Continuing weak demand for Caribbean cruises and the purchase of Spanish operator Pullmantur have been blamed for a 93% drop in Royal Caribbean International profits in the first quarter of 2007.
Net profit for the period was $8.8 million, down from $119.5 million in 2006, despite fuel costs being down 10.8% and overall turnover of $1.2 billion, up from $1.1 billion in the first quarter of 2006.
The operator, which has hedged 45% of its fuel for this year, said the seasonality of the Pullmantur business, which tends to be weak in the winter months, and a 4.2% drop in yields on Caribbean cruises caused the fall in profits.
Chief executive Richard Fain said first-quarter bookings required more aggressive marketing and price promotions following a strong performance at the end of 2006.
“While the revenue environment is more challenging than anticipated, our management team is mitigating the effect through improvements in efficiency.”