By Katherine Hamilton

Norwegian Cruise Line gave a cloudier earnings overview than rival Royal Caribbean, flagging that choppy demand is rippling into more corners of the travel industry.

"Norwegian's earnings was a little bit of a dose of reality of what's happening in the cruise industry," Truist Securities analyst C. Patrick Scholes said.

Some investors had hoped cruises would be more resilient to the slowing travel demand airlines discussed during earnings calls earlier this month, especially after Royal Caribbean on Tuesday raised its full-year outlook. But Norwegian revealed on Wednesday cracks in consumer spending are spreading into the industry and beyond the scope airlines had indicated.

The Miami cruise line experienced what it called choppiness during the first part of April among Americans taking European vacations, which makes up about a quarter of its trips. Chief Executive Harry Sommer said U.S. consumers are hesitating to book long-haul trips during an economically volatile time, and that could continue through the third quarter.

Norwegian shares fell 8% to $16.00 on Wednesday, continuing a 38% decline this year. Royal Caribbean's stock slid 9% and Carnival was down 3%.

Norwegian is hit harder by a slowdown in European cruises because it has a higher share of itineraries in that region - about 25% compared with Royal Caribbean's 15%, Jefferies analyst David Katz said. Both cruise lines logged strength in Caribbean trips, of which Royal has a larger share.

The longer duration and higher cost of a European cruise is likely deterring Americans, analysts said. Uncertainty around the U.S. trade policy and new tariffs has sparked volatility in the stock market and fears of a recession. The dollar has also weakened, reversing an incentive that has motivated droves of Americans to visit Europe and capitalize on the weaker Euro over the past few years.

"Europe used to be on sale," Katz said. "Now it's not as much anymore."

Diminishing demand for cruises and European vacations add to concerns that the travel industry is in trouble. Throughout April, airlines withdrew full-year financial projections due to falling demand, particularly for domestic flights.

Airlines' comments show U.S. consumers are taking fewer last-minute weekend trips to visit friends and family, Deutsche Bank analyst Chris Woronka. But Norwegian's report indicates Americans may also be pulling back on bigger, international vacations, potentially spreading tourism distress across the globe.

It will take some time to see how much of a beating cruise demand will take, analysts said. Travelers book cruises nine months out, on average, while flights are usually purchased closer to the date of departure.

"Can cruise totally avoid some kind of economic malaise? My answer now is no. It's just going to take longer," Woronka said.

Write to Katherine Hamilton at katherine.hamilton@wsj.com

(END) Dow Jones Newswires

April 30, 2025 12:45 ET (16:45 GMT)

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