Cruise industry pricing is increasing and passengers are booking
slightly more in advance, according to a survey by an A.G. Edwards
analyst, Tim Condor.
The latest survey examined the period from mid-July through the
end of September. Prices were compared with the previous
three-month period and the same period last year.
The survey examined the pricing of public companies,
specifically Carnival Corp.’s Carnival Cruise Lines as well as
Royal Caribbean International and Celebrity Cruises, both owned by
Royal Caribbean Cruises Ltd.
“Pricing trends continue to recover since bottoming between
April and May” depending on the itinerary, Condor wrote.
“Looking beyond the seasonally weak mid-August to the first week
of January period, booking curves are beginning to modestly
Condor notes that Europe was a bright spot for cruise lines.
“This geographic region has demonstrated the best relative
performance since the end of the Iraq war,” he wrote. “Northern
Europe and Baltic itineraries continue to be the strongest.”
Condor also said that, anecdotally, “Luxury discounts appear to
be starting to abate, indicating that the low point for pricing in
the luxury market may be past.”
And that is the segment travel agents should be selling, Condor
said, because it appears Internet retailers are focused on
“While travel agents still represent over 90 percent of
distribution for the cruise industry, it is clear that Internet
wholesalers are controlling an ever-increasing share of the lower
end of the market while traditional agencies (at least those who
want to maintain/enhance profitability) are focusing more intently
on mid/high end of cabins,” Condor wrote.
He also noted that overcapacity is “no longer a significant
concern,” another element that bodes well for future pricing.
In the first half of 2003, North American passenger counts were
up 13.6 percent. North American capacity is scheduled to grow 10.5
percent in 2004 and 3.5 percent in 2005, so industry observers are
expecting fewer empty cabins and, therefore, less discounting.