November 26, 2007
Our other special focus this week is on the Leisure space. We spoke with Steven Wieczynski of Niclaus & Company, who talked a little bit about his speciality in the leisure sector: cruises. He talked about the combination of rising oil prices and a boredom factor with the Carribean have made it a tough time for cruises.
- Rising oil costs have majorly affected cruise lines across the board. The cost of fuel is now 8% to 9% of revenue for cruise lines, where it was only 3% to 4% a few years ago.
- The Carribean, a major hub of cruise line income, has seen some weakness in the past months. The “boredom factor”, where people who typically go to the carribean are seeking other destinations for vaction combined with hurricane fears, and weak markets in the Carribean have all contributed to this weakness.
- The outlook for the future, however, is better. The Carribean markets are beginning to stablize by shifting capacity to European cruises, which is an less developed market with a strong demand at present. According to Mr. Wieczynski, pricing should pick up in the first part of 2008 for the Carribean.
For our full interview with Mr. Wieczynski, including a complete sector overview and stock picks, click here.
