Will The Stock Market Tsunami Impact Cruising?


It’s been a crazy week on the markets, and people in the travel business are no doubt wondering what impact the decline will have on business. Cruise Week set out to take the temperature.

Responses from retailers suggest that they believe the effect of troubling economic news is different now than in years past.

For instance, Kate Murphy, President of Wings Travel Group, says, “From our point of view, obviously it affects people’s pocketbooks. And anything that affects their pocketbooks affects us. There’s no two ways about it; it just does."
She says that it’s a bit scary and that one can only hope things correct themselves. “But in a way,” she says, “It’s like terrorism. I do think people have chosen to watch what goes on, be intelligent about, it but I think they have learned to deal with it and move on with their lives.”
In short, these economic downturns are not seen as being as alarming as before.  “It’s because we have lived through some of them that were so bad, not just hearing it from grandparents about the great one in the 1930s,” says Murphy.
In terms of cruise bookings, that means less knee-jerk slowdown due to economic uncertainty.
“It could impact far-out bookings,” says Murphy. “But it’s not like the phones stopped ringing on Monday morning. They didn’t slow down last week, and they certainly haven't this week.”
Some financial analysts see a silver lining amongst the stock market clouds. “Given recent declines in bunker prices as well as a somewhat weaker dollar, we are increasing our estimates for both Carnival and Royal Caribbean,” reported Sharon Zackfia of William Blair & Company.
Meanwhile, Stein Kruse, CEO of Holland America Group, tells Cruise Week he shares the agent perspective that the nature of the news is less shocking than it once would have been. “I have had that belief for some time. We’ve become slightly immune to those issues, realizing that it is unfortunately part of the cycle that we’re living in.”
So it’s not a positive story, but there’s not a lot of full-blown panic either, and one gets the impression that this relative sanguinity is sincere rather than an attempt to allay public fears.
Kruse also spoke out on China, which has seen its economy take a nose dive of late. With the fast-growing cruise presence there, concerns are mounting. Kruse takes a longer-term view there as well. “You can’t take what’s happening in a short period of time and draw long-term conclusions from that. We have to be very mindful that our investment in China is a long-term strategy. We are seeing the contours of an economy—the world’s second largest economy now -- that is in a shift pattern.”
He explained that, initially, China’s was an export-driven economy. “China is in the process of shifting from being a primarily export-driven country to a more mature economy where you have more domestic consumption and services, and it’s slowing down a little bit."
He concludes: "A slowdown in China is, by our standards, still phenomenal growth. China used to be double-digits but now that they are growing at 6-7% it is seen as a slowdown, but it’s still amazing growth.”

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