Do You Believe the Spokespersons?

[sail7seas]

I keep hearing that cruise lines are getting record future bookings.

All inclusive resorts are filled beyond their expectations.

 

Do you believe them?

 

I don't.

 

I think the bookings are down and their phones are a lot quieter now than they were a year ago!

[james j feller]

SAIL,

 

I think you are right.

 

We got free air from LAS VEGAS for this JULY on the EURODAM and we never got free air for any cruise we have ever done, something is going on.

 

JIM

[kakalina]

I know for a fact they are down. Cancellations are up also. The four year floating deposit might be backfiring on them. As some can just keep postponing until things look better.

[bepsf]

I don't believe it either - at least not for the US market.

When folks investments are down/homes are being foreclosed all around/job security is low and prices for fuel and food is going up, folks don't generally run out to book a cruise.

 

On the other hand, Europeans and Asians are doing quite well in the current market since most cruises are paid for in (devalued) US dollars - So perhaps this is what's keeping the bookings up?

[jhannah]

Here's an old saying: Figures don't lie; but liars figure. ;)

 

Numbers can be spun to picture almost anything in a favorable light. But if there are great offers like free airfare (I've seen these, but none have ever applied to me) and huge discounts, then those who have not been bitten by the latest economic downturn might well have snapped up the bargains ... thus causing an increase in bookings. Doesn't necessarily mean the bottom line is really any better.

[iancal]

I don't know. We are currently keeping an eye out for three potential cruise options...a 7 day from Italy in September, a 10-14 day Caribbean in Feb, and a 7-10 Mexican from the west coast. The prices are not yet going down, in fact the Mexican 7 day prices for March seem to have gone up a little. All based on a balcony guarantee price.

[billroddy]

Now they are trying to boost their shop sales!

 

Father’s Day 10% savings on the Mariner’s Dream™ bed

[hammybee]

CCL and RCL are publicaly held companies. As such, I am going to trust that they can back their numbers up. I am not impressed by the term bookings as we all know these can be as little as $100 and a booking is not the same thing as final payment, which is not the same thing as profit.

 

Having said this, charters are a good thing, especially in this economic enviornment. The risk of filling a chartered ship transfers to the organizer and their financing institution.

 

We will see how this play out over the next 12-18 months.

 

I hope that when the going gets tough, the tough will continue to cruise.

[LAFFNVEGAS]

Let's put it this way I believe that those who say the numbers are up believe this is true because they are being told this but in reality numbers are down. Large Corporations are not going to tell their employees and management about falling sales and doom and gloom. Just like in the car business we are not allowed to discuss how bad it is because it brings moral down.

I have a few friends from the UK that say they have never seen the economy this way and people are saving their money and discount store that never existed are popping up all over. One of our salemens just returned from Europe where his family lives and said that the economy was hurting there as well especially with petro prices but because so many all live together as a family in their family homes that they own free and clear it is not felt as bad but he said everyone is very leary of spending money. So in all honesty I do not see Europeans spending big money on cruising.

I have said before that never ever before have I received so many brochures for European Sailings. Just yesterday in the mail, I got a HAL,Cunnard and Princess. This is a weekly event. I never recieved brochures for Alaska, Caribbean or Mexican Riviera. In addition I received numerous emails a day with many all saying Free Air on European Cruises. Trust me if they were selling they would not be offering Free Air. Of course those cruises prices are padded in order to cover some of the price of the plane tickets;)

Basically these All Inclusive Resort Reps and Cruise Line Reps are saying everything is wonderful and bookings are up all in hopes to spur you to think you better book now;)

[hammybee]

Let's put it this way I believe that those who say the numbers are up believe this is true because they are being told this but in reality numbers are down. Large Corporations are not going to tell their employees and management about falling sales and doom and gloom. Just like in the car business we are not allowed to discuss how bad it is because it brings moral down.

/quote]

 

This is far more than pumping up the crew. CCL and RCL are reporting numbers to Wall Street. Numbers impact the value of the stock. Internal and external auditors have to substantiate those numbers.

 

Holding companies consolidate their numbers across their brands. No way to tell where strength/weakness lies within CCL, given they have 20 cruising brands under their wings. 30% of those brands cater to non North America passengers. Their eggs are in many baskets.

[kryos]

I think the bookings are down and their phones are a lot quieter now than they were a year ago!

