Carnival president and CEO Arnold Donald said the company is shifting its distribution strategy in China away from charters to more group sales. This means closer-in bookings, but will expand distribution there and give greater clarity on actual bookings, he said.
When a ship is chartered, that's immediately recorded as 100% booked, even through the sailing may not take place for months. Over time, the charterer may return to the company with unsold berths, seeking claims and credits on the back end. With a group sale, in contrast, only 10% of the inventory may be sold initially, so there will be a shift in the booking dynamic, Donald explained during Thursday's earnings call.
Q1 yields in China were up year over year, despite the greater industry supply and the inability to visit Korean ports, so China has 'done well,' Donald said, adding: 'We're cautiously optimistic' for the rest of the year.
Royal Caribbean and Ctrip's decision to scrap their joint venture, SkySea Cruise Line, will have no effect on Carnival, Donald said in response to an analyst's question. He noted no reason was given for the move, but there's 'demand for ships all over the world right now.'
SkySea Golden Era has been sold to TUI AG's Marella Cruises, for delivery in December.
'China is such an embryonic market,' Donald said, adding that Carnival 'feels good about' the performance of its purpose-built Majestic Princess and the Costa ships there.
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