|
Unique Cruise Solutions The news you need to know |
|||||||||||||||
|
|
|||||||||||||||
 |
 |
|
|||||||||||||
|
Cruise News for the Corporate Travel Professional |
October 2009 Edition |
||||||||||||||
|
Is the cruise business on the rebound? Two different viewpoints |
||||||||||||||
|
When industry giant Carnival reported earnings for
the third quarter a few weeks ago, its executives sounded relatively upbeat
about the state of the cruise business. After a sharp downturn that began late last year, bookings were on the mend, the company said, and even pricing showed signs of a turnaround. Carnival Chairman Micky Arison even warned prospective vacationers eyeing some of the bargains on cruises currently available to "act quickly" or risk missing out as rising demand pushes fares higher. Executives at Royal Caribbean, the second largest cruise company after Carnival, however, are sounding far less upbeat. "The recent news has been full of reports that the economy is rebounding or is about to be rebounding, but we have not seen any evidence to that in our bookings to date," Royal Caribbean CEO Richard Fain told Wall Street analysts Tuesday during a conference call to discuss the company's third quarter earnings. "Neither I nor any prudent business person is predicting when that rebound will occur." While Royal Caribbean -- the parent company of such cruise brands as Royal Caribbean, Celebrity Cruises and Azamara Cruises -- reported a slightly better than expected third quarter profit of $230.4 million on Tuesday, it warned that the fourth quarter is not going quite as well as expected. Royal Caribbean now estimates its net yield for the fourth quarter -- a measure of how much money it brings in per cabin -- will be down 7% to 8% from the same quarter in 2008. The line previously had projected a yield decline in the mid-single digits. "We're giving the upside that we enjoyed during the third quarter back in the fourth quarter," Fain told analysts. What explains the difference in tone between executives at Carnival and Royal Caribbean in recent weeks? In part, it's a matter of expectations. Wall Street analyst Robin Farley of UBS, in a research report out today, notes that Royal Caribbean was overly optimistic early in the year about just how strong the fall and winter would be. Now they're having to dial back their forecasts. "Our call on (Royal Caribbean) throughout much of 2009 has been that management’s full year yield guidance has been overly aggressive ... and heavily back-end loaded, relying heavily on a strong (fourth quarter) performance," she writes. Carnival, by contrast, has been "less aggressive" in its projections. In short, Royal Caribbean expected more by now and didn't get it, whereas Carnival was less rosy about the future early in the year and now is in a place to be pleasantly surprised. Industry watcher Mike Driscoll of Cruise Week notes today that Carnival -- the parent company of more than half a dozen lines including Carnival, Princess, Holland America and Cunard -- also has simply performed better during the downturn than Royal Caribbean. As Driscoll points out, Royal Caribbean's earnings for the third quarter were down 44% from the year-ago period while Carnival's earnings were down just 15% year-over-year. In fact, Carnival made over $1 billion during the quarter. |
 |
||||||||||||||
|
|
|||||||||||||||
 |
|||||||||||||||
| Up | |||||||||||||||
| Up | |||||||||||||||
|
Worldwide Travel & Cruise Assoc., Inc. 150 S. University Dr. Ste E, Plantation, FL 33324 - USA Tel: +1 954 452 8800 Fax: +1 954 252 3945 EMail: sales@cruiseco.com |
|||||||||||||||
|
Designed & Published by: Worldwide Media. |
|||||||||||||||
