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UK cruise bookings partly recover to 15% below last year in latest week after 29% fall on Costa Concordia

Details: Written by Kari Reinikainen Kari Reinikainen; Category: Top Headlines Top Headlines; Published: 08 February 2012 08 February 2012

Cruise bookings in the UK fell by as much as 29% in the week after the Costa Concordia disaster on 13 January and have since partly recovered so that they were 15% down year-on in the latest week, a report in Travel Weekly's newsletter says.

Industry analyst GfK Ascent reported cruise bookings in the week to January 21, immediately afterthe Concordia tragedy, down 29% against the comparable week a year ago, the report said.

Sales remained 24% down year on year in the following week to January 28, but the market recovered to just 15% down in the week to last Saturday, February 4.

Bookings were forecast to fall in the aftermath. However, GfK Ascent reports the cruise market for the year remains just 2% down on the same point in 2011.

The analyst reported total holiday bookings for the summer 2012 season down almost 9% on last year to the end of last week - in line with capacity reductions at the big-two groups Tui Travel and Thomas Cook.

Package holiday sales fared better at 7% down year on year for the season to date. The GfK Ascent figures show sales improving since a poor start to January, with bookings down 10% year on year in the last week and 11% down the week before. Summer bookings over the first four weeks of January were 15% down on January 2011.

RCCL says booking activity fell sharply from high level after Costa Concordia

Details: Category: Top Headlines Top Headlines; Published: 02 February 2012 02 February 2012

Royal Caribbean Cruises Ltd (RCCL), the world’s second largest cruise shipping group, said that new booking activity fell sharply from a high level in the wake of Costa Concordia accident on 13 January, with European bookings falling more than those originating in North America. The company forecasts 2012 earnings per share in the range of $1.90 to $2.30 compared to $2.77 achieved in 2011.

“Because the tragedy in Italy is having such a significant near term effect on bookings and because that impact on the company's earnings is so uncertain, the company first described the situation prior to the event and then discussed the possible consequences,” the company said in a statement.

Booking patterns at the end of 2011 were strong and WAVE season was off to an excellent start. During the two weeks prior to the tragedy, bookings averaged 5% more than the same period last year and at higher prices. Booked load factors and pricing were ahead of the same time last year in all four quarters.

Based on the bookings in hand at that time and the pattern of forward bookings through the period, the company anticipated Constant-Currency yield improvement in the mid single digits for the year. This figure was influenced by two unique factors:

Firstly, the company made some changes related to its International distribution system in 2011 which carry on into 2012 and will increase yields by about 130 basis points. The changes also increase expenses, but the bottom line impact is not material.

Secondly, the company has increased its commitment in certain deployment initiatives which increase revenues but also increase related expenses. For example, China represents a strategic market initiative the company is augmenting significantly.

Altogether, these factors are expected to cause both Net Yields and NCCs for the full year 2012 to increase approximately 200 basis points and 300 basis points, respectively. Absent these factors, the company estimates that its "normalized" Net Yield growth would have been in the range of 2% to 4% on a Constant-Currency basis.

Impact of Costa Concordia

It is very difficult to assess the impact of the incident on our revenues. It has been the subject of extensive media coverage and world-wide attention. In addition, we curtailed our marketing activities as did most cruise lines and travel agencies. We believe that most observers and potential guests understand that cruising is safe and that this incident was a very rare anomaly in an otherwise reliably safe vacation. But in the near term it has a significant impact on our bookings.

"We are pleased to note that there has been no material change in cancellation activity which has remained within normal levels. However, new booking activity has been hurt. Overall booking volumes from North America have fallen by low to mid-teen percentages versus same time last year for the last few weeks. In Europe, where media coverage has been more extensive, the decline has been higher, though results vary significantly by country. In aggregate the company's other markets, including Asia/Pacific and Latin America are down slightly. For the year as a whole, notwithstanding the recent slowdown, booked load factors and pricing are still higher than they were at the same time last year. This reflects the very robust starting position the company was in before the incident, RCCL said.

The impact on bookings has been greatest in the first three quarters and wanes as the year progresses. On the other hand, the first quarter also has more of its capacity booked making it less affected by changes in booking patterns. Spring and summer sailings are showing the largest declines in new bookings, while longer term bookings remain healthy. In addition, the company noted that the impact is much greater for first time cruisers compared to experienced cruisers. This reflects the greater knowledge experienced cruisers have about cruise vacations and ships.

Including the contribution from distribution changes and deployment initiatives noted above, the company currently anticipates yield improvement for the full year 2012 to be in a range between 1% and 5% on a Constant-Currency basis and between flat and 4% on an As-Reported basis versus the prior year.

