Costa Talking to Royal and Carnival

Costa Crociere is talking to two North American suitors, Royal Caribbean Cruise Line (RCCL) and Carnival Corporation (CC).

While the talks are in the preliminary stages, according to Costa, it is presumed that either RCCL or CC will enter into an agreement with Costa, based on minority ownership in the Italian line.

The advantage to Costa could be an infusion of capital plus a streamlining of its North American operations.

Since 1988, Costa’s sales in North America have declined steadily from 45 percent of overall cruise revenues to 22 percent in 1994. According to Costa’s financial report for the first half of 1995, North American sales were 21 percent of overall sales revenues.

Hence, it may make sense for Costa to look for a parmer in the North American market who could take on the sales and reservations functions, for instance.


In the meantime, Costa’s strength in Europe as well as in South America would be an asset both to RCCL and CC. Costa generated 67.7 percent of its cruise revenues in Europe and 11.3 percent in Argentina and Brazil during the first half of 1995.

In addition, Costa has considerable experience in the Far East with Pearl Cruises, which the company recently closed down, which could benefit RCCL’s venture into the Far East with the Sun Viking.

In addition, Costa is also pioneering modern-day cruising to Cuban ports with the Costa Playa sailing out of the Dominican Republic with European passengers.

RCCL has become increasingly international and generates about 10 percent of its cruise revenues from foreign markets. So investing in Costa may be a natural evolution for RCCL.

CC meanwhile has twice tried to enter the European market, first with Club Med, and secondly with Epirotiki Cruise Line. Both attempts failed. But Costa would offer Carnival the solidity that neither of the former venture partners had.

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