contend with drydock expenses, ship deliveries, and maintenance costs.

Norwegian Cruise Line's adjusted profit per share for the current quarter is 27 cents. This is below the estimated 30 cents.

Analysts had expected a 7.5% increase to $3.02 Billion. It was up 10.7% from the previous quarter.

The company said that lower participation in its air program - which involves coordinating flights to match a cruise itinerary – affected revenue.

Analysts say that investments in upgrading Great Stirrup Cay - one of the two island destinations owned by the company - would boost demand.

Norwegian announced that it will optimize its marketing strategy in early 2026 to reach a wider family market.

Fuel price per metric tonne, net of hedges increased from $699 to $744 a year earlier.

It raised its adjusted profit forecast from $1.16 to $1.20 per share. This is a significant increase compared with the previous forecast.

Peer Royal Caribbean raised its annual profit projection last week as well, but forecast its current-quarter profits below estimates due to higher costs. Reporting by Neil J Kanatt, Bengaluru. Editing by Pooja Deai.

(source: Reuters)