Wave Report: Volume Strong, Mixed Signals On Pricing

Cruise Week

Traditionally, the first two weeks of Wave Season are the most important weeks of the year for the cruise industry. This year, it's the first three weeks, retailers say, since many kids were still on vacation the first week of the year.

Whatever the length, agents across the board report that volume so far has been very strong. Last year at this time Europe business was reeling because of the terrorist attack in Paris. This year, retailers say, all markets are robust. Alaska is handling capacity increases well and Europe is holding its own. 

But the big winner is the Caribbean. The world's largest cruise market is seen as benefitting from several new ships and ongoing terrible weather in many parts of North America. "People really want to head to sunny, warm climates," said one agent.

Some recent financial reports have cited pricing challenges, but those appear to refer to conditions in December, not January. For instance, Patrick Scholes of SunTrust wrote in a December Cruise Pricing Survey released this past week, "Overall trends ticked down slightly--again.”
Scholes used the words "steady-eddie," to describe Carnival Corp., "bad month" for RCL, and "not encouraging" for NCLH.
Overall: "Forward pricing in the Caribbean dipped negative. Europe remains pressured. Alaska remains strong….CCL pricing remains positive and stands out from the group."
In contrast, Gregory Badishkanian of Citi Investment Research wrote in his report earlier this month that his cruise checks were positive. "Our latest cruise checks suggest that the industry remains very healthy. Not only are the Caribbean & Alaska set up to have a solid 2017, but we're seeing a continued rapid recovery of North American-sourced demand for European itineraries. If current trends hold, we'd expect net yields to approach mid-single digit in 2017."
Badishkanian explained that Royal is being more aggressive on pricing to drive volume, and "The strategy appears to be working." Norwegian, he says, will benefit the most from the recovery of North American passengers cruising in Europe.
"Carnival [Corp.],” he added, “is likely very solidly positioned for 2017 from a booking & pricing perspective."

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