Stock Market and Cruise Cost Plunge?

[Canuker]

It seems to me that the main factor affecting the economics of the cruise market is not demand.
It's supply.

More and bigger vessels coming onto the market need to be filled. 
New 'niche' cruises.
River cruises!
My national and local newspapers must be very grateful to the cruise industry - cruise companies and agents - for helping to (no pun intended) keep them afloat with all their ads.

They want your business.
 

Edited December 20, 2018 by Canuker

[OCruisers]

Guess we all have know there would be times like this when investing in the stock market.  

[Jammu2]

The people on taxpayer funded pensions will be cruising. From my experience on the mass market lines, this is a big part of the customer base.

 

I'm hoping that prices moderate a little in the near-luxury market. I think those are more market-sensitive.

[ScubesDad]

On ‎12‎/‎17‎/‎2018 at 10:31 PM, lovey1103 said:

Anyone out there have a sense if prices will drop due to the instability of the US stock market?

Unfortunately plenty of investors are pulling back and thinking twice about their spending habits.

Any comments or sense how this may affect travel?

 

My short answer is yes I think prices will drop, not so much in the short term, but for cruises happening in the 9 months and longer range.

 

The first reason is economics; there is a continued slowing of economic growth and couple this with the central banks strategy of continuing interest rate increases that will place increased pressure on economic growth.  The global political environment has moved into the realm of uncertainty.  The US mid term election has changed the outlook for the next 2 years.  Brexit is resulting in increased uncertainty as the deadline draws closer.  China continues to push the limits.  All of these contribute to significant levels of concern and uncertainty.  Finally investors look at all the changes and uncertainty and tend to draw pessimistic conclusions, and take a defensive position.

 

However, I feel the most price pressure will come from the client conclusion that Celebrity has become overpriced for the product offered.  Celebrity has been drinking too much of the marketing Kool-Aid and is believing the hype, while the clients have been stepping back and scratching their heads, as evidenced by the mixed and varied reviews of Edge.  

Celebrity has been marketing themselves as a Luxury product, and quite possibly the upcoming changes to the "Suite Life" may make that realistic; the prices have certainly increased to the point where there is little difference in the price point of "X" vs the price point of a traditional luxury line.  For example,  our two med cruises in 2017 and 2018 averaged out to C$900 per night for two people in a S1.  Our upcoming spring 2019 is C$1,525 per night for an S1; however some of that is due to the distance travelled  as there is a significant distance involved.   I am looking at a fall 2020 med cruise which is pricing out at C$1,480 per night.  All of these were and are on the Reflection which will not be Revolutionized until the very end of the process, 2023 I believe.  The experience I enjoyed in 2017 and 2018 will be essentially unchanged to the experience in 2020 and 2021 yet I am paying a significant difference.  (Yes, I realize there is some effect of a currency slide on the part of the Canadian dollar but not to the extent of 60%.)  Just to show how inconsistent the process is, we had booked Millie for Asia in Feb 2019 and were bumped for the drydock, so we switched to the second cruise out of drydock and the price was C$925 per night, S1. In addition our spring 2020 on the Equinox post revolution is C$1,120 per night, S2.

The 2019 cruises are safe as they have already been planned and essentially paid for; however, anything after that is in doubt.  I can travel independently at a significantly lower per day cost at essentially  the same level of comfort.  We do it now, our upcoming February trip is 28 days of which 14 is on a ship, yet my cost per day is significantly lower without compromising comfort for the week before and the week after.

 

Celebrity has placed too much emphasis and focus on their new demographic target which I feel will not work out for them.  Cruising has always focussed on a more mature client, which has worked well. Our first cruise with "X" was in 2001 and we were without a doubt among the youngest on the ship.  However, significant increasing in cruise ship capacity over the past few years has increased the competition, and when the markets start to turn, and interest rates start to increase, family focus will return to the basics and ensuring the mortgage is paid and food is on the table.  At that point in time cruise prices will slide as everyone fights to fill their ships.

