Analysis: Mexican Riviera Cruise Forecast Still Cloudy
August 23, 2010 By: Susan Young Travel Agent
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Royal Caribbean's Mariner of the Seas |
A few months ago, West Coast cruising to the Mexican Riviera took a hit from cruise lines who decided their ships could be better utilized at higher revenue fares elsewhere. Agents believe a “perfect storm” of factors contributed to the decision.
Those included a steadily increasing capacity of berths dedicated to those voyages; increasing consumer concerns over Mexico’s security; high unemployment, loss of jobs and a sour economy; as well as consumer over-familiarity with western Mexico’s port options.
Essentially, the losses include these. In January, Royal Caribbean’s Mariner of the Seas will sail out of southern California, leaving the region for more lucrative revenue cruises in Europe and Galveston, TX. Norwegian Cruise Line will move the Norwegian Star out of southern California and into Tampa for the winter 2011 season. And Carnival Cruise Lines has already repositioned Carnival Elation to Mobile, AL, although the line still has two ships operating year-round Mexican Riviera cruises and a third based in southern California much of the year.
But several months beyond the shock of some of those announcements, Travel Agent wanted to know what impact the announced changes having on agents’ bookings and client demand? What’s the mood for potential California cruisers? What’s the latest on the region’s economy? And what impact, if any, is the violence south of the border having on Mexican Riviera bookings?
Pricing and Yield Improvements
Carnival’s repositioning of Carnival Elation and consumers who are now apparently booking Carnival in lieu of other lines who plan to move ships out of the market may be having a positive impact. “What we’re seeing is some improvement in terms of pricing and yields for our ships on the West Coast – Carnival Paradise, Carnival Splendor and Carnival Spirit,” Terry Thornton, Carnival’s senior vice president for marketing planning, told Travel Agent.
Thornton says the apparent right-sizing of capacity is beginning to take hold, but also cautions that there is still a bit of a downdraft in terms of economic conditions in California.
While the entire U.S. is still in the midst of an economic slump, California is one state that’s still getting hit harder than at least 46 others, according to the most recent RealtyTrac monthly foreclosure report. In July 2010, one in every 200 homes in California was in foreclosure. Neighboring states were even worse. One in every 167 Arizona homes was in foreclosure, while, taking the top spot in the nation was Nevada, with one in every 82 homes in foreclosure.
Many state and local governments also have sizable budget shortfalls; that’s affected some workers’ take-home pay. “We have many government workers in our community who have had to endure unpaid furlough days for a long time now,” acknowledges Craig Nash, co-owner Nash Travels, Elk Grove, CA. “It is not clear when that will end, either. That naturally affects their choice of vacation.”
Travel Agent also pulled summer unemployment and job loss numbers from the U.S. Bureau of Labor Statistics. These too remain discouraging. The Western region’s unemployment was the highest in the nation for June at 12.3 percent; the overall U.S. unemployment rate was 9.5.
In addition, between June 2010 and July 2010, California had the largest month-over-month employment loss of 27,600 jobs. “California’s economic situation certainly has an impact on consumer spending,” believes Carrie Finley-Bajek, owner, Cruise Holidays, Mission Viejo, CA.
Security concerns south of the border also may be deterring some travelers, although Mexico continues to do everything possible to demonstrate that the situation is safe for visitors to cruise ports in the region. Thornton says: “We cannot seem to shake the tragic and bad news in Mexico.”
Recent media reports about violence in Mexican border towns have caused increased concern from travelers considering vacations in Mexico, according to Finley-Bajak. She says “crimes in border towns have created a ripple effect on consumer buying of Mexican resort vacations and cruises.”
From another perspective, “yes, some clients have asked about crime in Mexico [but others] have said they have already been to Mexico enough times … and want something different,” says Nash.
In the 1970s and 1980s, “The Love Boat” television show gave Americans a snapshot of the Mexican Riviera and an exotic world they might aspire to visit some day. But today, Mexico’s West Coast cruise destinations are highly familiar to mainstream cruisers, many repeat visitors. Interestingly, the “Love Boat” line, Princess Cruises, also has eliminated more than a dozen Mexican Riviera sailings this year and next.
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