Royal Caribbean Sees 4th Qtr Profit … But also Weakness in the Caribbean Market

Royal Caribbean, do you want the good news or the bad news first? Good news for Royal Caribbean was that they saw 4th quarter profits as compared to 2005. The bad news is that the Caribbean market is less than encouraging and sluggish at best.

Sluggishness in the Caribbean has been offset by good performance in Alaska and Europe, a scenario also faced by Royal Caribbean’s chief competitor, Carnival Corp., the world’s largest cruise group.

Richard D. Fain, Royal Caribbean’s chairman and CEO, said bookings were “less than encouraging” for the “wave season” – the busiest reservation period of the year for the cruise industry, when many people plan summer vacations.

Hovorka said sluggishness with Caribbean tourism is being seen throughout the leisure industry.

“There’s a broader weakness in discretionary spending for consumers” in the Caribbean, which is seen as an entry level cruise market, Hovorka said. (Bradenton Herald)

What is causing the poor performance in the Caribbean market in the cruise line industry? Other sectors of the cruise lines are performing well. Royal Caribbean has had its share of “missing” passenger incidents; however, it would appear the Caribbean market is being targeted as sluggish. Could a safety issue perception be spreading with regards to the Caribbean that is making people think differently when buy a vacation?

Joe Hovorka, an analyst with Raymond James & Associates, said the stock likely was falling because of a continued weakness in the Caribbean market that has lasted more than a year. (NJ Star Ledger)