The slow road to recovery
The cruise industry remains on the road to recovery from all the freak incidents this year. And their not exactly driving in the fast lane. As CCL CEO Micky Arison reported yesterday in their annual shareholder meeting, March bookings ex Costa were up 3% in the five weeks to April 1 but pricing dropped 5% in the same period. Meanwhile, Costa bookings in Europe were down "not as deeply" in the past few weeks as the face-ripping 75-80% drop after the Concordia incident. Costa European pricing was still down by double-digits in the five-week period.
Our March cruise pricing matrix below confirms these trends as cruise pricing continues to slack in 2012.
- Watch out for a double-whammy this summer. While the Street continues to focus on lower prices in Europe, we are concerned of further pricing weakness in Alaska. Alaska will have a particularly tough year given difficult comps. Early April data shows deterioration in pricing for Alaska summer itineraries, which will hurt CCL more than RCL as CCL is more exposed to the region.
- The consumer wins. Remember when Carnival CEO Arison said during the March conference call that consumers should quit waiting for lower prices in the Mediterranean? Well, Costa finally relented on its fixed pricing and slashed prices 20-40% across the fleet. RCL’s European fleet followed suit with +30% cuts across most of its ships.
- Luxury continues to struggle. Celebrity and Princess haven’t stopped dropping prices. Princess has been more aggressive in its pricing strategy.
- Any good news? CCL’s Caribbean FQ2 bookings were solid. South America/South Pacific FQ4 pricing was strong for RCL, which is a good sign since that region has the biggest presence during that quarter.
(Prices are tracked relative to those on most recent company guidance)