 

The largest portion of passengers are American; however, a significant portion, as previously commented, are Canadian, British and of course European. Also, Celebrity have moved into the Australian market. As the economy moves through the next phase of the cycle the first to feel it will be the non-Americans, who will reduce there demand, resulting in increase supply and lower pricing, at which point we will all jump back in...…...

 

Just my two cents worth.

 

 

 

[cruisin lady ca]

On 12/18/2018 at 4:38 AM, Stateroom_Sailor said:

Does a 100 shares of RCL stock do anything for you on a reposition cruises these days?  That and Carnival stock, hoping to buy at the bottom, though I doubt I'll see $6 like It crashed to in 2009.

We submitted a request for the "shareholder benefit" for our 15 night repositioning cruise which is now less than 100 days ago.  I received an email the same day indicating that the OBC would be added to my reservation.  And it did show up in my cruise planner that day. Yeah!  FYI, the benefit for a 15 night cruise is $250 OBC.  This on top of my being able to upgrade to AQ at  a special "resident rate" this week has made me pretty happy.

Edited December 21, 2018 by cruisin lady ca

[Stateroom_Sailor]

On 12/20/2018 at 3:30 PM, ScubesDad said:

 

My short answer is yes I think prices will drop, not so much in the short term, but for cruises happening in the 9 months and longer range.

 

The first reason is economics; there is a continued slowing of economic growth and couple this with the central banks strategy of continuing interest rate increases that will place increased pressure on economic growth.  The global political environment has moved into the realm of uncertainty.  The US mid term election has changed the outlook for the next 2 years.  Brexit is resulting in increased uncertainty as the deadline draws closer.  China continues to push the limits.  All of these contribute to significant levels of concern and uncertainty.  Finally investors look at all the changes and uncertainty and tend to draw pessimistic conclusions, and take a defensive position.

 

However, I feel the most price pressure will come from the client conclusion that Celebrity has become overpriced for the product offered.  Celebrity has been drinking too much of the marketing Kool-Aid and is believing the hype, while the clients have been stepping back and scratching their heads, as evidenced by the mixed and varied reviews of Edge.  

Celebrity has been marketing themselves as a Luxury product, and quite possibly the upcoming changes to the "Suite Life" may make that realistic; the prices have certainly increased to the point where there is little difference in the price point of "X" vs the price point of a traditional luxury line.  For example,  our two med cruises in 2017 and 2018 averaged out to C$900 per night for two people in a S1.  Our upcoming spring 2019 is C$1,525 per night for an S1; however some of that is due to the distance travelled  as there is a significant distance involved.   I am looking at a fall 2020 med cruise which is pricing out at C$1,480 per night.  All of these were and are on the Reflection which will not be Revolutionized until the very end of the process, 2023 I believe.  The experience I enjoyed in 2017 and 2018 will be essentially unchanged to the experience in 2020 and 2021 yet I am paying a significant difference.  (Yes, I realize there is some effect of a currency slide on the part of the Canadian dollar but not to the extent of 60%.)  Just to show how inconsistent the process is, we had booked Millie for Asia in Feb 2019 and were bumped for the drydock, so we switched to the second cruise out of drydock and the price was C$925 per night, S1. In addition our spring 2020 on the Equinox post revolution is C$1,120 per night, S2.

The 2019 cruises are safe as they have already been planned and essentially paid for; however, anything after that is in doubt.  I can travel independently at a significantly lower per day cost at essentially  the same level of comfort.  We do it now, our upcoming February trip is 28 days of which 14 is on a ship, yet my cost per day is significantly lower without compromising comfort for the week before and the week after.

