Micky Arison: Cruise prices have bottomed
Better book soon if you're hoping to lock in one of the super deals on cruises that have been floating around the marketplace in recent months. Executives at industry giant Carnival say prices may finally have bottomed.
"We have started tweaking pricing on a variety of brands," Carnival Corp. CEO Micky Arison told Wall Street analysts today during a conference call to discuss second quarter earnings. "Pricing is being taken up."
Cruise lines began dropping prices drastically late last year in reaction to a sharp slowdown in bookings brought on by the economic crisis, and fares for many itineraries remained unusually low through the winter and into the spring.
Carnival -- the parent company of more than half a dozen brands including Carnival, Holland America, Princess Cruises and Cunard -- says the prices it's getting for cruises in the third quarter still are substantially below the level of a year ago. Prices for fourth quarter cruises are down year-over-year, too. But in recent weeks there's been an improvement in pricing off the lows as demand for cruises returns.
Carnival says that since March, booking volumes for the second half of 2009 are running 26% ahead of a year ago -- helping to close a big deficit in second half bookings caused by the economic slowdown. Even with the surge in bookings, though, the overall amount of business the company has on its books for the second of half of 2009 remains three percentage points lower than this time a year ago.
Carnival COO Howard Frank told analysts the downturn last fall was so severe that the first reaction of revenue managers at the various Carnival brands was to drop prices drastically. "We've never experienced a cycle like this before," he said, citing double-digit declines in revenue per cabin. "The reaction by the revenue management people is typically to get the business first (by discounting), even if they leave something on the table."
With the ships now filling up -- albeit at lower prices -- revenue managers are free to begin reversing the discounting, Frank noted.
"Since the end of March everything is trending upward," Arison added. "And we're encouraged by that."