Is the Carnival Triumph strike three for the Cruise Industry?

Unloading relief supplies on Carnival Splendor...

Unloading relief supplies on Carnival Splendor 2010-11-09 2 (Photo credit: Wikipedia)

The “Pop Tart Cruise” on Carnival Splendor November 2010 was greeted with curiosity and had little impact to bookings or ticket prices.  The Costa Concordia January 2012 incident was greeted with shock.  Bookings and prices did drop and while they have since recovered; public consciousness of the event still hasn't gone away (and either has Captain Schettino).  I get the sense the “Cruise from Hell” on the Carnival Triumph February 2013 is being greeted with “enough is enough.”

Sure, with over 10,000 annual cruise sailings every year there are little things that can happen to cruise ships (pier bumps, rouge waves etc.,).  And with a seven percent compounded annual growth rate, the likelihood of such events simply continues to be multiplied.  Nevertheless, when a company dusts off the pre-Concordia advertising campaign themed “Land vs. Sea” to run in the subsequent year’s wave season, one is tempted to question good judgment.

I know.  Memories are short.  The media will move on to new stories.  Carnival obviously overcame the fact its first cruise ship, the Mardi Gras, ran aground on a sandbar during its inaugural voyage in 1972.  And don’t expect any instant drop in ticket prices. Prices for close-in sailings (those sold one to three months in advance of departure) took five months after Concordia to bottom in June 2012 .

The direct impact to the bottom line can be quantified by simply accounting for the 14 canceled Triumph sailings scheduled between Feb 11th and April 13th 2013, plus the ill-fated Feb 7th voyage.  The amount totals $20.8 million in revenue according to Cruise Pulse.  Based on the Splendor being off line 101 days, we believe Triumph guidance of 71 days is overly aggressive and the Triumph will likely cancel 7 more cruises up to the May 5th sailing, adding $9.8 million to lost ticket revenue.

But unfortunately the story may not end there.  On the margin, where cash from ticket revenues meet up with corporate expenses this event will continue to be felt.  Not exactly what an industry wants at a time when they are already being squeezed by a slowing European economy and the specter of inflation to costs for fuel and victualing.

When prospective cruisers hear Triumph passengers saying: “The credit, refund and $500 aren't really important. It’s not about the money.  We will pay Carnival anything just to let us off the ship.”  You have to wonder, will this time be different?

Repeat customers and die-hard cruisers will just get more bargains.  And when prices get low enough, it is amazing how memories fade.  But no spin can turn this publicity into a good thing for the industry.  In order to attract the best talent to work aboard ships, continue to penetrate the large “never before cruised” market and stay the course with investors attracted to exponential passenger growth these events can’t continue.  With 10,000 more "at bats" over the next year, getting wood on the ball 99.99% of the time so 20.9 million cruisers all leave happy and share their positive experiences is critical.  In the interim, Cruise Market Watch will continue monitoring the ticket revenue and pricing trends.

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