Carnival Splendor: Expect higher fares this summer
Higher fuel prices were the thorn in Carnival Corp.'s side during the first quarter, as the cruise operator's profits fell 33 percent. Carnival's net income was $175 million, down from the same period last year when the company earned $260 million. Carnival's revenues did climb 8 percent to $3.1 billion, from $2.86 billion during the same time last year. In all, Carnival did beat Wall Street expectations, perhaps one reason why Carnival is hiking fares up to 5 percent on summer sailings.
Carnival Corp. Chairman and CEO Micky Arison indicated that operating results in the first quarter 2010 were better than the company’s December guidance due to a combination of better-than-expected net revenue yields and lower-than-expected unit costs. "We were very encouraged by our results as pricing continued to rebound off last year’s lows and we returned to top line revenue growth after a challenging 2009," Arison said. "During the quarter, the booking environment continued to improve for our North American brands and we achieved stronger than expected pricing on close in bookings. In addition, we continue to realize significant cost savings worldwide, though the strength of our performance was masked by rising fuel prices."
The future looks brighter. Since the start of the calendar year, Carnival notes, booking volumes for the remaining three quarters are running ahead of the prior year with prices significantly higher than last year’s discounted levels. Wave season has been good for Carnival. "We have enjoyed a very robust wave season, setting booking records during the quarter," Arison said. "Wave season bookings were fueled by attractive pricing in the marketplace and pent-up demand from those who postponed vacations last year. As a result, pricing continues to increase, particularly for the peak summer season. Having achieved significantly higher pricing, we expect revenue yields for the remaining three quarters of the year to increase approximately 3 to 4 percent (in constant dollars) compared to last year. Vacationers should take advantage of the current low rates now as prices are going up."
He's not lying. In late February, Carnival announced it would be raising prices on summer sailings by up to 5 percent. USA TODAY notes some of these increases. Two examples: an outside cabin on the seven-night voyage of the Carnival Splendor out of Los Angeles scheduled for July 18 was priced at $909 per person on February 24. As of last week, the price had risen 5 percent to $959 per person, and now the line moved the price up another 3 percent to $989. And, an outside cabin on the three-night voyage of the Carnival Imagination out of Miami scheduled for July 16 was priced at $399 per person as of February 24. Now, it's up to $419.
Carnival spokesman Tim Gallagher tells USA TODAY that the examples are representative of what has occurred across the line's 22-ship fleet.