CRUISERS: Navigating Choppy Waters

Takeaway: Cruisers have a rough road (or is it sea?) ahead of them as they continue to offer aggressive promotions and pricing $RCL $CCL

Pricing trends continue to worsen although not dramatically as cruise line operators lose steam. The two big players in the space, Royal Carribean Cruises (RCL) and Carnival (CCL) have provided tepid guidance and we believe that trends are slightly worse than what management has put forth. Our proprietary cruise survey data remains choppy for 2012 and 2013 (pardon the pun).

There’s some good news, however, in the form of continued strength in Europe and Asia/Australia. While not enough to offset the weak market in North America, pricing for Europe has improved for CCL since July and pricing in Asia/Australia remains robust for both RCL and CCL in the fiscal fourth quarter of 2012. Heading into 2013, summer pricing for the year suggests a small pick up for both operators.

CRUISERS: Navigating Choppy Waters - YTD cruisers

In terms of stock performance, RCL is clearly the winner, up 10.5% year-to-date compared with CCL, which is up only 7.8% YTD. Both companies have a tough road ahead of them as they continue to aggressively offer discounts and promotions for various areas, especially Mexico and South America.