Royal Caribbean Cruises Ltd. (RCL) and Norwegian Cruise Line Holdings Ltd. (NCLH) are both navigating rough seas, but according to BNP Paribas analyst Xian Siew, one company's storm is a lot more manageable than the other's.
After meeting with investor relations teams at both cruise operators, BNP reiterated its Outperform rating on Royal Caribbean while keeping a Neutral rating on Norwegian. The key takeaway: Royal Caribbean's biggest overhang—a likely delay to its Perfect Day Mexico project—is something it can work around. Norwegian, on the other hand, is dealing with a messier set of operational and pricing issues that could take much longer to sort out.
Royal Caribbean's Mexico Project May Be Delayed
The biggest cloud hanging over Royal Caribbean is the fate of Perfect Day Mexico. Mexican authorities declined to approve the project in its current form, and BNP expects the destination could be delayed by nine to 12 months, pushing the opening into late 2028.
But here's the thing: BNP doesn't think this setback will derail Royal's longer-term growth story. Analyst Siew expects Royal to hold its midpoint guidance of 2% net yield growth for 2026, helped by the possibility of stronger-than-expected second-quarter results that could ease investor concerns about the back half of the year. Looking further ahead, the outlook improves even more in 2027 as capacity growth slows to about 4% from 6.7% in 2026, providing additional support for pricing.
And even if Perfect Day Mexico slips, Royal isn't out of options. It still has Royal Beach Club Cozumel opening in early 2028, and if necessary, could eventually explore alternative destinations such as Belize or Honduras.
Norwegian's Turnaround Still Has Hurdles to Clear
Siew sees a more complicated road ahead for Norwegian. While management has acknowledged that improving yields will take time, the brokerage believes new issues continue to emerge, making a meaningful recovery before 2027 increasingly difficult.
Among the concerns Siew highlighted: pricing decisions that may have prioritized filling ships over maximizing yields, continued leadership changes (including the search for a chief marketing officer), "open jaw" European itineraries, and questions surrounding booking management. These execution issues could weigh on performance into next year.
Norwegian's Great Tides water park at Great Stirrup Cay is now expected to open on schedule in September, which could boost both admission revenue and cruise ticket pricing over time. But Siew argues it's unlikely to offset the broader operational challenges facing the company.
For investors choosing between the two cruise stocks, BNP's takeaway was clear: Royal Caribbean appears to be managing through a temporary project delay, while Norwegian is still working toward a broader business turnaround that may not fully materialize until the second half of 2027.
