Cruise industry bookings drop since fatal European accident

Two of the cruise sector’s biggest companies have reported falls in bookings in the aftermath of the Costa Concordia accident in Italy. 

Royal Caribbean Cruises and Carnival Corporation both said bookings had fallen about 15 per cent compared with the prior year following the incident on Friday, 13 January, which has claimed the lives of 17 passengers to date. 

Royal Caribbean said in a statement that bookings had suffered for sailings in the first three quarters of 2012 with spring and summer seeing the largest declines. Before the incident, bookings for 2012 were up by 5 per cent compared with the same period in 2011 and people were paying more. 

Cayman’s travel industry were not reporting any effects from the incident in terms of locally-sourced bookings. 

Linda Gayler of Longitude Travel Services said that in fact bookings had been strong locally. 

“To be honest I am getting a lot of enquiries from cruises and it’s up from our angle compared to last year. From my personal perspective Cayman has not been affected.” 

The number of port calls in 2012 is still the same as originally projected, said Robert Hamaty of the Association for the Advancement of Cruise Tourism, with no cancellations to date. Measuring actual cruise arrivals was not the easiest, he said. 

“The ships’ capacity is what they use for these numbers so in fact the low 1.4 million, some 27 per cent down from our highest year is not accurate as to passengers on board – only the ships’ capacity,” Mr. Hamaty said. “Also there is no count as to numbers that actually disembark as only the ships security knows those numbers. Other than the cruise line and port authority that collects the head tax we do not know the actual numbers that arrive on the ships.” 

Anything that puts a bump in the road of the United States market is likely to give Cayman a wobble also, said Jane van der Bol, executive director of the Cayman Islands Tourism Association. 

“It is a worldwide effect,” she said. “Carnival is a big player and whenever a major player in any field is affected, in this case tourism, it is going to affect us. Our No. 1 business is the cruise business here – it is a market that they have created. The Caribbean has already lost bookings to new markets such as Europe so we must remain as competitive as possible. The European bookings are hit harder by this, but anything that impacts the United States is felt here too.” 

Impact assessment 

Royal Caribbean said in its fourth quarter earnings report that it was difficult to assess the impact of the incident on its revenues. 

“It has been the subject of extensive media coverage and world-wide attention,” the report read. “In addition, we curtailed our marketing activities as did most cruise lines and travel agencies. 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.  

“We are pleased to note that there has been no material change in cancellation activity which has remained within normal levels,” the report read. “However, new booking activity has been hurt. Overall booking volumes from North America have fallen by low to mid-teen percentages versus same time last year for the last few weeks. In Europe, where media coverage has been more extensive, the decline has been higher, though results vary significantly by country.” 

Disney Chief Executive Officer Bob Iger told reporters the company had also seen a slowdown in reservations. 

“Overall, the entire cruise ship business was affected by the crash in Italy, And I know that – we can speak for ourselves, but we know this is true across the business – that our call centres have decreased in volume. And our bookings for the week were down somewhat because of that,” he told CNBC. 

Despite this, load factors and pricing remain higher than 2011, Royal Caribbean stated. 

“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,” said Brian J. Rice, executive vice president and chief financial officer, who added that some positive momentum had been lost 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,” he said. 

The news coincided with a speech by the Premier McKeeva Bush in a public meeting at South Sound Civic Centre, in which he noted the relationship of cruise business with the Cayman Islands. At the tourism update meeting he reiterated the importance of the sector and noted that declines in numbers due to redeployments and other factors were hurting the economy already.