Despite Challenging Results, RCI Looks Ahead With Optimism
Cruise Week

Results from Royal Caribbean’s third quarter earnings report suggest that Carnival Corp. continues to outperform Royal on a bottom line basis this year.

Royal’s net income declined 44% from Q3 2008 to approximately $230 million, compared to a 15% drop for Carnival Corp. in its third quarter to a net income of $1.1 billion. More worrisome was Royal’s forecast for the fourth quarter, with the main message being that fall/early winter bookings were softer than they would like.

Executives cited various factors leading to weaker fall prices and Christmas premiums being less than usual. "Recent news has been full of reports that the economy is rebounding or is about to rebound," commented Chairman/CEO Richard Fain. "We haven’t seen any evidence of that in our bookings today."

Looking ahead, Royal officials signalled optimism for 2010, as yields for Oasis of the Seas should start bringing up numbers. Royal also improved guidance on fuel expenses, and is calling for a return to yield increases in the first quarter of 2010.

With that in mind, Royal’s fourth quarter might just be a speed bump in the general recovery that characterizes the rest of the year. "I think we are well positioned to ride out what remains in this cycle and to take off when the rebound becomes more tangible," said Fain.

Royal made it clear that agents and cruisers should not expect much discounting on Oasis in the near-term. "With respect to the amount of capacity that is for sale, we are definitely protecting our pricing position, because we know the value proposition that exists here, and we’re simply not prepared to engage in some of the discounting tactics that we see in the cruise space,'

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