Pricing, Booking Patterns Improve

Cruise industry prices increasing, passengers booking more in advance, according to survey.

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 lengthen.”

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 mass-market cruises.

“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.

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