The extreme cold snap along the US Eastern Seaboard could help demand for Caribbean cruises, too.
'We believe cruise lines will again have another year of positive yield growth with all three operators in a better booked position and at higher prices than the same time last year and they will lap hurricane impacts in H2'18,' UBS analyst Robin Farley said.
Outperformance to a 2% increase in cruise yield is likely, she added, given other factors like distribution that could help drive net yield growth.
The cruise sector may also benefit from demand for the Caribbean in a record cold winter, Farley said, by offering 'a way to visit Caribbean beaches without having to worry about some infrastructure on islands that are not fully operational.'
Of the Big Three companies, Royal Caribbean Cruises Ltd. has the largest increase in Caribbean deployment as a percentage of mix, 51% of capacity in 2018, up from 49% last year. Industry capacity in the Caribbean will be up roughly 6%, according to UBS.
The brokerage noted Norwegian Cruise Line Holdings will reduce its Europe capacity by about 6% year over year, in contrast to increases by RCL (10%) and Carnival Corp. (3% to 4%).
China will comprise about 8% to 9% of NCLH capacity in 2018 as the company annualizes the homeporting of Norwegian Joy. UBS said this compares to 5% China exposure for CCL and around 7% for RCL.
UBS is overweignt in the cruise sector with 'buy' ratings for CCL and RCL, and 'neutral' for NCLH.
On Thursday CCL closed at $66.85, down 5 cents; RCL at $122.46, down $1.54; and NCLH at $54.68, down 67 cents.
Copyright © 2024. All rights reserved. Seatrade, a trading name of Informa Markets (UK) Limited. Add Seatrade Cruise News to your Google News feed.
