Categorized | Cruises

A banner year in 2012? Cruise executives are hesitant to predict…

Posted on 28 October 2011


Royal Caribbean’s Allure of the Seas arrives in Fort Lauderdale, Fla., on Nov. 11, 2010.

How high will cruise fares go in 2012? In a conference call with Wall Street analysts on Thursday, Royal Caribbean Cruises executives were unusually hesitant to make predictions, citing the topsy-turvy nature of the current economic and political environment.


“This is the point at which we would normally say let’s look forward and begin to make predictions about 2012,” Royal Caribbean Cruises Chairman and CEO Richard Fain told the analysts during a discussion of third quarter earnings. “However, no management can witness the political stalemate on both sides of the Atlantic or the deterioration of consumer confidence in spending without being concerned about how those factors will develop over the coming months and year.”


Fain noted his company’s ships already are more booked up for the coming year than they were at this time last year — and at higher prices. But he and other executives on the call struck a cautious tone with the analysts, refusing to offer guidance on how much earnings might improve in the coming year, as they normally do at this time of year.


Like airlines and hotels, cruise lines adjust rates regularly in response to changes in supply and demand, and the wildcard for pricing in 2012, it seems, is how much unfolding economic and political events will affect demand.


“So far, we’ve seen surprisingly little slowdown (in bookings) due to those pressures,” Fain said. “Some impact is already being felt, but not at the level one would expect based on the economic statistics or the media coverage.”


Fain did say that as of now the company is expecting yields — a measure of how much money it makes per cabin — to be up for the year.


“Our revenue management team is looking forward to further yield improvements for 2012, but we’re reluctant in light of all the other factors going on to be more particular than that,” Fain said. “I would emphasize that we are not expecting yield improvements due to economic tailwinds. On the contrary, we think we have (felt) and will continue to feel the drag of a lumbering economy.”


Fain noted that 2012 will bring one of the lowest rates of capacity growth at the company in years.


Royal Caribbean Cruises is the parent company of several cruise brands including Royal Caribbean, Celebrity and Azamara. The company on Thursday said it earned $399 million, or $1.82 per share, during the third quarter — a jump of 14% from the same period a year ago

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