How have the industry’s biggest players been faring in a climate of softer prices (and higher fuel costs)?

Reporting on its 2000 third quarter, P&O Princess’s Ratcliffe noted that the company had “achieved a record level of operating profit for the quarter, despite high oil prices and an adverse exchange rate.” But he said that “pricing conditions for the next two quarters are challenging,” continuing that “the market is continuing to grow and the fundamentals of the cruising industry remain sound.”

Carnival Corporation reported net income for the year ended November 30, 2000, was $965.5 million on revenues of $3.78 billion, compared to net income of $1.03 billion on revenues of $3.5 billion for the same period in 1999.

Cruise operating income increased in the fourth quarter of 2000 to $187.2 million from $174.1 million in the prior year’s fourth quarter. Commenting on cruise operating results, chairman and CEO Micky Arison noted that, “Despite continued pressure on cruise pricing, resulting in slightly lower net revenue yields, and higher fuel costs, we were still able to grow our cruise operating earnings during the fourth quarter.”

Arison also noted that while fiscal 2000 brought many challenges, the company also had many significant achievements. “During 2000, we introduced several new ships into service, carried a record number of cruise guests, significantly expanded our European presence and accelerated our shipbuilding program in two strategic areas.” Fiscal 2000 saw the company’s cruise brands introduce an unprecedented four new cruise ships — Costa’s 2,112-passenger Costa Atlantica, Carnival Cruise Lines’ 2,758-passenger Carnival Victory, and Holland America Line’s 1,380-passenger Amsterdam and 1,440-passenger Zaandam.
The company carried a record 2.7 million guests in the year, a 12.8 percent increase over fiscal 1999, and increased occupancy levels to 105.4 percent from 104.3 percent in 1999. The occupancy percentage increase indicates that the company has been doing what’s needed to ensure that its new capacity is absorbed.

Carnival’s strategy also includes expansion in the in the fast-growing European cruise marketplace. During the fourth quarter of 2000, the company purchased the remaining 50 percent interest in Costa Crociere, accelerating its development plans for Costa by signing a letter of intent for the two 2,700-passenger vessels from Fincantieri. It also announced plans to transfer Carnival Cruise Lines’ 1,022-passenger Tropicale to the Costa fleet.

Commenting on the outlook for the company’s core cruise business in 2001, Arison stated “Based on what I’ve seen so far, it appears that bookings for the contemporary and premium segment of the cruise market are largely in line with our expectations … barring any unforeseen developments, I am optimistic that Carnival will resume earnings growth for the full fiscal year 2001.”

Royal Caribbean Cruises Ltd. last month announced a 16% increase in net income to $445 million in 2000, from the prior year’s $384 million, on revenues of $2.9 billion versus $2.5 billion the prior year.
“It is a pleasure to again report record earnings. Our core products continue to perform well, allowing us to introduce new itineraries and develop new markets for future growth,” said chairman and CEO Richard D. Fain.

“Looking forward to 2001,” said Fain, “we expect that we will continue to experience a competitive pricing environment but nevertheless are anticipating a very exciting year. The wave season is off to a good start and we have set a number of new booking records during the past two weeks.” ML

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