Oceanliners cruise to better results
Royal Caribbean, one of the leading global cruise operators, reported profits Friday that beat expectations. Morningstar reports the Wall Street consensus for earnings per share at 72 cents, contrasted with the company’s earnings of 66 cents per share for the same period last year.
The cruise industry has been through stormy times recently, including the global economic downturn and multiple public relations debacles on the high seas, some of them tragic: the capsizing and sinking of the Costa Concordia cruise ship off the coast of Italy, plus tourists stuck on disabled ships without working bathrooms and waves of illness among passengers on ships at sea.
Cruise-industry equity analyst Assia Georgieva at Infinity Research in Boca Raton, Florida, predicts that 2015, by comparison, will be a “stellar” year for leading cruise companies.
“Bookings in the U.S. and Canada are strong,” Georgieva says. “It’s not only the Caribbean and the Bahamas. Alaska is doing well, and at the same time, Carnival and Royal Caribbean have been expanding into China and earning double-digit returns.”
Maritime lawyer Jim Walker, who publishes a popular blog on all things cruise related, is often critical of the industry for its safety and environmental record, and for flagging its ships in minimally regulated countries such as Liberia and Panama.
Walker credits the industry with significant progress cleaning up its image and addressing some egregious consumer issues on board. “Public opinion is a far cry from where it was a couple years ago,” Walker says. “There was a perception that it wasn’t safe to go on the high seas. We’ve seen new leadership in the industry. The industry is doing well in the minds of the public.”
But Walker warns that another wave of high-profile media-genic incidents at sea — involving illness, sexual assault or poor seamanship — could undermine consumer confidence and make would-be cruise passengers wary again.
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