Cruise stocks were dropping dramatically this morning as Royal Caribbean’s Q1 earnings forecast of $0.30 per share was less than analysts’ expected, despite the company’s full year forecast of $5.90 to $6.10 per share, compared to $3.02 last year.
For Q1, Royal Caribbean cited the timing of drydock costs, increased marketing costs in China related to its expansion there, and start-up costs for new ships.For the full year, the company reported that its booked position was equal to last year record high and at higher rates.
According to Royal Caribbean, a strong North American market is driving demand in the Caribbean, Alaska and Bermuda, which represent more than 60 percent of its capacity, according to the Cruise Industry News 2016 Fleet Deployment Report.
There is also strong demand for Royal Caribbean’s Northern Europe and Asia products, which combined with North America, are expected to offset pricing challenges in the Mediterranean, Australia and Brazil. The company’s combined capacity in these markets is estimated at approximately 13.5 percent for 2016.