Costa brand will bounce back it’s a matter of time & Concordia & Allegra are written off .
Contributors are not employed, compensated or governed by TD, opinions and statements are from the contributor directly
Costa Cruises is expected to lose about £65 million a swing of £320 million from last year due to the fallout from the 13 January Costa Concordia incident and the latest Costa Allegra incident in the Indian Ocean. In a recent conference call discussing the disappointing first quarter results the company’s executives expressed confidence that Costa will bounce back, it is only a matter of time.
The company is already seeing signs of improvement, especially among its North American brands. In the first month after the Concordia grounding, Costa bookings plunged 80 to 90 percent, in the last three weeks they were 40 to 50 percent lower signalling some improvement even at a time where no Costa marketing or advertising is carried out.
Micky Arison , Carnival’s chairman and ceo and Howard Frank, the lines chief operating officer both expressed confidence that the Costa brand will bounce back. “I think people, even in Italy are seeing this as a one-time freak event …a very unfortunate incident,” Frank said.” It will take a year or two to come back but it will come back.”
Arison said extensive surveys conducted among Italian consumers indicate they “continue to view Costa as great vacation option… There’s no question Costa will come back and come back stronger than ever.”
Both executives confirmed that fares are not being dropped to encourage bookings, even at the expense of lower occupancy levels. Costa’s fleet is currently down by three ships, with the Costa Concordia now declared a total loss, Costa Allegra is to be written off as the high cost of repairs cannot be justified . The Costa Marina left the fleet late last year, Arison stated the 1969-built Costa Allegra had been up for sale and would have been removed from the fleet once a buyer was found.
The executives noted that the Carnival Cruise Lines brand is performing especially well so the Concordia incident does not appear to have scared off first time cruisers. As a contemporary line the brand attracts a higher ratio of first time cruisers yet it suffered the least impact according to Arison.
Some of the premium brands in Europe are struggling a little more with their European cruises, citing economic troubles and high cost of air travel as the main reason; the Concordia fall-out may also play a role.
But a number of consumer surveys indicate safety is not the number-one reason people are holding back from booking a cruise, Arison said. “Clearly there is recognition that this is a very, very safe industry,” he said. “The top reason is the expectation that prices are getting lower. At this point, there is no reason to believe that to be the case, and as people realize that, they’ll come of the fence and book cruise vacations.”
It additionally announced that the stricken Costa Concordia which is still partially submerged on rocks near the island of Giglio is beyond repair and will be totally written off costing the insurers in excess of £400 million .