Good News For Pricing: North America Cruise Capacity Leveling

Cruise Week

In a recent report, UBS Investment Research pointed out that for the 1st time the North American market might see a decrease in cruise capacity for the year 2017.

“CCL announced it will be deploying 2 more ships, 2,124 berth Carnival Miracle and 3,000 berth Carnival Splendor, to sail year-round in China starting in spring '17 and spring '18, respectively,” wrote Robin Farley. "These re-deployments reduce our estimate of North American capacity... with 2017 now going up +0.8%, down from up +1.3% previously....”
While this is still a capacity increase, UBS doesn’t necessarily expect it to last.
“We often know about ship withdrawals only a few months in advance, so the true net increase is typically a couple of % points lower than the gross increase, so we believe 2017 could end up being negative for North American cruise capacity, which has never happened before.”

While that will mean fewer cabins for travel agents to sell, the positive side is that lower capacity should drive higher pricing and agent commission.

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