04 November 2009

Royal Caribbean suffers summer profits dive

The company behind Oasis of the Seas, the world’s largest cruise ship, saw peak summer profits almost halve.

Third quarter net income for Royal Caribbean Cruise Lines was $230.4 million compared to $411.9 million in the same period last year.

Revenues were $1.8 billion, versus $2.1 billion in the third quarter of 2008.

Net yields were down by 16.5%, "somewhat better" than the company's previous guidance of down approximately 18%.

The company projects net yields to decline 7% to 8% in the fourth quarter and approximately 14% for the full year.

Chairman and CEO Richard Fain said: "Like many other travel companies, we saw more strength than we expected during our peak season but have been experiencing more pricing pressure on some of our traditionally softer fall season sailings.

"Overall though, the business environment is largely unchanged and stable.

"We expect the yield deficit to continue to improve in the fourth quarter and we remain optimistic that 2010 will bring year-over-year yield improvement."

Booking volumes since mid-September were up about 40% compared to same period last year, with favourable comparison for cruises departing both in the fourth quarter and next year.

"While the pricing environment is still not what we'd like it to be, we're pleased to see solid growth in our order book and a rapidly diminishing gap in year-over-year booked volume comparisons," said chief financial officer Brian Rice.

"During the fourth quarter, we historically source a disproportionate number of our guests from Florida.

"As a consequence of the weaker economy in the state, we do not anticipate the same strength of close-in bookings in the fourth quarter as we saw in the third quarter."

New ships, Royal Caribbean's Oasis-class and Celebrity's Solstice-class vessels, continue to command significant premiums and volumes. Oasis of the Seas enters service on December 1. by Phil Davies