Good Year?

This year was promising to be another good year for the industry. Braking the earnings growth, however, are rising fuel costs, a softer Caribbean, lagging ticket prices and bookings, while onboard spending may be leveling off too.

After three years of increased earnings in Q1, both Carnival Corporation and Royal Caribbean Cruises reported lower earnings for this year’s first quarter, although they met or exceeded expectations.

Bookings and pricing may also be influenced by oil prices, which for consumers, mean more money for gas or heating oil and less for vacation. In addition, it has been a relatively mild winter in the Northeast, while cold weather tends to drive people to book more warm weather cruises.

The combination of a variety of factors means that 2006 could be a more challenging year, whereas the industry spent the last few years recovering from 9/11 and did increasingly well despite incidents of viruses, hurricanes and fuel costs.

This year may not be another record-breaking year, or even a stellar year, but still promises to be a solid year. With good forecasts for Q2 and Q3, it will be Q4 again that will decide how solid 2006 will be.

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