Royal Caribbean Cruises had their 2011 Q2 earnings call earlier today. In the call they announced that they missed earnings for the quarter due primarily to Eastern and Western Med yields [pricing] missing estimates. A month ago, I was quoted in the NY Times stating that Europe Cruise prices were the lowest we’d ever seen due to increased supply that was not being met by demand. Royal Caribbean’s earnings call today confirmed what we were seeing.
In a earnings Followup Call today Royal Caribbean’s CEO Richard Fain said:
[quote]“At the beginning of the year, who would have imagined the earthquake and tsunami in Japan, the upheaval in the North Africa and the Middle East or more recently, the senseless and tragic events in Oslo? Despite all this, it still looks like this will be one of the best years in our history. Not quite as fantastic as we originally hoped, but a very good year, nonetheless.”[/quote]
Click here to read full transcript from RCL Earnings Discussion.
Overall, the cruise lines have fared well through all of these events… but the story continues to be that for whatever the excuse there is an over supply of cruise cabins. Over the next couple of years, there will be fewer new ships being introduced to the market allowing demand to catch up with the supply.
So, amazing deals like the Costa 10 night Mediterranean Cruise sailing in November for $587 will not be around forever. Demand will catch up to supply, but until then cruisers will continue to enjoy awesome deals. Although cruise prices are close to record lows, Royal Caribbean will still have one of their best years ever. I take this as a excellent sign that you will not see Royal Caribbean and Celebrity offering a lesser product to make up for the lower prices. All good news for cruisers.
2012 Cruise Prices
A notable trend for cruisers is the cruise lines aggressively pricing 2012 peak season cruises now to offer a true incentive for booking early. This will allow them to baseload their ships and gradually increase the rates as they sell cabins. If you plan on cruising in 2012 during peak times like Spring Break or Summer, I recommend booking early to lock in the best rate. If you plan on cruising in Winter or Fall 2012 and are flexible with your travel dates then you can wait a while for the best deals.[Box] Click here to Subscribe to CruiseSource[/box]
Author Note: Rich Tucker is regularly quoted in regards to cruise pricing trends due to his constant tracking of cruise rates for CruiseDeals.com. One of Rich’s side passions is economics and investing – but does not claim to be an expert in either.