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UBS sees Q1 finishing well but forward pricing declines

UBS Investment Research is beginning to see some cruise ticket pricing declines, with rates down slightly week over week for the first time since the start of the year but still slightly up on average since 2012 opened.

The UBS Cruise Data Tracker, which follows 7,000 sailings for six of the largest North American sourcing lines and two of the largest European sourcing lines, this week found a pricing decline of approximately 30 basis points. This follows three straight weeks of flattish sequential pricing.

For close-in sailings (first quarter), pricing this week is up 1% to 2% sequentially, and up approximately 2% since the start of the year.

Analyst Robin Farley noted Q1 pricing changes may be less meaningful as the data set shrinks with the quarter winding down. But she added that the results are still a positive indicator that Q1 was well booked before the Costa Concordia accident on Jan. 13.

Cruise lines have been favoring value-added incentives such as on-board credits, rather than reducing rates.

This week the UBS Cruise Data Tracker found that pricing for most brands was down sequentially, with Carnival Cruise Lines and Costa closer to flat. Farley identified the Carnival brand and Cunard Line as the weakest performers so far, both with pricing down since the start of the year.

Based on the UBS Cruise Data Tracker, pricing for eastern and western Mediterranean sailings is down 1%-2% and 2%-3%, respectively, since the start of the year, with the past week showing more softness than previous weeks. Pricing for Northern European sailings is also down sequentially, about 1% since the start of the year.

Rates for Alaska cruises are down sequentially, too, though still appear to be up about 1% since the start of the year, while Caribbean pricing has been flat.

According to the brokerage’s separate cruise pricing survey, which looks at week to week changes, rates across the Caribbean have been up moderately over the past two months, and up slightly sequentially last week. Alaska pricing had also been up until some sequential declines two weeks ago, though last week it was up slightly again.

And UBS’s channel checks indicated that Mediterranean cruise pricing, which had been down sequentially in the prior two weeks, stabilized this week to come in flat.

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