I don't know if overall bookings are down, but I do know ... because I've read/heard about it from several independent sources ... that FAMILY vacations are really taking a hit. With the economy tanking, a lot of families are feeling it the hardest. Salaries are being held at the same level as previous years, overtime is being cut, expenses are rising, etc. Thus, a lot of families are cancelling their vacations because they are scared. What will the gas prices do? If I spend this money on a vacation, what will happen if I really need it further up the road for other things?

 

Now, from what I've been told ... at least so far ... other segments of the vacation industry have not been too affected by the economy. I guess that's because the people who make up that segment have already enjoyed their prime wage earning years, have raised their families (so their expenses are lower now), or they are retired and thus not so subject to the pain of the rising price of gas (they don't have to drive long distances to work everyday now).

 

But family vacations are taking a hit.

 

In fact, I read a story in my Sunday paper last week ... about the newest rage in family vacations ... the "staycation" ... a vacation enjoyed either at home, or very, very close to home. The big department stores like Walmart are jumping on the bandwagon by offering all kinds of sales on stuff like home swimming pools and other backyard fun items, barbeques, etc. The whole point is to encourage people to save money on gas by taking their vacations right there at home. In fact, my local paper even sponsored a contest for readers to come up with places where people could have a great vacation within one tank of gas from home. (No, I couldn't enter ... I'm not eligible for reader contests since I work for the paper). They got a record number of entries.

 

So, don't let the cruise lines give you their spin saying everything is hunky dory with their bookings. They're worried ... you'd better believe it.

 

Blue skies ...

 

--rita

[kryos]

Let's put it this way I believe that those who say the numbers are up believe this is true because they are being told this but in reality numbers are down.

My travel agent told me she has never had so many cancellations as she is getting now. She's been in the business for a while, and primarily books cruise vacations.

 

Blue skies ...

 

--rita

[kryos]

I know for a fact they are down. Cancellations are up also. The four year floating deposit might be backfiring on them. As some can just keep postponing until things look better.

I think the cruise lines will start focusing on other markets outside of the U.S., where the economy and currency are still strong. They're gonna realize (if they haven't already) that if they keep their eggs in the U.S. basket, they're gonna be sailing a lot of ships with empty cabins or cabins sold at very steep discounts. And if you think I'm wrong ... just read the news story right on the CC home page ... about RCI's "Total Immersion Cruises." Why do you suppose they are having those cruises? Because they are trying to attract other segments of the market to their ships who would probably not normally sail them.

 

Blue skies ...

 

--rita

[Oceanwench]

Disney World is still packing them in.

I was there a few weeks ago, and it was quite crowded. And merchandise was flying off the shelves in the Disney shops.

I noticed a lot of British tourists - more than I've ever noticed before.

[sail-a-bration]

We are taking our next years 20th anniversary Alaskan cruise this year, because I was afraid next year the fuel cost and cruise prices will be too high. Maybe there are others like me who are taking that dream cruise before they can no longer afford it. My advice, take advantage of the deals while you can.

[twinkletoes4445]

 

I think the bookings are down and their phones are a lot quieter now than they were a year ago!

 

I think they are down...at least bookings from US market.

[bepsf]

Let's put it this way I believe that those who say the numbers are up believe this is true because they are being told this but in reality numbers are down. Large Corporations are not going to tell their employees and management about falling sales and doom and gloom. Just like in the car business we are not allowed to discuss how bad it is because it brings moral down.

 

Lisa--

 

I understand what you're saying, but these are publicly-held companies: There are SEC rules that now prohibit companies from making false statements to the public, in financial filings and to equity-research departments to keep stock ratings high in order to boost share prices - otherwise, the CEO's themselves run the risk of going to jail, as they have to sign-off on these financial statements personally.

 

I don't think Micky's that stupid.

[RedmondCruiser]

I for one have not heard of a cruise line boasting about record bookings. Where does this information coming from ?

If they do have record bookings then the true measure is how are profits ? They may have filled a ship, but at what fare levels ? If the price is low enough then they can always fill the ships, but at a loss.

 

I get the impression that bookings are soft based on the availability of Alaska cabins and the prices, but its only an impression.