 

Celebrity has placed too much emphasis and focus on their new demographic target which I feel will not work out for them.  Cruising has always focussed on a more mature client, which has worked well. Our first cruise with "X" was in 2001 and we were without a doubt among the youngest on the ship.  However, significant increasing in cruise ship capacity over the past few years has increased the competition, and when the markets start to turn, and interest rates start to increase, family focus will return to the basics and ensuring the mortgage is paid and food is on the table.  At that point in time cruise prices will slide as everyone fights to fill their ships.

 

The largest portion of passengers are American; however, a significant portion, as previously commented, are Canadian, British and of course European. Also, Celebrity have moved into the Australian market. As the economy moves through the next phase of the cycle the first to feel it will be the non-Americans, who will reduce there demand, resulting in increase supply and lower pricing, at which point we will all jump back in...…...

 

Just my two cents worth.

 

 

 

 

I 100% agree with you.  Even a 5% reduction in bookings, could create great competition between the cruise lines, most of whom are far more leveraged in capacity than they were in 2006.  I'm not convinced that recent retirees will be unaffected, as some have prepared for only best case scenarios, or may feel pressure to help their children or grandchildren, or the weight of falling real estate prices.

 

Celebrity's attempt to appeal to Millennials, will fail.  Sure, as Millennials get into their 40's and 50's, I'm sure more will enter the market, especially for the floating resort, and exotic beaches.  The Millennials who are enthusiastic about travel, having that wanderlust gene, have a completely different strategy.  They like flying on discount fares, staying at local hotels or Airbnb, and really absorbing the local food and culture on their time.  The thought of being trapped on a giant ship with 3,000+ people, with only brief stops along the way, eating unauthentic food, does't appeal.  Eden, the Magic Carpet, and the IV cabins, do nothing to change this, if they're even incentives at all.

Edited December 22, 2018 by Stateroom_Sailor

[cluso]

Yep, sounds like we see it--and we have several Millennial kids.

 

 

2 hours ago, Stateroom_Sailor said:

 

I 100% agree with you.  Even a 5% reduction in bookings, could create great competition between the cruise lines, most of whom are far more leveraged in capacity than they were in 2006.  I'm not convinced that recent retirees will be unaffected, as some have prepared for only best case scenarios, or may feel pressure to help their children or grandchildren, or the weight of falling real estate prices.

 

Celebrity's attempt to appeal to Millennials, will fail.  Sure, as Millennials get into their 40's and 50's, I'm sure more will enter the market, especially for the floating resort, and exotic beaches.  The Millennials who are enthusiastic about travel, having that wanderlust gene, have a completely different strategy.  They like flying on discount fares, staying at local hotels or Airbnb, and really absorbing the local food and culture on their time.  The thought of being trapped on a giant ship with 3,000+ people, with only brief stops along the way, eating unauthentic food, does't appeal.  Eden, the Magic Carpet, and the IV cabins, do nothing to change this, if they're even incentives at all.

 

[cruiseerf]

I have tracked our cruise $ for years and for the FIRST time our transatlantic has gone down in price significantly prior to final payment with 35+ suites still available onboard.   I expect after final payment, the prices will continue to fall......I think people will continue to cruise....but that extra money they used to upgrade to suites and perks has been going down with the stock markets.....People are nervous,  Dems are taking over the house, hostile president, all this riles the markets and makes people nervous.  So I agree with the two previous posters that I think fares will have to fall in order for Celebrity to fill their ships.  

 

Today I checked Trans Atlantic fares for the Edge 2020.......Captains club and past suite passengers were offered to place deposits on the grande suites etc, three weeks ago prior to public release.  As of Today, all Major suites are still available on Edge......I have never seen this when a transatlantic opens up.....Usually all the big suites go first and then the smaller ones...Edge is WIDE open.   It is true that Edge has far more suites, but still, those big boy suites priced at 35K per person......are sitting.....We tried to get a PH on a Solstice class ship last year and could only reserve 1 year out at 22K per person....they were all booked.....So Edge might not be the $$ they hoped for.  Personally I know several people who have now seen Edge and decided to go back to Solstice Millennium class ships and $ was the issue, markets, no added value etc.  

