Tags: Royal | Caribbean | carnival | Cruise | lines | fuel | oil

Cruise Industry Turning Higher, but Fuel Costs Weigh

Wednesday, 20 Apr 2011 12:18 PM

Cruise line companies should see better times soon. High-seas bookings are on the rise at last.

During the fourth quarter of 2010, 18.2 million passenger nights were booked on North American cruises, up 13.5 percent from a year earlier, according to the U.S. Department of Transportation. About 2.7 million passengers traveled on 1,083 cruises.

For the year, 69.7 million passenger nights were booked, up 9.4 percent from the year before.

New, big ships entered the market in 2010, including Royal Caribbean's "Oasis of the Seas" and "Allure of the Seas," which can each hold 5,400 passengers. Norwegian Cruise Lines' "Norwegian Epic" and Carnival's "Carnival Dream" also began sailing, with capacities to hold 4,200 and 3,646 passengers, respectively.

The economic recovery spawned a small increase in fares during the first half of 2010, but a second-half surge in cruise capacity brought fares back to 2009 levels, the DOT reports.

"For 2010, fares were up just 1.5 percent from a year earlier, and down 8 percent from the 2008 levels. The discounting not only filled ships, but increased demand for port and other cruise-related services," the agency said.

So one would think blue skies and calm seas await big cruise-line operators like Carnival Corp. (CCL) and Royal Caribbean (RCL), right? Not so much. Rising fuel prices are hurting an otherwise strong recovery.

While revenue rose during the first quarter of 2011 from the same period in 2010 for Carnival, high fuel prices ate into profits, with operating income falling 8 percent to $235 million for the quarter.
Carnival's news scared investors in Royal Caribbean as well.

"Fuel costs are at the forefront of investors' minds," JPMorgan analyst Kevin Milota told Reuters. "There's no resolution and stabilization in the fuel markets as a result of unrest in the Middle East and North Africa."

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Cruise line companies should see better times soon. High-seas bookings are on the rise at last. During the fourth quarter of 2010, 18.2 million passenger nights were booked on North American cruises, up 13.5 percent from a year earlier, according to the U.S. Department of...
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Wednesday, 20 Apr 2011 12:18 PM
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