The outlook for the final quarter of the year appears to be better than that of the current quarter from the demand point of view, says Robin Farley, cruise industry analyst at UBS in New York.
- Pricing for Q4 Sailings Only Slightly Down Based on UBS Data Tracker for week ended 07/29 and flattish to slightly down each of last 4 weeks vs. Q3 ticket pricing down ~1% this week and down cumulatively ~4% over last 4 weeks. This implies aggressive discounting on tickets that took place for Q3 sailings has not yet occurred for Q4 sailings to date. Still, we are not as far into penalty period for Q4, which may be limiting some discounting, but we note that several brands in the last week have indicated that ’13 load factor is running ahead YOY, and in some cases Q4 as well. So although Carnival noted a month ago that Q4 bookings ex-Costa were running behind, recent color could imply an improvement in booking environment within last month.
- No Negative Read Through to Carnival From Royal Caribbean Cruises Ltd's (RCL) Q2 Call"We reiterate that we do not believe Royal’s commentary on their call last week had negative read-thru for CCL (Carnival Corp & plc) . RCL’s updated yield guidance essentially caught up to the change that CCL had already adjusted for in late June, which was a 50 bps adjustment at the midpoint of FY12 yield guidance vs. RCL’s adjustment for a 100 bps move at the midpoint for FY12, as RCL was previously guiding for higher yield growth than CCL prior to RCL’s Q2 call last week. CCL & RCL now both guiding to 2H’12 yields being down ~200 bps on a comparable basis (so excluding Costa for CCL and excluding deployment / Pullmantur charter change for RCL).
- UBS Cruise Pricing Survey: Med Flattish Last Several Weeks: Checks indicate Carib pricing up slightly this week, after being flattish for previous 2 weeks. Alaska was flattish, holding steady since mid June, though down YTD (year to date). Med pricing has been flattish the last 4 weeks, after pricing drop in early July, she said in a research note.