 

Time will tell but I see prices already falling on several other lines cruises I have been watching.....Safe sails to all.  

 

 

[grandgeezer]

Besides the stock market drop, the cruise lines better keep an eye on oil prices. Oil finished today at $45.42 per barrel, down over $35 from the end of September. Fuel is one of their biggest cost and and when it starts to rise, their profits shrink unless they raise prices and that would be very risky.

If RCL is like many other large corporations, executive bonuses are based on profits and stock prices as stock options is how most of their bonus is paid. With stock sitting at $95, down from a high of $135, a share things don't look too promising for them.

With the government going into a partial shutdown things, financially, are going to get very interesting in the coming weeks.

[Stateroom_Sailor]

Our 4 Day Bahamas cruise in Aqua on the Infinity, dropped to about $500 after final payment, we moved laterally from Concierge.  We have a 12 day Hawaiian cruise on the Eclipse coming up in April.  Aqua was once well over 3K, now down to $1,699.  There are so many cabins left, that I'm sure it will plummet more, after final payment in 2 weeks.  We grabbed the last Aqua cabin on the hump, facing the islands, otherwise I would strategize differently.

 

NCL has stayed pretty steady in April for their 7 day Hawaiian cruise, $1899 for a veranda.  Holland and Princess are priced higher, though I've not followed their fluctuations.  Something tells me that there's more going on here than fears over the stock market, or Edge reviews, because this has been a long time coming.  Maybe X overpriced some these sailings, cruisers booked elsewhere, and now Celebrity is having a hard time making up the difference.

Edited December 22, 2018 by Stateroom_Sailor

[The_Big_M]

12 hours ago, Stateroom_Sailor said:

 

I 100% agree with you.  Even a 5% reduction in bookings, could create great competition between the cruise lines, most of whom are far more leveraged in capacity than they were in 2006.  I'm not convinced that recent retirees will be unaffected, as some have prepared for only best case scenarios, or may feel pressure to help their children or grandchildren, or the weight of falling real estate prices.

 

 

Wishful thinking. 

 

When the Concordia sank, there was a greater than 5% reduction in bookings. However, there was no need for major competition and prices continued their climb shortly after.

[The_Big_M]

5 hours ago, grandgeezer said:

Besides the stock market drop, the cruise lines better keep an eye on oil prices. Oil finished today at $45.42 per barrel, down over $35 from the end of September. Fuel is one of their biggest cost and and when it starts to rise, their profits shrink unless they raise prices and that would be very risky.

 

 

As you point out, fuel prices have actually fallen substantially, and that is a big saving. They are now back to where they were 18 months ago, which is very good for cost control.

[Blockschip]

In reference to the post earlier, many of us who were backpacking Europe back in the 70s and early 80s on a Eurail pass and staying in hostels, are now cruising. The millenials’ tastes will change as they age. Not that that really impacts any of us in the foreseeable future. 

[Lastdance]

IMHO, this is not a time to be over confident, as there are just too many factors at play.  It is nice to see the glass half full rather than half empty, but also to be cautiously optimistic with a strategy in place if you need it!

 

Merry Christmas!

[Baron Barracuda]

6 hours ago, The_Big_M said:

 

As you point out, fuel prices have actually fallen substantially, and that is a big saving. They are now back to where they were 18 months ago, which is very good for cost control.

