“The bottom line is things are stronger for sure that they were last year at this time,” said Arnold Donald, president and CEO of Carnival Corporation, touching on China on the company’s Monday morning second quarter earnings call.
Donald said he still believes China will eventually be the largest cruise market in the world and putting in new hardware (ships) still made sense.
“The market there is very large in terms of overall travel, both from cities in China and, of course, as a huge potential source market for fly/cruise all over the world,” Donald said.
“In terms of the distribution system itself, yes, we’ve moved from full-ship charters primarily now to group sales and partial ship charters,” he continued. “We’ve added a large number of additional distributors. All of that kind of de-risks things a bit from being overly concentrated and what, in effect, today is still pretty much a B2B market. The direct sales component is slowly growing a bit there. There’s an opportunity to grow that over time. But a timeline in China, we’ll see. It’s a small market.
“I don’t see a dramatic increase in per cent of total capacity in the short term there. And the reason is not so much because of China, but because of the demand everywhere else in the world. And then as I mentioned, there are large addressable markets everywhere in the world that are under-penetrated, including the United States.
“And so it looks positive for the year on a relative basis so far. But China’s China, and we have to see how things play out for the full year,” Donald said.
“But right now, conditionally, things definitely look stronger. In terms of sanctions, we haven’t heard of any sanctions on either side that would directly impact the cruise industry.”
Travel to Korea is still unofficially restricted, and Donald said if that opens up, it could help the situation.
Carnival Horizon being constructed and due next year.
Carnival Corporation has announced a $2.6billion net income for the full year of 2017.
Revenues for 2017 were $17.5billion – $1.1billion higher than the $16.4billion in 2016.
Carnival said in its annual report that it expects 2018 revenue yield to be up 2.5% compared to this year.
Bookings across the world’s largest travel company for 2018 have been running well ahead of the prior year at higher prices, Carnival said.
Carnival’s president and chief executive officer Arnold Donald said that despite booking disruptions from this year’s hurricanes, the company was heading into 2018 with a stronger base of business and higher prices than last year.
Donald said: “We have numerous efforts underway to keep the momentum going in 2018 and beyond, from our innovative approaches to increased consideration for cruising, to the further roll-out of our state-of-the-art revenue management system.
“In 2018 we also look forward to the delivery of four new cutting-edge ships, Carnival Horizon, Seabourn Ovation, AIDAnova, and Nieuw Statendam to further our strategic fleet enhancement program.”
Disruptions to voyages caused by hurricanes reduced fourth quarter earnings by approximately $0.11 per share.