Agents, Analysts Fret Over Slow Europe Cruise Sales
Agent concerns that Europe cruise sales are not performing as well as hoped for in recent weeks are being echoed by some in the financial community.
"We have fears about a slowdown in the European cruise business," report Felix Wang and Todd Jordan of Hedgeye Risk Management.
Hedgeye cites several factors impacting source markets on both sides of the Atlantic. First there's Europe itself: "The local economies there are struggling, unemployment in the Eurozone remains high and there are deflation risks." Hence, Hedgeye believes that the European consumer is not in great shape, and Wang says that has implications for the cruise market in North America, particularly with pricing, as lines may turn more to the U.S. to fill European ships.
Another factor is that 2014's strong Europe market - particularly for Costa and Royal Caribbean - set such a high bar that some regression was inevitable. Yields were "up 20%-25% year-over-year in some of the quarters," says Wang. "Obviously there is going to be a slowdown this year coming off that top performance last year."
But a natural correction alone can't explain away such a dramatic drop. "It's pretty significant, but it is still early in Wave, so things can change," points out Wang.