 

How much Royal will benefit from the collapse in oil depends largely on the skill (and luck) of their commodities traders.  Royal tends to hedge roughly half their anticipated consumption.  Hopefully for their sake they didn't increase their hedges when oil was rising sharply earlier this year

[Baron Barracuda]

19 hours ago, Stateroom_Sailor said:

 

 

Celebrity's attempt to appeal to Millennials, will fail.  Sure, as Millennials get into their 40's and 50's, I'm sure more will enter the market, especially for the floating resort, and exotic beaches.  The Millennials who are enthusiastic about travel, having that wanderlust gene, have a completely different strategy.  They like flying on discount fares, staying at local hotels or Airbnb, and really absorbing the local food and culture on their time.  The thought of being trapped on a giant ship with 3,000+ people, with only brief stops along the way, eating unauthentic food, does't appeal.  Eden, the Magic Carpet, and the IV cabins, do nothing to change this, if they're even incentives at all.

 

Young folks like variety.  They might try one X cruise, but then move on to sample offerings from other lines.  My three millennial daughters have no interest in X.  They want  experiences, and X lacks daytime activities and live music.  Far more attracted to Royal's Anthem and MSC Seaside. 

[Blockschip]

2 hours ago, Baron Barracuda said:

 

How much Royal will benefit from the collapse in oil depends largely on the skill (and luck) of their commodities traders.  Royal tends to hedge roughly half their anticipated consumption.  Hopefully for their sake they didn't increase their hedges when oil was rising sharply earlier this year

How quickly cabin prices might change would depend how far out they hedged. The fixed cost of the hedged fuel will already be built into their cabin prices. 

[Stateroom_Sailor]

April 22nd, 2021 - 10 Night Hawaiian Cruise on the Eclipse

$1,399 Inside, $1,999 OV, $2,099 Veranda, $2,499 Con, $2,999 Au, $5,899 Suite

 

April 29th, 2019 - 10 Night Hawaiian Cruise on the Eclipse (3-4 weeks until final payment)

$8,99 Inside, 1,099 OV, $1,299 Veranda, $1,399 Con, $1,649 Au, $3,399 Suite

 

These prices don't make any sense.  They're asking too much in the beginning, and having to heavily discount to make up for it in the end, a cruise people aren't likely going to choose last minute. 

 

That's before we factor in economic uncertainty, moving forward.

 

[Lastdance]

3 hours ago, Stateroom_Sailor said:

April 22nd, 2021 - 10 Night Hawaiian Cruise on the Eclipse

$1,399 Inside, $1,999 OV, $2,099 Veranda, $2,499 Con, $2,999 Au, $5,899 Suite

 

April 29th, 2019 - 10 Night Hawaiian Cruise on the Eclipse (3-4 weeks until final payment)

$8,99 Inside, 1,099 OV, $1,299 Veranda, $1,399 Con, $1,649 Au, $3,399 Suite

 

These prices don't make any sense.  They're asking too much in the beginning, and having to heavily discount to make up for it in the end, a cruise people aren't likely going to choose last minute. 

 

That's before we factor in economic uncertainty, moving forward.

 

 

You are right...supply and demand, along with price high and see what demand is or not!  Crazy stuff!  I paid 8,000 for an SV on Edge for 2020 in Europe.  The cruise is 11 days and I love the itinerary, but feel it is over priced, so will watch and wait...the suite I wanted was 16,000 - no way will I pay that price!

Edited December 23, 2018 by Lastdance

[Doubt It]

On 12/20/2018 at 5:30 PM, ScubesDad said:

 

My short answer is yes I think prices will drop, not so much in the short term, but for cruises happening in the 9 months and longer range.

 

The first reason is economics; there is a continued slowing of economic growth and couple this with the central banks strategy of continuing interest rate increases that will place increased pressure on economic growth.  The global political environment has moved into the realm of uncertainty.  The US mid term election has changed the outlook for the next 2 years.  Brexit is resulting in increased uncertainty as the deadline draws closer.  China continues to push the limits.  All of these contribute to significant levels of concern and uncertainty.  Finally investors look at all the changes and uncertainty and tend to draw pessimistic conclusions, and take a defensive position.