[TCF]

I don't believe that the 'spokespersons' are lieing outright. Brian makes a pertinent point when he says that the days of these guys saying whatever they want about the health of the company are long gone...especially if the company is publicly traded and they don't want to end up in jail. That said however, I do believe that there is a lot of "whistling past the graveyard" going on in some of the public pronouncements by the cruise industry.

One has to look at a couple of things. First, CCL, the largest cruise line conglomerate in the industry, released a statement several weeks ago that said they have cancelled all 'new-builds' that are in the design phase...in other words they have decided not to build any new ships in the forseeable future. (CCL does, however, have a couple of new ships already under construction that will continue.)

This is some cause for worry. Companies have to expand to survive and for cruise lines building new ships is expanding! No new ships...no expansion...no reason to buy shares.

Thes second thing is the widely held belief that crusie ships will make money if they fill all the cabins on all the ships. That is not true! Filling ships means that a lines operating costs are covered....what they have to pay for fuel, food, entertainment, labour costs, administration, etc. comes from cabin fares. The profit comes from a number of different revenue streams...casino, bingo, shop leases and sales cut, excursions, cuts from sales of shore-side companies that are promoted on the ship, liquor sales, exclusive on-board restaurants, etc. So, they need to fill the cabins at prices that meet there operating costs...and....leave enough 'disposable income' in the pockets of those occupying the cabins to pour into the various revenue streams!!! And that is the trick!

Will prices come down...maybe...but not right away and not by a lot. IF it gets REALLY tough economically...some of the mass - market cruise lines may be forced to 'mothball' some of the older, expensive, fuel guzzlers, with low numbers of cabins...and fill the new , bigger, more fuel efficient ships at reduced prices.

As for the so-called, 'premium', lines, they will not have the same problems because the demographics of their customers fall into a different economic position than the mass-market cruisers.

It is too early to stop planning and depositing cruises...but it is important to watch the 'big' economic picture and act accordingly.

[mikjr]

I keep hearing that cruise lines are getting record future bookings.

All inclusive resorts are filled beyond their expectations.

 

Do you believe them?

 

If this is true, why is HAL reducing the number of departures from West Coast ports? this has been the topic of another post... that HAL and Princess both are supposedly reducing the number of cruises originating from Southern Calif.

 

I don't believe they would be doing that if they were getting record bookings.

[jtl513]

Disney World is still packing them in.

I was there a few weeks ago, and it was quite crowded. And merchandise was flying off the shelves in the Disney shops.

I noticed a lot of British tourists - more than I've ever noticed before.

And there's lots more Brit shoppers in the Orlando outlet malls, and they're buying LOTS of stuff! Has anyone noticed if HAL sailings are carrying more Brits lately? On our Panama Canal transit there were a high number of Canadians, but that may well be related to the next-to-last port being Vancouver as much as to their dollar vs ours.

[Krazy Kruizers]

We were talking to our TA on Friday and since her office wasn't crowded, she had lots of extra time to just chat. Sitting on desk was over a dozen folders -- all of them from people who were cancelling future cruises. She also had some land cancellations as well in another pile. She said that business is really bad. And part of her income comes from commissions.

 

I do believe that the spokespersons are just saying that everything is looking good just to encourage people to book.

[iancal]

Europe and Asia Pacific are doing very well in comparison to the US economy. And the US dollar is very weak. Carnival Corp. reports in US dollars. Hence, when quarterly numbers are reported, the revenues in foreign currency translated to US dollars will be very good. The real test is what is the growth in each market in constant currency, ie not adjusted for USD. We live in Canada. We are taking more cruises from FLL and buying more in the US because our dollar is par with USD. Several years ago, when our dollar would only buy 60-70 cents US we essentially stopped travelling and buying things in the US. This will be exactly the same with UK tourists.

[kenish]

It would be interesting to know if Carnival and RCCL pay employees, fuel bills, and suppliers in US dollars. If they do, it helps keep their costs low compared to fares if passengers pay in their foreign currency. (Airbus has the opposite problem!)

 

I checked CCL versus RCCL stock price history. Both are in the "consumer discretionary" category and have increasing fuel costs. CCL is doing fairly well where RCCL looks like most travel-related companies (faltering). CCL is more diversified beyond cruises but I don't think that explains everything. I didn't spend time to see if CCL is sitting on a mound of free cash or has lower levels of debt.

[sail7seas]

I think HAL pays ships' crew in U.S. Dollars.