Travel Agent - April 14, 2008 - (Page 56)

CRUISES Is the Price RIGHT? Royal Caribbean’s Brilliance in Europe Opinions vary on the direction cruise pricing is heading as capacity shifts regionally FEWER CRUISE SHIPS WILL BE MANEUVERING through Caribbean waters in the foreseeable future. That’s a fact. What’s debatable is how reduced capacity in the region will affect pricing. In a supply-and-demand market, less ship supply bodes well for operators who have the leeway to raise or keep rates steady, since it’s easier to sell cabins when there are fewer available. Conversely, when increased supply floods the market, making it more difficult to keep ships full, the pendulum shifts to the buyer, who doesn’t have to look hard for deals. Okay, enough Economics 101. What does this mean for you and your clients? According to the most current data announced at this past month’s Seatrade Cruise Shipping Convention in Miami, the cruise industry plans to reduce total passenger ship capacity in the Caribbean by about 5 percent, a trend that has been building. The Caribbean’s total market share dropped in 2007 to around 35 percent from 39 percent the year prior. Now come fresh numbers from Carnival Corp. (www.carnivalcorp. com), whose 11 brands and more than 80 ships make it the largest cruise operator around. The company’s 2008 first-quarter numbers and outlook accurately frame the overall cruise landscape—both with regard to current and impending economic hardships (read: escalating fuel costs and housing market turmoil) and trends within the industry. BY DAVID EISEN Projections Taking a look forward to the fourth quarter, companywide, Carnival’s cruise capacity will be up 8.7 percent over 2007, bolstered by the deliveries of Carnival Splendor in July and Holland America Line’s (www. 56 | TravelAgent April 14, 2008 hollandamerica.com) Eurodam, too, in July. In North America, fourthquarter capacity will be up 5 percent, but overall Caribbean capacity will decrease to 42 percent, down 4 percent from the previous year. Carnival’s presence in the Caribbean—while still the biggest by far in the industry—is nonetheless declining, while its presence in European markets is on an upswing. So too, on an even higher plane, is Royal Caribbean International’s (www.royalcaribbean.com) entrenchment in Europe. Carnival’s closest competitor will have seven ships plying European waters this summer, with that number reaching eight next year. Its sister line, Celebrity Cruises (www.celebritycruises.com), will have its biggest Europe season ever in 2009, deploying five ships. Still, notwithstanding the lackluster economy, most in the cruise industry are heralding the return of the Caribbean in terms of shored-up pricing. “All brands are performing well with Caribbean pricing rebounding nicely from 2007,” said Howard Frank, vice chairman of Carnival Corp., during the company’s 2008 first-quarter earnings call. Furthermore, he said, “On a companywide basis, we are currently forecasting yields in the second quarter to be in the 6.5 percent to 7.5 percent range. The stronger yields are driven primarily by stronger Caribbean pricing.” Carnival Chairman and CEO Micky Arison also pointed to “the continued recovery of Caribbean business.” But it’s coming at a price for some Caribbean destinations and ports, which are losing out on needed tourism dollars that cruise ships bring. Consider Jamaica. According to Pat Bellinfante of the Port Authority of Jamaica, 3,222 ships called in CONTINUED ON PAGE 58 http://www.hollandamerica.com http://www.royalcaribbean.com http://www.celebritycruises.com http://www.carnivalcorp.com http://www.carnivalcorp.com http://www.hollandamerica.com

Table of Contents Feed for the Digital Edition of Travel Agent - April 14, 2008

Travel Agent - April 14, 2008 Online Now Contents Contributors From the Editor From the Publisher Europe: The châteaux-hotels of the Dordogne and Quercy in France Middle East: Although Dubai is Expanding, it is not Bursting at the Seams Pacific/Asia: Pattaya is Southeast Asia’s Sunny Paradise Pacific/Asia Briefs Las Vegas: New York City Dining Comes to Sin City Hawaii: Accommodations in Hawaii for the Entire Family Central & South America: Cayo Espanto is the Private Island Resort for Clients to Get Away from it All Caribbean: Iberostar Property Opens in Rose Hall, Jamaica Running El Casino at the Sheraton Old San Juan Africa: Africa Travel Association’s 11th Annual Symposium Spotlight on the Djibouti Palace Kempinski Cruises: Experts Share Views on the Direction Cruise Pricing is Heading Cover Story: Home Counsel Car Rental: Vacation.com Joins with Hertz to Grow Car-Rental Sales Transportation Briefs Northeast USA: Brooklyn’s Hotel Le Bleu Agent Profile: Gary Mansour of Mansour Travel Agenda: Fam Trips, Deals & Incentives, Calendar Violent Protests Halt Travel to Tibet Celebrating Company and Agency Innovations Sheraton Upgrades Brand through Renovations and Redesign Earning Opportunities and Agent Recognition In the Spotlight Editorial Index Advertising Index Classified Marketplace Trendwatch

Travel Agent - April 14, 2008

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