Miamibased Cruise Lines Map Different Routes Through A Struggling Economy
Written by Risa Polansky on October 30, 2008
By Risa Polansky
With economic conditions making waves globally, signature Miami cruise lines are mapping different routes to calmer waters.
Carnival Cruise Lines announced this week that a ship scheduled to move to Europe in May is to remain in Miami operating Caribbean cruises instead.
A ship meant to shift in April from Long Beach, CA., to Miami and later to Baltimore will instead move directly to the Maryland port four months early to begin the city’s first year-round cruise program.
"Based on current market conditions, continued economic uncertainty and high air costs to Europe, we are shifting our focus to an even greater extent toward our core, close-to-home cruise options, which are clearly the preference of the vast majority of the mainstream vacation market right now," said Gerry Cahill, president and chief executive officer, in a press release.
Carnival did not respond to a request for further comment.
The company’s third-quarter earnings show that the cruise line saw a dip in net income, dropping to $1.3 billion from $1.4 billion in last year’s third quarter.
However, revenue rose year over year: the company generated $4.3 billion third quarter of 2007 and $4.8 billion the same period this year.
The cruise line still plans to offer European voyages next year when its newest and largest ship, the Carnival Dream, debuts next fall.
Royal Caribbean Cruises, another major cruise operation based here, has not announced any changes to its itineraries and destinations, said Ian Bailey, vice president of investor relations, in an interview.
Should the need arise to tweak plans, the line is established enough in both North America and Europe to accommodate, he said.
"If one market is particularly strong relative to the other one, or weak, you could source from the other market, so it does give you some flexibility in getting the ships filled."
The cruise line saw record earnings in the third quarter of this year, with net income hitting nearly $412 million compared to $395 million the year before.
Still, in recent months, Royal Caribbean has seen a dip in bookings.
"Up until September of this year, bookings had been very robust, but over the last six-to-eight weeks we have seen a disruption in the volume of bookings that we’ve been taking for the year," Mr. Bailey said.
The company expects fourth quarter yields to fall anywhere from 4% to 5%, according to an earnings announcement.
"We don’t know if this is the beginning or middle or end" of the drop in bookings, Mr. Bailey said. "Our visibility into 2009 is a little less clear."
Royal Caribbean is taking a "wait-and-see" approach before changing any plans, he said, not because officials are "asleep at the wheel," but because "this is a very new disruption for us… certainly we would react appropriately as we get more data and understand better what’s happening in the markets."