The news 'further validates our long-term thesis that this year is the tipping point for China to become a game-changing force for the cruise lines, not only providing a new source of demand, but also helping pricing in more mature markets as tonnage is redeployed out of North America and Europe,' UBS analyst Robin Farley said.
Taking the 3,600-berth ship out of the North American market reduces the brokerage's weighted average supply expectations for the region by about 100 basis points, to a 1.9% capacity increase, down from 2.9% previously, in 2017. The 2018 supply growth projection is reduced by 10 basis points, to 4.9%, down from 5%.
Carnival Corp. & plc has five ships in China today for at least part of the year, and UBS thinks that could go to 12 to 15 ships in the next five years.
'China today generates higher yield and higher operating income per cruise day than the corporate average for CCL,' Farley said.
In terms of deployment, China represents about 5% to 6% of Carnival Corp. capacity deployment this year and 6% to 7% for Royal Caribbean Cruises Ltd.