UBS says 2015 wave pricing is better than last year

The brokerage said wave season started in December, which may explain the slower pace in early January. There has been improvement in recent weeks.

Norwegian Cruise Line Holdings has more than doubled the volume of bookings for 2016 today than what they had a year ago for 2015, UBS analyst Robin Farley said. While the company viewed January booking volumes as sub-par, it reported an acceleration in the last four weeks, with volumes up 20% in that time.

NCLH also noted that for its higher-end Prestige brands, bookings had slowed during the fourth quarter, with Ebola worries impacting the sale of cruises charting Africa, and some loyal customers' concerns about how the acquisition would affect Oceania Cruises and Regent Seven Seas Cruises. Since January, Prestige bookings have picked up.

Farley said the slower autumn for Prestige is part of the reason the first quarter will be the toughest of 2015, in addition to the well-known Caribbean supply increase in Q1 that will decline in Q2 and Q3.

While Carnival Corp. would not address the current booking environment and recent comments from others that the pace of wave season has improved in the last month, the company historically has moved in the same direction as the broader industry, Farley said.

UBS said Carnival Corp.'s test last year of holding pricing on the Carnival brand and allowing a slight occupancy drop for the Caribbean product was so effective that the strategy is now being used to a small degree by other brands and for other itineraries.

Royal Caribbean management did not update its wave guidance in light of NCLH's comment that wave bookings had accelerated since roughly Jan 25, but reiterated that at the time of its earnings call on Jan. 29, it had said the prior two weeks were the best two weeks of bookings in the company's history.

UBS cited multiple conversations with industry sources suggesting that while the sheer number of promotions is high, they are at higher prices than last year. Factors include the removal of MSC Divina in the Caribbean from April for a summer season in the Mediterranean, significantly more spending on television advertising this year and the shift to more added-value promotions instead of discounts.

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