Costa Concordia tragedy hits Royal Caribbean bookings

The impact of the Costa Concordia tragedy is being felt across the cruise industry and not just by Costa Crociere and its parent Carnival Corporation. Royal Caribbean Cruises Ltd. (NYSE, OSE: RCL) today reported fourth quarter and full year 2011 results. The company also provided an initial outlook for 2012 that said that bookings had been hit by the Costa Concordia tragedy

Royal Caribbean said that, in the wake of the tragedy it curtailed marketing activities as did most cruise lines and travel agencies.

"We believe that most observers and potential guests understand that cruising is safe and that this incident was a very rare anomaly in an otherwise reliably safe vacation. But in the near term it has a significant impact on our bookings," said the cruise line.

Royal Caribbean reports that there has been no material change in cancellation activity which has remained within normal levels, but says that new booking activity has been hurt.

"Overall booking volumes from North America have fallen by low to mid-teen percentages versus same time last year for the last few weeks," said the company. "In Europe, where media coverage has been more extensive, the decline has been higher, though results vary significantly by country. In aggregate the company's other markets, including Asia/Pacific and Latin America are down slightly. For the year as a whole, notwithstanding the recent slowdown, booked load factors and pricing are still higher than they were at the same time last year. This reflects the very robust starting position the company was in before the incident.

"The impact on bookings has been greatest in the first three quarters and wanes as the year progresses. On the other hand, the first quarter also has more of its capacity booked making it less affected by changes in booking patterns. Spring and summer sailings are showing the largest declines in new bookings, while longer term bookings remain healthy. In addition, the company noted that the impact is much greater for first time cruisers compared to experienced cruisers. This reflects the greater knowledge experienced cruisers have about cruise vacations and ships.

Including the contribution from distribution changes and deployment initiatives noted above, the company currently anticipates yield improvement for the full year 2012 to be in a range between 1% and 5% on a Constant-Currency basis and between flat and 4% on an As-Reported basis versus the prior year.

"Already, bookings have started to recover, particularly in North America and the company does not expect that this event will have a significant long term impact on its business."


FOURTH QUARTER AND FULL YEAR 2011 RESULTS

Royal Caribbean says 2012 ended on a strong note with good bookings and cost control more than compensating for the increased cost of fuel and foreign exchange impacts.

Results For the Full Year 2011:

  • Net income was $607.4 million, or $2.77 per share, versus $515.7 million, or $2.37 per share, in 2010;
  • Net Yields increased 2.4% on a Constant-Currency basis (+4.1% As-Reported.)
  • Net Cruise Costs ("NCC") excluding fuel increased 1.3% on a Constant-Currency basis (+2.3% As-Reported.)



Results For the Fourth Quarter 2011:

  • Net income was $36.6 million, or $0.17 per share, versus $31.9 million, or $0.15 per share, in 2010;
  • Net Yields increased 3.5% on a Constant-Currency basis (+3.2% As-Reported.)
  • Net Cruise Costs per APCD ("NCC") excluding fuel increased 3.7% on a Constant-Currency basis (+3.6% As-Reported.)



"The year ended on a strong note which more than offset the rise in oil prices and the strengthening U.S. dollar," said Brian Rice, chief financial officer. Rice continued, "For the year as a whole, adjusted for fuel price increases and geopolitical events, our earnings would have meaningfully exceeded the midpoint of our January 2011 guidance."

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February 2, 2012