iNVEZZ.com, Wednesday, February 5: Carnival Cruise Lines, the largest brand in the portfolio of British-American cruise operator Carnival Corporation & Plc (LON:CCL, NYSE:CCL), has achieved a record number of monthly reservations in January, with more than 565,000 net bookings (new reservations minus cancellations), up 17 percent year-on-year. Traffic to the cruise line’s website also hit a record with 13 million visits during the month.
Carnival President and CEO Gerry Cahill attributed the record booking activity to a number of factors, including continued product enhancements and innovations, attractive promotions, strong support from travel agent partners, and a new aggressive advertising campaign.
“Now is the time of year when many people focus on their upcoming vacation plans and the cruise industry typically sees an escalation in booking activity. We are definitely observing a strong uptick in reservations with bookings coming in at unprecedented levels,” Cahill said, adding that no new ships have been launched last year, so added capacity would not account for the stronger booking activity.
Carnival Cruise Lines, which operates cruises from North America and Australia, is the biggest unit of Carnival Corporation & Plc with 24 of the group’s 101 ships. Carnival, the world’s biggest cruise operator, also operates the P&O Cruises, Cunard, Princess Cruises, Holland America, Costa Cruises, and Seabourn lines among others.
Carnival was hit by a series of problems in the past two years including a fire on its Carnival Triumph ship last February and the 2012 fatal disaster involving its Costa Concordia ship. Last week, gastrointestinal illnesses afflicted hundreds of people on two cruise ships in the Caribbean – one of the ships was part of Carnival’s Princess line, while the other was operated by rival Royal Caribbean Cruises (NYSE:RCL).
Wells Fargo Securities considers the booking update as positive, but adds that this should be viewed as an expected step in the brand’s recovery. In December, Carnival Corporation & Plc advised that cumulative advance bookings for 2014 were behind the prior year at prices, but in line with prior year levels (Carnival share price climbs on better-than-expected results). The Carnival brand, accounting for some 30 percent of the group’s capacity, had the largest booking deficit to make up.
According to Wells Fargo, “it appears that January’s booking volumes have made substantial progress in closing the deficit for the Carnival brand, at the expense of on-going pricing promotions”. The broker expects that Carnival Cruise Lines pricing will stabilise in the second half of 2014 at the earliest.
Wells Fargo also expects that the ship incidents in the last two years will continue to weigh on Carnival’s results for another two years, with 2016 seen as the first full year of ‘normalized’ earnings from the affected Carnival and Costa brands. The broker has a ‘market perform’ rating on Carnival. It prefers Royal Caribbean, which it rates as ‘outperform’, as its best cruise and overall leisure sector pick for 2014.
According to a survey of analysts published by Analyst Ratings Network, Carnival has a consensus rating of ‘hold’ and an average target price of 2,199.46p. Six research analysts have a ‘hold’ rating on the stock, six have it as a ‘buy’, and four call it a ‘sell’.
In today’s trading, Carnival’s share price was up 1.4 percent at 2,514p as at 10:57 UTC, compared to a 0.3 percent rise in the blue chip FTSE 100 index.
**As of 10:46 UTC buy Carnival shares at 2,519.00p.**
**As of 10:46 UTC sell Carnival shares at 2,516.00p.**
Trade stocks with Hargreaves Lansdown from £5.95 per deal.
Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.