Poor profits mean cheaper deals

It looks like the financial analysts do know what they were talking about, after all. Although not quite as right as they thought they were.
Royal Caribbean, announcing last year’s results, have admitted that profit prospects for 2009 are even worse than anticipated.
The recession is hitting cruise ship bookings, particularly in the United States, and RCL’s net income in the last three months of 2008 fell 98 per cent to $1.48 million, equivalent to one cent a share. Wall Street had been forecasting a profit of seven cents a share.
For 2009, RCL are expecting a drop of 14 per cent in the first quarter, levelling out to nine per cent in the full year. The company is the second-largest cruise operator nehind Carnival, and includes the brands of Celebrity, Azamara and Pullmantur.
The good news for cruising customers is that there will be even more cheap deals on offer as RCL and other operators compete to fill their ships, because sailing half-empty would be even more disastrous than filling a ship with cut-price fares.
RCL’s big concern must be the arrival of the world’s biggest cruise ship, Oasis of the Seas, in December. At 220,000 tons and with space for 5,400 passengers, it’s going to take an awful lot of filling each week.
They can only hope that the excitement created by the new vessel will attract new customers, and they must be keeping their fingers crossed that there will be light at the end of the recession tunnel by then.
On this side of the Atlantic, the word so far is that British consumers are not cutting back as hard as their American counterparts. That theory is supported by the fact that the American market is a much younger profile, while over here – despite the advertising campaigns aimed at families – the core market is the older generation whose incomes are safer.