Royal Caribbean has become the latest cruise line to report a bookings slump in the aftermath of the Costa Concordia tragedy, describing the downturn as “significant”.
While the rate of cancellations has not increased “new booking activity has been hurt”, the company said.
Reporting its 2011 year end financial results, which saw net income rise from $US$515.7 million to $607.4m, Royal Caribbean said bookings in the second and third quarters have been hit hardest.
The admission comes in the same week that Carnival Corporation, which owns Costa Cruises, said sales have fallen in the “mid teens” (Travel Today, February 1).
But as with Carnival, Royal Caribbean maintained there is unlikely to be any long term damage to its business.
Bookings in Europe have been hit hardest while North America has fallen by low to mid teen percentages, the firm said. Asia Pacific and Latin America have seen a “slight” decline.
“The impact on bookings has been greatest in the first three quarters [of the year] and wanes as the year progresses. On the other hand the first quarter also has more of its capacity booked making it less affected by changes in booking patterns,” it said. “It is very difficult to assess the impact on our revenues…but in the near term it has a significant impact on our bookings.”
First timers have been deterred rather than experienced cruisers, Royal Caribbean said.
“We believe that most observers and potential guests understand that cruising is safe and that this incident was a very rare anomaly in an other wise reliably safe vacation,” the company added. “Already bookings have started to recover, particularly in North America.”
Turning to the 2012 outlook, executive vice president and chief financial officer Brian J Rice said 2012 quarter loads were also encouraging although momentum has “clearly been lost”.
“We are still on track to achieve our original projections for the first quarter but there is a high degree of uncertainty and it is difficult to judge the impact on the balance of the year,” he said. “Fortunately we had a very strong order book before the tragedy [and] our brands are back in the market advertising.”
Royal Caribbean chairman and chief executive Richard D Fain said lessons must be learned from the Costa tragedy.
“Cruising has an extraordinary record of safe operation but this tragic incident is a reminder that there is no such thing as perfect safety, only perfect dedication to safety,” he said. “Stunned by the tragedy, we and the rest of the industry are determined to learn whatever lessons we can and rededicate ourselves to continue providing the best and safest vacations for our guests.”
