Royal Caribbean emerges strong from downturn

Royal Caribbean emerges strong from downturn

The cruise industry has been given a boost by Royal Caribbean posting a strong set of quarterly results and a bullish outlook for 2010.

“Wave season is off to a promising start,” Chief Executive Richard Fain told analysts in a conference call. Wave season, which typically runs from January through March, is the prime time for consumers to book their cruise vacations.

The cruise giant also said Oasis of the Seas - the world’s largest cruise ship - has proved a huge hit with customers since debuting last month, and is commanding “tremendous” price premiums over other vessels in the fleet.

Royal Caribbean, the world’s second largest cruise operator after Carnival Cruises, said since the beginning of September, new bookings were 30% higher than the same period a year ago, and that current price levels are also ahead of the same time last year across the majority of its packages. It said that it also expects European bookings to generally be a growth area for 2010.

During the quarter, the cruise operator was also voted the “World’s Leading Cruise Brand” by the World Travel Awards for innovation, in particular the success of Azamara, the informal luxury line which goes to off the beaten track destinations.

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Net yields are expected to rise about 2% in the current quarter, and by 3% to 6% this year, in contrast to last year’s sinking yields that were hurt by lower pricing and promotions. Meanwhile, the decline in net yields has slowed, with Royal Caribbean expecting an upturn in the current quarter and year.

The group – whose brands include Celebrity, Pullmantur and Azamara -  reported a profit of $3.4 million compared with $1.5 million a year earlier. Revenue was flat at $1.5 billion, while the number of passengers carried rose 9.5%.

Addressing some of the negative publicity surrounding its decision to return its ships to its Labadee, Haiti port, Fain said the company “agonized over the idea of the people taking their holiday so near the devastation.”

“In the end, we decided that the moral imperative demanded that we bring the people of Haiti much-needed relief supplies and equally needed tourist and economic activity.”

Royal Caribbean launched the world’s largest passenger ship, the Oasis of the Seas, with a capacity of 5,400 guests last month, despite the weak economy. Fain said Oasis, along with its Solstice-class vessels, are generating “very healthy returns.”

The company currently has just four ships on order - one for its Royal Caribbean brand and three for sister line Celebrity Cruises. The last of the vessels arrives in 2012.