RCCL Sees 40% Income Drop, But U.S. Agent Sales Stay Strong
Royal Caribbean Cruise Line’s net income declined 40% in the first quarter. But North American travel agents did not suffer a comparable drop-off, indicating that an especially weak source market in Europe, along with rising costs, was the main culprit.
Royal Caribbean’s net income for the first quarter of 2012 was $47 million, down from $78.4 million in the first quarter of 2011. The numbers include the period immediately following the shipwreck of the Costa Concordia in January, which dealt an industry-wide blow to bookings.
Since early February, RCCL’s overall bookings have been down by a mid-single-digit percentage – with gradual and continuing improvement, RCCL said. That’s a positive change from the cruise company’s Feb. 2 financial report, which showed a double-digit drop-off in bookings following the Concordia accident.
In North America, in the last four weeks RCCL’s bookings finally returned to – and then exceeded – last year’s numbers, the cruise company reported.
Agents didn’t see drop
North American cruise-selling agencies and networks never reported the same post-Concordia drop-off in bookings as did Royal Caribbean and other cruise companies, including Carnival Corp.
“There does seem to be a discrepancy in sales reported by North American-based travel agents in comparison to sales reports from the leading global cruise lines,” Dwain Wall, senior vice president and general manager of CruiseOne and Cruises Inc., told Travel Market Report.
Michelle Fee, president and CEO of Cruise Planners concurred. “The good news for Cruise Planners is that we are not seeing the falloff of RCCL business in 2012. Actually, it’s pretty solid.”
Europe market, rising costs
Wall and Fee said an extreme drop in European-sourced bookings likely explains the discrepancy.
“With the Costa Concordia, Europe is having a hard time selling to Europeans. They just are not pulling the numbers they have in the past few years,” Fee said. She noted that Royal Caribbean’s brands have “a lot of tonnage in Europe, and they count on sourcing passengers from that market.”
Wall commented that RCCL’s large drop in net income was “most likely because the Costa Concordia tragedy more significantly impacted demand from European-based cruise customers. This is especially true for cruises in Southern Europe.”
Rising costs accounted for some of Royal Caribbean’s drop in net income. According to the RCCL investment report, net cruise costs, excluding fuel, increased by 5.7%. The price of fuel also went up, the company reported.
Direct bookings off?
A dip in direct bookings – at least for one of its brands – also may have impacted Royal Caribbean Cruise Line in the first quarter of 2012.
“Our direct business had gone down a bit,” Vicki Freed, senior vice president of sales for Royal Caribbean International, told Travel Market Report in an email. Freed noted that “we have a very small amount of direct business and have not put a lot of energy behind this channel.”
“I do believe that in harder economic times a consumer depends on the professional travel agent to help be the ‘value interpreter’ of the various vacation options,” she said.