Cruise stocks plunge after ship sinks
The timing of the Costa Concordia disaster could not be worse, as many cruises are booked at this time of year.
As Bloomberg News notes, about one-third of all cruise vacations are booked between January and March. Moreover, Europe accounts for about 38% of the revenue of Carnival, the corporate parent of Costa Concordia.
Early estimates peg the disaster's cost at $95 million, though insurers may be on the hook for as much as $800 million, according to Numis Securities. Shares of Carnival, which plummeted about 14% in early trading, may fall further.
Media reports have pointed out that the Miami company is attributing the disaster to "significant errors in judgment" made by Capt. Francesco Schettino. The captain has been detained on manslaughter and other charges. He reportedly has a history of disobeying orders. Those reports have also pointed out that the accident occurred before the ship's personnel conducted evacuation drills required by law.
USA Today pointed out that the $570 million ship, which was built in 2006, was damaged in an accident in 2008. And in 2010, three members of the crew were killed when another ship from the same line hit a pier in Sharm el-Sheikh, Egypt.
The Costa Concordia disaster is also hurting Royal Caribbean, the parent of Celebrity Cruises, Royal Caribbean International, Pullmantur, Azamara Cruises and CDF Croisières de France. Its shares are down more than 5% as investors are worried that the accident will cause travelers to have second thoughts about cruises.
Look for all lines to offer steep discounts in order to ease the frayed nerves of anxious travelers.
Jonathan Berr is a freelance business writer who is going on a cruise this summer.
Fixit man.. are you too dumb to see the heading is stock prices are dropping on CRUISE lines..
So to explain it too you.. RCL stock is down over 4% which is why it is part of the story. stock wise.
Carnival is the parent company under which Costa runs their cruises.. not RCL ..
I have never been on a cruise, but I was thinking about it. Not anymore since this accident happened. I'll keep my feet on solid ground.
I heard that a plane crashed - better stay on the ground.
I heard that there was a car accident - best to not ride in cars.
I heard that someone's house caught on fire - you better not live in a house, it's not safe there.
I heard someone got hit by lightning - it's not safe to go outside anymore.
Don't even think about eating the food either - someone died from something they ate.
I guess the only thing you've got left to do is dig a hole in the ground, hide in there, and cower in fear because CLEARLY nothing is safe anymore.
What does Royal Caribbean have to do with this mess? I've had nothing but great experience with them. Carnival is another story. Worst experience ever.
High profile disaster in any company can have impact in the sector.
Simply, this kind may lead to less people booking cruises at any company.
This is one of those things in terms of the stock than can create a buying opportunity. Emotional investor reaction may lead to over reaction. In the long view, in a world that "should" see a growing class of people who can afford cruises globally, I would look to pick up shares of one of the cruiselines if you can get in at the right price.
I have been on several cruises from various providers (Carnival, Disney and Holland America - so far); this accident DOES remind us that these ships aren't too big to sink, etc. - and maybe we should re-think the rules about allowing them to transport *anyone* BEFORE giving the mandatory safety briefing (instead of the current rule of within the first 24 hours of the cruise).
Also - the current thought of going to one side or the other of a ship in case of emergency; most likely the ship is NOT going to stay up straight when/if it sinks or if there is a major disaster; not sure that having the emergency liferafts ONLY on the two sides (and not the front/back) is the wisest thing either; in the case of this ship, it listed to one side - effectively cutting the # of rescue boats to 1/2...thank goodness they WERE so close to an isalnd that people could opt to swim to shore (altho it was VERY cold).
I am going to cruise - but I'm also going to make sure I take the time to make myself aware of my surroundings, emergency exit routes, etc. and NOT rely exclusively on the crew - who are often overworked, underpaid, etc. - and (not surprisingly) often only looking out for their own well being in times of crises!
My wife and i are going on our 4th Caribbean cruise starting on Friday.Despite the tragic events of the past few days on board the stricken liner,we are waiting with child-like excitement for our holiday to begin.We are both just a couple of years away from our 60th birthdays.Unfortunately we need to travel to the airport by car travelling along a British motorway.Where I ask ,do you consider the greatest danger to lie?.Our thoughts and sympathies for all the casualties and their families.
Royal Caribbean is the parent company to Carnival Cruise Lines
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