In a note out this morning, Citi discusses the impact of this weekend’s cruise crash on the industry.Analyst Gregory R Badishkanian writes:
Historically, the net yield impact is shorter term (lasting a quarter or two). However, we note the pictures and videos from the Costa tragedy are more graphic and widespread than past incidents and it occurred during the heavy booking period of Jan-March (Wave season). The media coverage could also be prolonged as the 100-year anniversary of the Titanic is in 3 months.
As for the immediate business impact:
We sense cruise booking volumes fell 6-10% over the last few days, though we note this is within normal day-to-day volatility. Also, we note most travel agents and cruise lines have cut advertising this past weekend, so a decent drop-off would be expected even without the negative media. We believe pricing remains firm (no degradation) and there has been no material increase in cancelations, which means there is no major passenger fear of cruising thus far.
By the way: Shares of Carnival are off 17% in the pre-market.