How will P&O weather the coming financial crisis?

[pennib]

With today’ gloomy news about the finances of all of us how will P&O find themselves?

I ask as back in 2008 when we had the last real financial crisis, we were on Ventura’s maiden Christmas and New Year jolly around the Caribbean. There had been so many cancellations by people unable to pay the final balance for the cruise that cabins were being sold off at crazy prices which unfortunately attracted a few undesirables to the extent there were fights and other unsavoury goings on. So will the same happen this year? And how would this affect the introduction of Arvia?

[wowzz]

6 minutes ago, pennib said:

With today’ gloomy news about the finances of all of us how will P&O find themselves?

I ask as back in 2008 when we had the last real financial crisis, we were on Ventura’s maiden Christmas and New Year jolly around the Caribbean. There had been so many cancellations by people unable to pay the final balance for the cruise that cabins were being sold off at crazy prices which unfortunately attracted a few undesirables to the extent there were fights and other unsavoury goings on. So will the same happen this year? And how would this affect the introduction of Arvia?

Carnival's balance sheet is relatively healthy,  so no impact at all really. 

And Arvia is so far advanced that nothing will  affect her introduction.

[Harry Peterson]

Interesting question, and interesting subject.  Impossible to predict, though.  
 

I don’t think the full impact of all the tax increases, energy cost increases and fuel increases, coupled with a predicted 10% inflation rate, has yet been appreciated - and may not be until the winter and a likely further 40% or so on energy bills.

 

Cruises are going to be the very last thing on the minds of those who can barely make ends meet, but inevitably holidays are going to be one of the first things to go.

 

Expect lower prices.

[Neil_c]

Having just received an Email from our energy provider with the increase in our Direct Debit, I am thinking it might be cheaper to live on a cruise ship over the winter! 35 day cruise already booked

 

Neil

[Harry Peterson]

Just now, Neil_c said:

Having just received an Email from our energy provider with the increase in our Direct Debit, I am thinking it might be cheaper to live on a cruise ship over the winter! 35 day cruise already booked

 

Neil

You may be right there!  Maybe that’s the line they should push:

 

”Hit by food and fuel price woe?  Escape it all with P&O.”

[Josy1953]

I expect that there will be little or no immediate affect but as times start to get tough then there will be some people who will have to cut down on spending and holidays are an easy way to cut back.

A lot of us on this forum are part of the generation that have been able to save and have very good pension incomes and are in position where we will still be able to continue pretty much as we are now.  I do feel however that there will be some people who will have to cut down on spending and holidays are an easy way to cut back.

I know that we had our hard times when we were young and had mortgages etc, I heard that the increase of interest rate could go up to 8%  When we bought our first house in January 1980 we started paying at 15% interest.

[yorkshirephil]

What financial crisis? interest rate increase = More holidays. I am sure that philosophy won't suit everyone but you have to do what you have to do. 

[zap99]

23 hours ago, pennib said:

With today’ gloomy news about the finances of all of us how will P&O find themselves?

I ask as back in 2008 when we had the last real financial crisis, we were on Ventura’s maiden Christmas and New Year jolly around the Caribbean. There had been so many cancellations by people unable to pay the final balance for the cruise that cabins were being sold off at crazy prices which unfortunately attracted a few undesirables to the extent there were fights and other unsavoury goings on. So will the same happen this year? And how would this affect the introduction of Arvia?

You are right. Keep the undesirables away and their unsavoury goings on behind closed doors.🤣

[Harry Peterson]

3 minutes ago, yorkshirephil said:

What financial crisis? interest rate increase = More holidays. I am sure that philosophy won't suit everyone but you have to do what you have to do. 

 

I'm not sure you're going to be able to get a great deal more than 1.5% though, and with inflation expected to top 10% that's a big loss on any cash savings!  Best spend it quick then?

 

Seriously, though, any sustained period of inflation is bad news for most people.  We've seen it before, with increases of around 25% pa at one point, but incomes were keeping up with it. They're not now.  A lot of pensions are capped at 5% too.  Damn Putin!

[yorkshirephil]

2 minutes ago, Harry Peterson said:

 

I'm not sure you're going to be able to get a great deal more than 1.5% though, and with inflation expected to top 10% that's a big loss on any cash savings!  Best spend it quick then?

 

Seriously, though, any sustained period of inflation is bad news for most people.  We've seen it before, with increases of around 25% pa at one point, but incomes were keeping up with it. They're not now.  A lot of pensions are capped at 5% too.  Damn Putin!

There are plenty of accounts around with, albeit most fixed that are above 2% and they will rise. I am expecting 3% by year end. We are in an ideal situation to take advantage of higher rates as our travel budget is much higher than our day to day living costs so unless cruise prices rise massively we will be OK. We have every intention of spending it reasonably quickly. 

[Harry Peterson]

3 minutes ago, yorkshirephil said:

There are plenty of accounts around with, albeit most fixed that are above 2% and they will rise. I am expecting 3% by year end. We are in an ideal situation to take advantage of higher rates as our travel budget is much higher than our day to day living costs so unless cruise prices rise massively we will be OK. We have every intention of spending it reasonably quickly. 

Like you, I'm expecting increases in rates - so I'm sticking with a variable 1.5% for now. Not keen on fixing at today's rates.  Not keen on saving that way at all, really, because whatever you do your money's going to worth a lot less in a year's time! Good argument for spending on cruises though. Or other purchases.

 

Save 10% - buy now.  10% more next year!

[yorkshirephil]

[jeanlyon]

3 hours ago, yorkshirephil said:

There are plenty of accounts around with, albeit most fixed that are above 2% and they will rise. I am expecting 3% by year end. We are in an ideal situation to take advantage of higher rates as our travel budget is much higher than our day to day living costs so unless cruise prices rise massively we will be OK. We have every intention of spending it reasonably quickly. 

