China ‘Stronger Than Last Year’ For Carnival Corp

Costa Serena

“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.

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Cruise lines’ Dubrovnik deal seen as a way to combat overcrowding

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Last year, Dubrovnik received 742,000 passengers on 538 ships.
FORT LAUDERDALE — Carnival Corp. CEO Arnold Donald said a new agreement in Dubrovnik, Croatia, illustrates how fears about crowding in favourite tourist areas can be managed by the cruise industry.

Speaking as part of a CEO panel at the Seatrade Cruise Global convention here, Donald took the occasion to disclose that major cruise lines have agreed to coordinate their schedules this summer in Dubrovnik.

That could mean some ships arrive later or depart earlier to keep their time in port from coinciding, or it could mean moving some ships to arrive during the week rather than on weekends.

The walled Old City of Dubrovnik was named a Unesco World Heritage site in 1979, but Donald said its mayor requested a meeting with cruise officials because it had been threatened with delisting by Unesco.

Donald and other cruise officials met several times with mayor Mato Frankovic, most recently in January when an agreement was apparently reached.

“In the end, our guests don’t want to go to a place that’s overcrowded,” Donald said. “If the sites that everybody wants to see are being abused, our guests won’t go. It’s in our self-interest, but it’s also in the interest of the places we go.”

Last year, Dubrovnik received 742,000 passengers on 538 ships. The city recorded about 3.4 million overnight stays, with many visitors drawn by Dubrovnik’s status as a filming location for the HBO series “Game of Thrones.”

Donald said cruise lines need to “listen with empathy for the issue of what some would call over tourism, not necessarily driven by cruise companies but by the fact that we’re a very visible symbol for it; our ships are large, and so forth. We have to listen with empathy to the ports that are out there and make sure we work with them to get the proper infrastructure.”

Dubrovnik’s over tourism concerns are shared by several other destinations in the Mediterranean, including Barcelona, Venice and the Greek island of Santorini.

Travel journalist Peter Greenberg, who moderated the CEO panel, said the World Travel and Tourism Council in a recent study listed “destination degradation” as one of three critical issues facing the travel industry.

Others on the panel took issue with the label “over tourism.”

“I think it’s a misnomer,” said Royal Caribbean Cruises Ltd. chairman Richard Fain. “What we’re really talking about is sustainable tourism.”

Fain cited Royal Caribbean’s development of Falmouth in Jamaica to offer an alternative to Montego Bay and Ocho Rios, as another successful response to crowding concerns.

After Falmouth opened in 2011, the number of cruise visitors actually rose, but they were more spread out.

“There were more people but less density,” Fain said.

“The opportunity, really, is to work together in these communities,” Fain said. “We work with them, and we find solutions that are to both of our benefits. And those we work with are very happy. You see that over and over again. Those who just want to make headlines, that’s a different story.”

The Celebtity Reflection in Dubrovnik.
The Celebrity Reflection in Dubrovnik.

Greenberg said that two cities where over tourism has been a hot-potato issue — Venice and Barcelona — are in the backyard of MSC Cruises, which has its headquarters in Geneva and its operations in Naples, Italy.

MSC executive chairman Pierfrancesco Vago said some perspective was in order.

“When you’re talking about Venice’s 30 million visitors a year, the cruise industry is 1 million of that,” Vago said.

He added that unlike the general tourism population, which ebbs and flows individually, cruise tourists come in groups that can be managed.

“We can actually coordinate,” Vago said. “We can actually ensure that there will never be an overflow, and we can control embarkation and disembarkation.”

A 2015 Unesco report recommended that the number of cruise passengers at Dubrovnik should not exceed 8,000 a day, arguing that when more than 8,000 visitors are inside the walls of the old city “tourist blight” becomes inevitable.

Research from the Port of Dubrovnik found that in 2016, arrivals exceeded 8,000 on 18 out of 243 total cruise days and that arrivals exceeded 10,000 on four days that year.

MSC has been looking for new destinations in the Adriatic to supplement hot spots like Dubrovnik. Last year, for example, MSC began calling at the port of Sarande, in southern Albania.

“Nobody knew that in Sarande, there were 10 different Unesco sites,” MSC CEO Gianni Onorato said in a recent interview. “This is the opportunity the cruise industry can give because there are options. That’s the only way to solve this problem.”

Carnival Corporation expects revenue to rise by 2.5% in 2018

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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.