Royal Caribbean reveals impact of Mediterranean unrest

Royal Caribbean Cruises was forced to cut prices to stem a drop in Mediterranean bookings following unrest in North Africa, the cruise operator has revealed in an update on its first quarter performance

The parent company of Royal Caribbean International, Celebrity Cruises, Azamara Cruises and Pullmantur was forced to alter 63 cruises in the Mediterranean in the first quarter of the year.

The earthquake and tsunami in Japan forced the company to change a further 21 sailings. The company said it had observed “a broad slowdown” in bookings for Mediterranean sailings.

“These booking volumes have now returned to normal levels as a result of reduced pricing,” a statement said. “The effect of this booking disruption has been largely offset by the company’s other product groups, including Caribbean and Alaskan itineraries, which continue to show better than expected year-over-year improvement.”

Prior to the itinerary changes, bookings at the beginning of the year in the Mediterranean and in Asia were described as being “quite strong”.

The company said it had included $189 million and $770 million of fuel expense in its second quarter and full year 2011 guidance, respectively.

It saw first quarter net profits rise to $91.6 million from $87.4 million a year earlier. “The company has been able to largely offset higher fuel prices through its hedging strategies as well as the impact of currency exchange rates,” Royal Caribbean said.

“The effects of recent geopolitical events in Northern Africa and Japan have also been partially offset by improvements in the company’s other itineraries.”

Chairman and chief executive Richard Fain said: “The year started off with a roar – strong bookings, low costs and solid profits – and in the first quarter every one of our brands exceeded its forecast.

“Unfortunately, the events in Northern Africa and Japan have turned what was shaping up as a spectacular year into merely a very good one.

“Nonetheless, other than adjustments for fuel pricing, our earnings guidance for the year is essentially intact despite these dramatic geopolitical events.

“The demand for the majority of our products has remained quite strong and even the impacted itineraries have begun to improve.”

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