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Full speed ahead for cruise ship industry

Vacation: Princess looks ahead to smooth sailing as market shows improvement

Posted: December 21, 2010 10:10 p.m.
Updated: December 22, 2010 4:10 a.m.

Demand for cruises is picking up, and forecasts predict an even stronger 2011. Carnival cruise lines achieved an 11-percent net-income increase. Locally based Princess Cruises, which is part of the Carnival group, is offering several new cruises.


With economic indicators showing signs of improvement in the second  half of 2010, demand for cruises is picking up
Forecasts call for an even stronger 2011, as consumers begin planning vacations they once postponed when cautious spending guided customers vacation decisions.

Ben O’Toole, analyst for HSBC Global research,  said that Carnival Corp. & PLC and Royal Caribbean Cruises Ltd. should see an uptick in the demand for cruises. O’Toole also reported interest was continuing to build in Europe.

Locally based Princess Cruises is part of Carnival, a global cruise line company.

“All-in-all, 2010 was an encouraging year with improved business trends from a gradually recovering economy,” said Micky Arison, Carnival chairman and CEO. “We achieved an 11-percent increase in net income on 7-percent higher revenues.”

Arison reported that booking volumes continued to be strong, and prices for those bookings are higher than last year.
Based on these booking trends, the company forecasts a 3- to 4-percent increase in “constant dollar” net revenue yields for the full year 2011. Use of constant-dollar values allows the company to compare performance, and account for inflation, from one year or period to another.

Princess Cruises
Princess Cruises announced several cruise dates in 2011 for passengers traveling to South America and Europe, which will feature best-selling maritime author John Maxtone-Graham on board. His on-board presentations include stories of famous ocean liners, a dramatic recreation of the Titanic’s fateful final night and tales from the historic explorations of the North and South Poles.

“John Maxtone-Graham nearly always commands a full house when he speaks on board,” said Jan Swartz, Princess Cruises executive vice president. “His incredible knowledge of the history and lore of cruising is always fascinating.”

Maxtone-Graham has chronicled the full history of ocean travel from the early days of passenger shipping to today’s modern cruise vacation, and written books such as “Titanic Survivor” and about the famed “SS Normandie.”

For fishing enthusiasts, Princess announced in December that it is introducing new tours just for fishermen (and women) as part of its 2011 season.

The 14-day vacation includes special excursions for anglers, with opportunities to cast their lines in some of Alaska’s premier fishing spots in the Inside Passage and river fishing on two of the state’s rivers.

“Fishing is such an iconic part of the Alaska experience that it made sense to offer a special tour especially for those who want to focus their time on the sport,” Swartz said.

In November, the cruise line company introduced several new cruise tours.

The first are European cruises, providing passengers the opportunity to explore ancient Petra and the Dead Sea while on a 16-night cruise to Israel and Egypt. Also offered is a 20-night cruise to the cities along the Rhine River. The excursion is combined with sailing to Scandinavia and Russia.

2011 forecasts
Carnival expects to increase net revenues by approximately 2 percent compared to first quarter of the prior year, with rising fuel costs affecting revenues. Fuel costs for the first quarter are expected to increase $25 million compared to the prior year.

“We estimate our cash from operations will exceed $4 billion in 2011 while our capital investment commitments decrease to $2.6 billion,” Arison said.

Taking all the above factors into consideration, the company forecasts full year 2011 earnings per share to be in the range of $2.90 to $3.10, compared to $2.47 for 2010. And as the year progresses, the company expects improved net-revenue gains.

“We are optimistic these positive trends are an indicator of a strong wave season, our heaviest booking period, which begins in early January,” Arison said in a statement.


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