Categorized | Cruises

Royal Caribbean CEO: Cruise fares about a third of the way back to pre-downturn levels

Posted on 23 July 2010

 

The launch of Royal Caribbean International’s 5,400-passenger Oasis of the Seas, the worlds largest cruise ship. Aerial views off Miami.

Fares for cruises are bouncing back this year after plunging during the recent economic crisis, but they remain well below the peak levels of a couple years ago.

That’s the word from Royal Caribbean International CEO Adam Goldstein, who told Wall Street analysts today that pricing is about a third of the way back to where it was before the economic downturn began in 2008.

 

“You could say that we’re clawing back approximately 30%, or one-third, of what we lost,” he said in response to a question on pricing from Janet Brashear of Bernstein Research. “It always was our understanding and expectation that what happened last year would take a period of years (from which) to recover, and that’s essentially what we’re seeing.”

 

Goldstein said improving demand and bookings from both North America and Europe were contributing to the recovery in pricing.

 

Goldstein made the comments during a conference call to discuss parent company Royal Caribbean Cruises’ second quarter earnings, released earlier today. The world’s second largest cruise company reported a better-than-expected quarterly profit of $60.5 million, or 28 cents per share, that it attributed to lower-than-expected operating costs.

 

The profit compares to a loss of $35.1 million, or 16 cents per share, in the same quarter a year ago.

 

Royal Caribbean Cruises is the parent company of several cruise lines including Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises. In the conference call, the Miami-based firm’s executives said bookings at the lines remained consistent and steady during the quarter despite some turmoil in the economy and the stock market.

 

The company says second quarter net yields — a measure of how much money it makes per cabin — increased 4.9%, (5.4% on a constant currency basis). Second quarter net cruise costs declined 2.8%, (2.0% on a constant currency basis).

 

The company says net yields are expected to increase approximately 4% in the third quarter and 3% to 4% for the year as a whole (7% and 4%-to-5%, respectively, on a constant currency basis).

 

The firm says operating costs are being driven down by a variety of factors including “strong” cost control, energy conservation measures, expense timing and currency fluctuations.

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