Analyst: Caribbean Cruise Pricing Stabilized

Tim Conder, a cruise analyst with A.G. Edwards, writes in his most recent industry report that pricing in the Caribbean has stabilized and is showing continued improvement. Meanwhile, Alaskan pricing continues to founder, while Europe remains the strongest geographic market. "Caribbean pricing appears to have stabilized and continues to slowly improve," writes Conder, who makes the case that if Carnival is stabilizing, the rest of the industry also will fall in line. Carnival began cutting rates on its Caribbean inventory last May after pricing was hurt by the 2005 hurricane season, Conder explains. Pricing should remain favorable if there is a calm hurricane season, but the National Oceanic and Atmospheric Administration held its 2007 Atlantic Hurricane Season Outlook meeting earlier this week and predicted that three to five major hurricanes could hit the U.S and the Caribbean between June and November. Conder also writes that the period now entered (mid-April through August) typically represents 35 percent to 45 percent of cruise bookings, and that pricing is usually flat to up moderately. Meanwhile, A.G. Edwards reports that cruise demand was up in North America in 2006 to 10.2 million passengers. Conder continues to make the case that cruise vacations offer 25 percent to 35 percent better value than land-based vacations in both North America and Europe. "Given that major land-based destination markets like Orlando," writes Conder, "raised prices 6 percent in 2005 and 7 percent to 8 percent in 2006, consumers may look for substitutes, suggesting that cruise operators could see increased demand."

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