Royal Caribbean momentum hit by Costa tragedy

Royal Caribbean momentum hit by Costa tragedy

Royal Caribbean Cruise Line today admitted there was a “high degree of uncertainty” over business in the crucial wave period first quarter in the wake of the Costa Concordia disaster.

The parent company of brand such as Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises reported improved 2011 net profits of $607.4 million, up from $515.7 million a year earlier.

New bookings have been hit by the tragedy, with business from Europe suffering a deeper decline than that from North America, Latin America and Asia-Pacific.

But there has been no “material change” in cancellations which have remained within normal levels and there are signs of bookings recovery in North America.

“Overall booking volumes from North America have fallen by low to mid-teen percentages versus same time last year for the last few weeks,” the company said.

“In Europe, where media coverage has been more extensive, the decline has been higher, though results vary significantly by country.

“For the year as a whole, notwithstanding the recent slowdown, booked load factors and pricing are still higher than they were at the same time last year. This reflects the very robust starting position the company was in before the incident.”

Spring and summer sailings are showing the largest declines in new bookings, while longer term bookings remain healthy, RCCL said.

The impact is much greater for first time cruisers compared to experienced passengers.

“This reflects the greater knowledge experienced cruisers have about cruise vacations and ships,” the company said.

Discussing the first three months of 2012, chief financial officer Brian Rice said: “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 of the tragedy on the balance of the year.

“We have clearly lost some of our positive momentum in the short term. Fortunately, we had a very strong order book before the tragedy; our brands are back in the market advertising and we do not expect any significant long term impact to our business.”

The company said it was very difficult to assess the impact of Costa incident on its revenues.

“It has been the subject of extensive media coverage and world-wide attention.  In addition, we curtailed our marketing activities as did most cruise lines and travel agencies,” a statement 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 otherwise reliably safe vacation.  But in the near term it has a significant impact on our bookings.”

Chairman and chief executive Richard Fain said: “Like so many who have spent their working lives in this industry, a tragedy like this just breaks our hearts.

“All of us in the industry, who are so devoted to providing safe and exceptional vacations to millions of people around the world, are devastated and humbled when something like this happens.

“Ironically, this tragedy is so noteworthy partially because it is so rare. 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.

“And I can assure you that we strive toward this perfect dedication to safety each and every day.

“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.”


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