 

However, I feel the most price pressure will come from the client conclusion that Celebrity has become overpriced for the product offered.  Celebrity has been drinking too much of the marketing Kool-Aid and is believing the hype, while the clients have been stepping back and scratching their heads, as evidenced by the mixed and varied reviews of Edge.  

Celebrity has been marketing themselves as a Luxury product, and quite possibly the upcoming changes to the "Suite Life" may make that realistic; the prices have certainly increased to the point where there is little difference in the price point of "X" vs the price point of a traditional luxury line.  For example,  our two med cruises in 2017 and 2018 averaged out to C$900 per night for two people in a S1.  Our upcoming spring 2019 is C$1,525 per night for an S1; however some of that is due to the distance travelled  as there is a significant distance involved.   I am looking at a fall 2020 med cruise which is pricing out at C$1,480 per night.  All of these were and are on the Reflection which will not be Revolutionized until the very end of the process, 2023 I believe.  The experience I enjoyed in 2017 and 2018 will be essentially unchanged to the experience in 2020 and 2021 yet I am paying a significant difference.  (Yes, I realize there is some effect of a currency slide on the part of the Canadian dollar but not to the extent of 60%.)  Just to show how inconsistent the process is, we had booked Millie for Asia in Feb 2019 and were bumped for the drydock, so we switched to the second cruise out of drydock and the price was C$925 per night, S1. In addition our spring 2020 on the Equinox post revolution is C$1,120 per night, S2.

The 2019 cruises are safe as they have already been planned and essentially paid for; however, anything after that is in doubt.  I can travel independently at a significantly lower per day cost at essentially  the same level of comfort.  We do it now, our upcoming February trip is 28 days of which 14 is on a ship, yet my cost per day is significantly lower without compromising comfort for the week before and the week after.

 

Celebrity has placed too much emphasis and focus on their new demographic target which I feel will not work out for them.  Cruising has always focussed on a more mature client, which has worked well. Our first cruise with "X" was in 2001 and we were without a doubt among the youngest on the ship.  However, significant increasing in cruise ship capacity over the past few years has increased the competition, and when the markets start to turn, and interest rates start to increase, family focus will return to the basics and ensuring the mortgage is paid and food is on the table.  At that point in time cruise prices will slide as everyone fights to fill their ships.

 

The largest portion of passengers are American; however, a significant portion, as previously commented, are Canadian, British and of course European. Also, Celebrity have moved into the Australian market. As the economy moves through the next phase of the cycle the first to feel it will be the non-Americans, who will reduce there demand, resulting in increase supply and lower pricing, at which point we will all jump back in...…...

 

Just my two cents worth.

_____________________________________________________

 

Perfectly said.

 

All cruises have been cancelled by our household:

 

1) Celebrity is full of themselves - their new product vision of Edge across the entire fleet is crap. Their pricing is ridiculous. Our first and last Oceania cruise was highly patronized by former Celebrity patrons.

 

2) The Cdn $ - our pathetic $ is resulting in all our foreign travel being cancelled. No cruises booked. Good luck cruise lines replacing many Canadian travellers. Will not pay the current pricing for Celebrity let alone converted to Cdn $.

 

For those that wish to cruise, there are many options. Forget loyalty, go with what is best for you.

[Jammu2]

I think there is a lag. We have 5 trips (two cruises) scheduled for 2019 (some of it 100% paid) and we are looking at 2020. However, if we have another week in the market like last week, 2020 gets put on indefinite hold and we turn the screws on the balance of 2019.

 

Just got a new Oceania brochure with new prices and notice of an increase on January 5th. Sorry, their prices have gotten out of hand and even if I wanted to splurge, the market is preventing me.

 

I think our most luxurious cruises were in 2010 - 2014, which is the lag after the financial crisis. 

 

 

[mafig]

If we had a cruise booked for 2019 we would keep it.  However, we don't.  Prices for the cruise I'm interested in are dropping, but I'm still going to wait to book.  The price will have to come down further  and the market has to stabilize before I book.