Cruise companies reducing Mediterranean presence

Ongoing instability in the Mediterranean region is prompting cruise companies to trim capacity there, with the latest example coming from Celebrity Cruises, for summer 2017.

Celebrity said it will keep the 2,850-passenger Celebrity Equinox in Miami next spring after it completes its winter cruise schedule, instead of returning to the Mediterranean, where this summer it will operate cruises out of Athens and Barcelona.

The move will draw down Celebrity’s Europe deployment next summer from five ships to four and give it a year-round ship in the Caribbean for the first time since 2010.

Other companies also plan to move capacity out of the Mediterranean and into the Caribbean.

Carnival Corp. in a June 28 conference call said it expected a 10% capacity reduction in the Mediterranean region next year, and a 5% increase in Caribbean capacity.

“We are rebalancing our portfolio to optimize the current demand environment,” Carnival Corp. CEO Arnold Donald said.

The moves come as the Mediterranean was again rocked, this time by a failed coup attempt in Turkey and the truck massacre in Nice, the third major terrorist attack in France in the past nine months.

Cruise lines had already largely stopped calling in Istanbul after a series of terrorist attacks there this year. After the coup, many cruise lines also suspended calls elsewhere in Turkey, such as Kusadasi.

Most are in a wait-and-see mode, such as Carnival Cruise Line, which replaced the Carnival Vista’s calls in Kusadasi on July 17 and 20 with sea days and said it will evaluate future calls there “in the coming days.”

Some travel agents said client demand for Europe remains healthy.

“For us, our European business is still very strong,” said Jeffrey Bateman, vice president of operations at Crown Cruise Vacations in Princeton, N.J.

Bateman said most of his clients on Equinox cruises that had been scheduled for Europe next summer had rebooked other Celebrity European cruises.

Prices have been softening for Europe, according to a survey by SunTrust Robinson Humphrey analyst Patrick Scholes, who said advertised prices for cruises in southern Europe in June fell 1.3% year over year, compared to a 7.4% increase in May.

Frank Del Rio, CEO of Norwegian Cruise Line Holdings, said cruise lines remain reluctant to drop Europe in the summer.

“Analysts ask me, why don’t you put the ship in the Caribbean in the summer instead?” he said. “Well, because even a bad year in Europe is better than a good year in the Caribbean, especially in the summer.”

In 2014, a mass migration of ships from Europe to the Caribbean led to a pricing bloodbath. Donald said that’s unlikely in 2017, when Carnival’s expected Caribbean capacity growth will be 5%. In 2014, it was 20%.

The Equinox will add to the overall capacity in the Caribbean, but several travel agents liked having more itinerary options for Celebrity in the summer.

“I view the year-round vessels in the Caribbean as a plus,” said Valerie Harris, a CruiseOne franchisee in Atlanta. “They lend a hand with creating and maintaining a cruise line’s presence in the region, which in turn may establish brand loyalty.”

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s