Buckelew says Princess global growth "is cloudy - there's no clarity whatsoever"

[Host Mike]

Princess Cruises has underlined its commitment to the Australian market in the face of challenging global conditions.

Speaking at the Carnival Australia Partnership Summit, Princess chief executive and president Alan Buckelew said the Australian market, although relatively unscathed by economic turmoil, had been hit by the “knock-on effect” of economic instability in North America and Europe.

“People down here were spooked by what they saw,” he said.

He revealed that growth from its traditional North American and European markets had slowed in 2011 and predicted a challenging year globally in 2012.

“It’s cloudy - there’s no clarity whatsoever,” Buckelew said. “In Australia, it’s hard to predict, but we’re cautiously optimistic that it will bounce back up.”

He stressed that the cruise line was committed to growing its business in Australia.

“We are making a big investment in Australia by basing four ships down here,” he said. “We wouldn’t be doing that if we didn’t think there was potential.”

Sea Princess will join Dawn Princess, Sun Princess and Diamond Princess in Australian waters in summer 2013.

Buckelew did not rule out the possibility of a further ship joining them as he stressed that the cruise line would continue to react to market demand.

“It’s for the market to tell us how many ships to send down here,” he said.

http://www.travelweekly.com.au/news/princess-invests-in--cloudy--future

Editor comment:  I'm currently reading "The Great Crash Ahead - Strategies for a World Turned Upside Down" by Harry S. Dent, Jr (c) 2011.  The Princess stock price lately seems to reflect what Alan Buckelew is seeing.  What this means to us is that Princess will be seriously cutting fares on less than full voyages, keeping smaller, older ships in Australia and working to further maximize on board revenue fleet wide.

[RichC]

He revealed that growth from its traditional North American and European markets had slowed in 2011 and predicted a challenging year globally in 2012.

That's almost hard to believe since we were looking for a cruise in Jan, Feb or May for the Caribbean on no particular ship, no particular cat as long as it was a balcony or decent window cabin & after looking around for quite a while we could only come up with a very limited selection. Most ships have already been filled or the remaining cabins were not that great a choice.
Maybe they consider anything other than a complete sell out as a declining market. 

[Host Mike]

I'm thinking that Mr. Buckelew's main concerns may possibly point to disappointing advance Princess Europe cruise bookings this coming summer and higher fuel costs.

[f-mattox]

And concerned he should be; Europe is becoming a less attractive destination by the day--not only has air travel become almost intolerable, but you never know where the next civil unrest may crop up.

[RichC]

The high airfare combined with the devalued dollar sure doesn't make a European trip all that enticing. Even with a bargain deal for a repositioning cruise, it makes for a very expensive vacation.

[NSWP]

Cruise business is booming in Australia. Many lines in addition to Princess now getting ships here, HAL, Celebrity, Royal Caribbean, Carnival.   Plus P&O UK's world cruise ships, inc Arcadia which I am on in March.

As a matter of interest..P&O Australia's oldest tub - Pacific Sun (ex Carnival Jubilee, lanched 1986) is leaving the fleet in July, to be replaced by another ship from the Carnival stable probably.  

[Host Mike]

"Some of the world's biggest cruise lines are encountering choppy waters as prices for their cabins take a dip.

Carnival, which operates ships under brands such as Carnival Cruise Lines, Princess Cruises and Holland America, warns that while bookings for next year are up from past years, they are commanding lower prices.

"Despite the uncertain economic environment, we anticipate a continued slow recovery in yields in 2012," Micky Arison, the chief executive of Carnival, said this week.

The industry uses the term "yields" in discussing how much money cruise cabins generate. Mr Arison did say, however, that the revenue from the company's European, Australian and Asian cruise brands remained steady from a year ago "despite … the geopolitical unrest in the Middle East and North Africa".

Still, experts warn that cabin costs have come under pressure lately and are likely to take time to recover."

http://www.thenational.ae/thenationalconversation/industry-insights/tourism/choppy-waters-for-cruise-lines

[kuldalai]

If Princess had more innovative new itineraries they might generate more business . Who wants to sail the same old tired itineraries year after year .  Secondly if they their marketing were more pro-active and they
(i) updated their website before releasing itineraries (not weeks after) and (ii) were announcing Itineraries further in advance it would help .  As at  December 2011, Princess still do not have all itineraries out to the end of calendar year 2013 .

[Host Mike]

Carnival Corp. reported that net income for the fourth was $216 million, a 13% decrease from $248 million earned a year earlier.

In a conference call with analysts on Tuesday, company CFO David Bernstein said fuel costs jumped 39% percent during the quarter, to $680 per metric ton.

Net ticket revenue yield across the company’s 10 brands increased 8% for the quarter and 2% for the year, Bernstein said. Revenue rose 9% for the year, to $15.8 million from $14.5 million.

Chairman Micky Arison called 2011 “an encouraging year” for the Carnival Corp. brands.

The higher revenue yields, he said, partially offset the increase in fuel prices, but higher fuel prices reduced earnings for the year by $535 million.

Carnival Corp. said it recently implemented a fuel-derivatives program to mitigate a portion of its risk to price spikes.

Bookings during the last 13 weeks, said COO Howard Frank, “show an ebb-and-flow pattern and a closer-in booking window.”

“We reduced prices,” he said, “and consumers have responded.

Booking levels have increased in the last six weeks, said Frank. A level of weakness still can be seen in summer Europe bookings, he added, due mainly to lower consumer confidence and the European debt crisis.

“Wave season will give a better indicator for revenue and yield for the remainder of the year. Our current status is that ticket prices for all brands are slightly higher, with slightly lower occupancies,” said Frank.

“We do believe that while the booking window has come in — not a huge amount but it has come in — at the end of the day we fill up. But we need to manage through that process. Each brand does it differently. It depends on how they see the world,” he said.

Frank said there is little inventory left to sell for first-quarter cruises in 2012, but “there is a significant amount of inventory to be sold” beyond that time.

In Europe, said Frank, bookings in the U.K., the Netherlands and Germany are holding up well but southern Europe, particularly Spain, Italy and to a lesser degree France, is “more of a challenge.”

“It could be air costs,” said Frank, “but the psychology of consumers is of greater concern.”

http://www.travelweekly.com/Cruise-Travel/Higher-fuel-prices-take-bite-out-of-Carnival-Corp--s-earnings/?a=cruise