Cruise stocks have dropped with the rest of the market as swine flu concerns spread. Carnival Corporation dropped 13 percent on Monday, but was starting to see upward movement at press time, trading for $25.90, compared to closing at $28.43 on Friday. Royal Caribbean Cruises at first dropped 16 percent, but was also seeing upward trading at $12.39, compared to $14.46 on Friday.

While it is unknown to what extent flu concerns will affect travel in general. The Centers for Disease Control has issues a warning that U.S. travelers should avoid non-essential travel to Mexico.

According to Cruise Industry News estimates, the cruise capacity slated to call at Mexican Gulf ports in 2009 is about 3 million passengers, while Mexican Riviera capacity is estimated at 1.1 million. Combined, the Gulf and Riviera capacity is about 24.3 percent of the worldwide cruise passenger capacity. Moreover, cruises to Mexico have been doing well, compared to the slump in Alaska and Europe cruises.

So far, no cruise lines have adjusted itineraries, except Fred. Olsen that is dropping a May 6 and 7 call in Acapulco.

According to Robin Farley, leisure and gaming analyst with UBS, the Gulf cruises can easily be diverted to other ports, while Rivera cruises cannot. Farley said the real Mexican exposure is in the range from 5 percent to 6 percent.

Sell Off Was Buying Opportunity

UBS’ Farley also said that during the 2002/2003 SARS outbreak cruise shares declined 20 percent, but both stocks recovered fully over the following 12 months.