Cruise line fight economic fears with aggressive marketing, discounts


As their stock prices decline, cruise lines are hoping aggressive marketing and discounts will help would-be passengers overcome concerns about the weak economy and indulge in a voyage.

Financial analysts are concerned about rising fuel prices’ impact on profits and the overabundance of capacity on the ships, and that’s driven the stock prices for Carnival Cruise Lines, Royal Caribbean International and Disney Cruise Line parent Walt Disney Co. lower over the last year, said Oivind Mathisen, editor of the trade publication Cruise Industry News.

“These are solid sound companies, the cruise lines,” he said. “They make a ton, but they don’t make as much as they used to, and Wall Street wants more.”

Cruising the Caribbean still remains popular, particularly for first-time cruisers, Mathisen said.

“But the cruise lines have to turn up the promotion machine,” Mathisen said. “There has been a 24 percent increase in capacity in 2008 over 2007, and that will continue. They have to combat aggressive growth in inventory, and softening in the European cruise markets.”

But make no mistake, the cruise lines are profitable. For example, Carnival pulled in $390 million in profits for its second quarter.

And ticket prices are up and passengers are paying, Mathisen said.

Royal Caribbean’s second quarter ended March 31, showed passenger ticket revenues increased from $870,416 in 2007 to $1,037,903 in 2008. Also, on-board spending went from $352,710 for the second quarter of 2007 to $391,182 for the same period in 2008.

With bigger ships being delivered to Port Canaveral and other ports around the world, there is more inventory to sell.

So deals and discounts on Disney, Carnival and Royal Caribbean are plentiful. There is a sense of urgency being created to fill the staterooms, said Geraldine Blanchard, president of Global Tours & Travel, a travel agency in Melbourne.