Published on Friday, July 27, 2012

Royal Caribbean suffers in Europe

Pressure to discount cruises in Europe combined with the Costa Concordia disaster have taken their toll on Royal Caribbean Cruises.

The cruise line, which also owns Celebrity Cruises and Azamara Club Cruises, reported a loss of $3.6 million for the second quarter, in sharp contrast to the $93.5 million it reported for the same period last year.

Miami-based RCCL said "larger than anticipated discounting" had been needed in Europe, although it was difficult to know how much was down to the Concordia disaster and how much was due to the tough economic climate.

"Our sense is that the former is no longer having a major impact on our bookings especially amongst experienced guests," said chief financial officer Brian Rice.

"However, the timing of the incident left a big gap during our peak booking period and filling that gap is disrupting our normal booking patterns."

Chairman and chief executive Richard Fain added: "The steady drumbeat of negative news emanating out of Europe is certainly having an impact.

"As a result, we are seeing pluses and minuses in the different geographical markets - North America is holding up reasonably well; Asia is a big plus; but Europe is a pretty consistent minus.

"Overall we have seen about a 100 basis point drop in our yield projections, but we expect to offset over half of this decline with lower spending."

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