More Cruise Capacity Causes Price Drop in Europe, Analyst Says

Pricing for European cruises is down while Caribbean prices are up, according to a survey by Wachovia Capital Markets.

Tim Conder, managing director of leisure equity research for Wachovia, said that looking at second-quarter and third-quarter 2008 sailings, pricing in Europe is down due to a 15 percent increase in industry capacity in the region this year.

Brands owned by Carnival Corp. and Royal Caribbean Cruises Ltd. (RCCL) are experiencing double-digit price drops in Europe, Conder wrote.

In the Caribbean, Carnival Corp. prices are up over 10 percent while RCCL’s pricing is flat. In Alaska, the survey found a slight increase in prices for Carnival Corp., excluding Holland America and Princess, and a slight decrease for RCCL lines.

The bank lowered its earnings estimates for Carnival Corp. and RCCL based on weaker-than-expected European pricing and fuel costs, but said it was still bullish on the cruise industry due to an overall increase in prices and the potential for fuel prices to fall if there is a slowdown in global growth.