UPDATE 3-Royal Caribbean profit, outlook up; shares jump

* Q3 EPS $1.64 vs Street view $1.57

* Raises 2010 profit forecast to $2.43-$2.47/share

* A “value-oriented vacation”

* Shares up 15 percent
(Rewrites, adds byline, analyst quotes, executive quotes,
Wyndham Worldwide comparison, updates shares)

By Helen Chernikoff

NEW YORK, Oct 26 (BestGrowthStock) – Cost controls and a nascent
consumer recovery helped Royal Caribbean Cruises Ltd (RCL.N: )
(RCL.OL: ) post a higher-than-expected quarterly profit, sending
its shares up 15 percent to their best level in almost three
years.

The company also raised its full-year earnings forecast,
saying passengers were willing to pay more for its cruises next
year and had already booked a third of its 2011 capacity.

The world’s second-largest cruise operator’s quarterly
results lend credence to spotty reports that U.S. consumers
have begun to show slightly more confidence. [ID:nN26127639]

(For a graphic on Royal Caribbean earnings, click
http://r.reuters.com/zut32q.)

“People are going on a vacation, and we are a beneficiary
of that,” Chief Financial Officer Brian Rice said on a
conference call with analysts.

A cruise is a vacation affordable only to the middle and
upper-middle classes, but it is still a way to save because it
is cheaper than a comparable trip to Las Vegas or Orlando,
Florida, said Citigroup analyst Greg Badishkanian.

“Cruise lines are a value-oriented vacation,” Badishkanian
said. He has seen stronger demand across leisure products and
services in September and October.

Lodging company Wyndham Worldwide Corp (WYN.N: ) on Tuesday
said revenue per available room — a hotel industry metric that
measures financial performance — was up 6.7 percent during its
peak summer third quarter. [ID:nN26111348]

“The consumer is traveling more,” Wyndham Chief Financial
Officer Tom Conforti told Reuters in an interview. “They’re
coming back in a moderate way.”

OUTLOOK STRONG

Royal Caribbean said it expects full-year 2010 earnings of
$2.43 to $2.47 per share, well above analysts’ average estimate
of $1.98, according to Thomson Reuters I/B/E/S. In July the
company forecast $2.25 to $2.35 per share.

Royal Caribbean’s bigger rival, Miami-based Carnival Corp &
Plc (CCL.N: ) (CCL.L: ), last month raised its outlook for 2010,
saying pricing strength in Europe and much of North America was
offsetting weakness in the Caribbean.

Royal Caribbean said its net cruise costs were down 1.2
percent in the third quarter, excluding the impact of currency
and fuel.

“Third-quarter outperformance was almost all a function of
cost control,” wrote Stifel Nicolaus analyst Steven
Wieczynski.

Cost reductions will likely slow in coming quarters,
Wieczynski said.

“We are beginning to see some cost pressures, especially
with food prices,” said CFO Rice.

Earnings for the quarter rose to $356.8 million, or $1.64
per share, from $230.4 million, or $1.07 per share, a year
earlier.

Analysts on average were expecting $1.57 per share.

Revenue rose to $2.06 billion from $1.76 billion.

Royal Caribbean shares were up 15 percent at $40.49 in
afternoon trading and touched $40.92 earlier in the session,
their highest level since February 2008.

Along with the broader market, the shares have rallied
since August. As of Monday’s close, they were up about 24
percent since Aug. 24.
(Reporting by Helen Chernikoff, editing by Lisa Von Ahn and
John Wallace)

UPDATE 3-Royal Caribbean profit, outlook up; shares jump