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Encouraging cruise

industry trends give good

reason for confidence

A WORD FROM OUR PUBLISHER

11

he major cruise corporations

delivered strong first half-year

results in the prevailing trading

and operating conditions in 2015,

especially with the choppy global

economy, the cautious global consumer

and corporate investment outlook, the

strong US dollar, competitive pricing

points in the overall global vacation

market, and the tricky US press and

media environment.

From a cruise business operating cost

perspective, higher selling, general and

administrative expenses, interest and

impairment charges, food, insurance,

port, air ticket, crew and raw material cost

outlays impacted the margins. However,

the industry filled all of its ships, exceeding

104 % occupancy rates and managing very

successfully to curtail and even cut like-for-

like half-year cruise operating costs. Fuel cost

remains below US$50 a barrel and consumer

spending confidence is rising as are average

wages, which are exceeding inflation rates.

Guidance suggests very successful full years

for all three major companies with Carnival

Corporation expected to earn nearly 40% more

than in 2014 and Royal Caribbean Cruises Ltd.

anticipating a record year in profit. Norwegian

Cruise Holdings is also predicted to post record

profits for the full year.

The global cruise industry has seen price

increases and hardening of bookings with

very strong demand for China/Asia, Canada/

Alaska and Europe itineraries.

According to the CLIA Europe Economic

Contribution Report, released in June, an

estimated 6.4 million European residents

(30 % of all passengers worldwide) booked

cruises in 2014 and around 5.85 million

passengers embarked on their cruises from

a European port. Of these, 900,000 came

from outside Europe, showing the continent’s

huge cruise potential. The Caribbean is also

now seeing a marked price strengthening

and growth of bookings, with global market

share set to grow this year to 39% from

37% in 2014. Bookings look very solid for

the third and fourth quarters, and early

indications are that the pricing levels are

higher than the equivalent time in 2014.

Despite cruising’s global growth and the

steady stream of exciting new cruise ships,

pricing margins and the image of the industry

remain the top priorities to be focused on.

Another challenge is for the industry to

position itself better to global consumer media

regarding the fantastic job it does of offering

truly memorable and affordable vacations. The

industry and its representative body CLIA also

needs to continue to convince regulators of

the huge economic impact that it brings – in

the US and Caribbean over US$75 billion and

in Europe over US$50 billion – and the near 1

million global jobs it brings with it.

Finally, I would like to thank all who

have participated in this issue. I hope that

it proves to be an interesting, informative

and productive read for you that will help

inspire some debate on the many topics we

cover. We look forward to seeing you at the

Seatrade Hamburg show in early September

and the FCCA Annual Conference in early

October in Cozumel, Mexico.

Nolan Andrews

Publisher

The big operators are enjoying solid bookings

and impressive earnings forecasts despite

ongoing challenges

2015 FIRST

HALF-YEAR

RESULTS FOR

THE ‘BIG THREE’

Carnival Corporation & plc reported

revenues of US$7.12 billion for the first

half in 2015 as opposed to revenues of

US$7.22 billion for the first half in 2014

and profits of US$271 million in the first

half of 2015 as opposed to profits of

US$78 million for the first half in 2014.

Royal Caribbean Cruises Ltd. came in with

revenues of US$3.87 billion for the first

half of 2015 as opposed to revenues of

US$3.86 billion for the first half in 2014

and profits of US$230 million in the first

half of 2015 as opposed to profits of

US$164 million in the first half of 2014.

Norwegian Cruise Line Holdings

announced revenues of US$2.02 billion

for the first half of 2015 as opposed to

revenues of US$1.43 billion for the first

half of 2014 and profits of US$137 million

for the first half of 2015 as opposed to

profits of US$163 million for the first half

of 2014. This was the first result that

included the revenues from the acquisition

in 2014 of Prestige Cruise Holdings and

its two brands, Oceania Cruises and

Regent Seven Seas Cruises.