Already, bookings have started to recover, particularly in North America and the company does not expect that this event will have a significant long term impact on its business. Taking into account the high degree of uncertainty surrounding current booking patterns, current fuel pricing and currency exchange rates, and the factors detailed above, the company anticipates 2012 earnings to be in the range of $1.90 to $2.30 per share.

The company's booked load factors in the first quarter were already very strong prior to the incident. Subsequently, the quarter experienced a big percentage decline in new activity, but the bookings already in hand mean the company still expects yield improvements of 5% to 7% on a Constant-Currency basis (+4% to 6% As-Reported basis.) This estimate includes approximately 300 basis points relating to the previously referenced distribution and deployment items.

"We are still on track to achieve our original projections for the first quarter, but there is a high degree of uncertainty and it is difficult to judge the impact of the tragedy on the balance of the year," said Brian J. Rice, executive vice president and chief financial officer. Rice continued, "We have clearly lost some of our positive momentum in the short term. Fortunately, we had a very strong order book before the tragedy; our brands are back in the market advertising and we do not expect any significant long term impact to our business."

RCCL reports full year 2011 net income rise to $607.4 million

Details: Category: Top Headlines Top Headlines; Published: 02 February 2012 02 February 2012

Royal Caribbean Cruises Ltd (RCCL), the world’s second largest cruise shipping group, reported 2011 full year net income of $607.4 million, or $2.77 per share, versus $515.7 million, or $2.37 per share, in 2011. Fourth quarter 2011 net income was $36.6 million, or $0.17 per share, versus $31.9 million, or $0.15 per share, in 2010.

Analysts had forecast on average earnings per share (eps) of $0.15 for the final quarter and $2.75 for the full year.

For the full year, net yields increased 2.4% on a Constant-Currency basis (+4.1% As-Reported.) Net Cruise Costs ("NCC") excluding fuel increased 1.3% on a Constant-Currency basis (+2.3% As-Reported.). Final quarter Net Yields increased 3.5% on a Constant-Currency basis (+3.2% As-Reported.) Net Cruise Costs per APCD ("NCC") excluding fuel increased 3.7% on a Constant-Currency basis (+3.6% As-Reported.)

“The year ended on a strong note with good bookings and cost control more than compensating for the increased cost of fuel and foreign exchange impacts,” the company said in a statement.

Carnival in Costa Concordia cost assessment

Details: Written by Kari Reinikainen Kari Reinikainen; Category: Top Headlines Top Headlines; Published: 31 January 2012 31 January 2012

Carnival Corp & plc, parent company of Costa Crociere whose 114,500 gross ton Costa Concordia ran aground on the coast of Italy on 13 January, has calculated costs of the accident.

The company said in a filing with the New York Stock Exchange that the 2006 built ship had a book value of $490 million at the end of last year. It is insured for $510M, but deductibles should amount to about $30M. In addition, Carenival expects other costs related to the incident amount to $30-$40 million.

Carnival also reiterated an earlier assessment that the 2,978 passenger capacity ship’s absence from service would reduce its net earnings by $85-$95 million this financial year that ends 30 November.

CLIA launches safety review

Details: Written by Kari Reinikainen Kari Reinikainen; Category: Top Headlines Top Headlines; Published: 30 January 2012 30 January 2012

Cruise Lines International Association (CLIA ) says it will launch an operational safety review in the wake of Costa Concordia's grounding on 13 January on the west coast of Italy.

"In response to the Concordia incident and as part of the industry’s continuous efforts to review and improve safety measures, the Cruise Lines International Association, Inc. (CLIA), speaking on behalf of the global cruise lines industry, today announced the launch of a Cruise Industry Operational Safety Review. The Review will include a comprehensive assessment of the critical human factors and operational aspects of maritime safety. As best practices are identified, they will be shared among CLIA members and any appropriate recommendations will be shared with the IMO. Recommendations will be made on an ongoing basis," the organisation said in a statement.

Key components of the Review include:

An internal review by CLIA members of their own operational safety practices and procedures concerning issues of navigation, evacuation, emergency training, and related practices and procedures.

Consultation with independent external experts.

Identification and sharing of industry best practices and policies, as well as possible recommendations to the IMO for substantive regulatory changes to further improve the industry’s operational safety.

Collaboration with the IMO, governments and regulatory bodies to implement any necessary regulatory changes.

"While the cruise industry has an outstanding safety record, CLIA is fully committed to understanding the factors that contributed to the Concordia incident and is proactively responding to all maritime safety issues. The Cruise Industry Operational Safety Review will enable the industry to do so in a meaningful and expedited manner," CLIA said.