Agree, I keep opening 1 year fixed rates with Atom and Tandem banks.  Latest is 2.05% for one year and it will continue.

[Denarius]

A very good question. My thoughts:

P&O is part of Carnival Corp and its survival depends on the performance of that group rather than its own. But how much loss Carnival would allow P&O to rack up before it took remedial action is anyones guess.

As regards the cruise market in general, those who stand to be most affected by the expected economic downturn are probably retirees whose only income is the state pension and younger people with mortgages or rent to pay. The former do not tend to cruise, but the latter are very much the emerging cruise market - the "family market". Cruise lines which target the latter group are probably the most vulnerable to the downturn. The people less affected are likely to be affluent retirees with inflation linked private/company pensions who no longer have mortgages; a group which used to represent a majority of cruise passengers and which still do for some companies. These companies are likely to be less affected. Indeed, they may even get a boost as those people spend some of their savings before their value is eroded by inflation.

Edited May 6, 2022 by Denarius
typo

[yorkshirephil]

12 minutes ago, Denarius said:

The people less affected are likely to be affluent retirees with inflation linked private/company pensions who no longer have mortgages; a group which used to represent a majority of cruise passengers and which still do for some companies. These companies are likely to be less affected. Indeed, they may even get a boost as those people spend some of their savings before their value is eroded by inflation.

We fall into that group as probably quite a few here do too. With that in mind it may be wise for P&O to consider this when deciding whether to concentrate on the bigger family ships or to ensure Aurora and Arcadia are kept for us oldies. Maybe that applies to the whole of the Carnival group for the next few years.

[tring]

2 hours ago, yorkshirephil said:

We fall into that group as probably quite a few here do too. With that in mind it may be wise for P&O to consider this when deciding whether to concentrate on the bigger family ships or to ensure Aurora and Arcadia are kept for us oldies. Maybe that applies to the whole of the Carnival group for the next few years.

 

That was my immediate thoughts as I read the start of this thread.  Perhaps Carnival have not chosen the right time to market for families and other younger people and work on shaking off their previous passenger base.  

[bobstheboy]

Retirees like me and many on here will not fill all the ships. They still need salaried, family customers and they will be feeling the pinch with huge rises in the cost of living to come.

 

Happy days for those who have a large surplus each month, with lots of late deals, but others will struggle. Current cruise prices are very cheap, but can it continue ?

[yorkshirephil]

5 minutes ago, bobstheboy said:

Retirees like me and many on here will not fill all the ships. They still need salaried, family customers and they will be feeling the pinch with huge rises in the cost of living to come.

 

Happy days for those who have a large surplus each month, with lots of late deals, but others will struggle. Current cruise prices are very cheap, but can it continue ?

I think you are right Bob, but we could help to fill Arcadia and Aurora, I don't have any issues with the big ships but their itineraries are same old so apart from an odd cheapy to the Fjords or winter Caribbean/Canaries it would likely be the older ships for us. One advantage P&O have now is that they have become a budget cruise line (IMHO) so some may desert the expensive lines until things pick up, in the same way they do with supermarkets. Then on the other hand?

 

[snaefell]

22 hours ago, zap99 said:

You are right. Keep the undesirables away and their unsavoury goings on behind closed doors.🤣

Reminds me of the previous crisis when I read reports from regular Cunard clients that the explosion of cheap offers in newspapers had Transatlantic crossings resembling a holiday in Benidorm!😂😂

[molecrochip]

19 hours ago, tring said:

 

That was my immediate thoughts as I read the start of this thread.  Perhaps Carnival have not chosen the right time to market for families and other younger people and work on shaking off their previous passenger base.  

Except the decision was taken in, say, 2017 and no one predicted a pandemic.

[crompton21]

14 hours ago, molecrochip said:

Except the decision was taken in, say, 2017 and no one predicted a pandemic.

I think that Britannia was ordered in 2011 and Iona in 2016, assuming the plan had to be formulated first it really doesn’t appear to be a recent change of strategy.

[yorkshirephil]

14 hours ago, molecrochip said:

Except the decision was taken in, say, 2017 and no one predicted a pandemic.

That is correct, but as things have now changed maybe a new/temporary plan needs to be formulated and likely is. We can only speculate as to whether the current recession will get worse and by how much and for how long. A companies ability to weather the storm will likely be determined by their planning. There is little doubt that some big names will fall by the wayside over the coming months. Carnival has a significant dept and global interest rates are heading upwards as is energy two of the things that tend to imact the travel industry.

[Son of Anarchy]

On 5/6/2022 at 1:57 PM, Neil_c said:

Having just received an Email from our energy provider with the increase in our Direct Debit, I am thinking it might be cheaper to live on a cruise ship over the winter! 35 day cruise already booked

 

Neil

With you on that one.  A couple of weeks ago we managed to re-book our Jan Azura cruise - £629pp for two weeks.  I wanted to b2b with the one before it for the same price, but The Ole Lady wouldn't have it 🙁

[molecrochip]

On 5/8/2022 at 9:03 AM, yorkshirephil said:

That is correct, but as things have now changed maybe a new/temporary plan needs to be formulated and likely is. We can only speculate as to whether the current recession will get worse and by how much and for how long. A companies ability to weather the storm will likely be determined by their planning. There is little doubt that some big names will fall by the wayside over the coming months. Carnival has a significant dept and global interest rates are heading upwards as is energy two of the things that tend to imact the travel industry.

But enough cash that they could pay that Pandemic debt off. They just chose not to.

 

And my 2017 was just an example to make the point that the ship if market was decided long before the Pandemic. All our choices may have been different if we had forseen a 2 year pandemic.