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The refugee crisis in Europe is hurting cruise-ship travel in the region, according to Arnold Donald, chief executive officer of Carnival Corp., the world’s largest cruise-line operator.
Images of bodies washing ashore and refugees packed in rafts are having a psychological impact on customer behavior, Donald said in an interview. Would-be guests are sharing their concerns in Carnival’s customer research and in questions posed to its call center operators.
“They’re asking, ‘Do I want to go to sea and have my vacation disrupted?,’” Donald said. “‘What if the ship has to stop to pick up refugees? I don’t know who they are, what am I exposing myself to?’ There is a consternation.”
Carnival got 36 percent of its $15.8 billion in revenue from Europe last year. On Tuesday its shares fell as much as 5.9 percent after the company issued fourth-quarter guidance that missed analysts’ projections.
The refugee crisis, coupled with an overall economic malaise, is affecting the entire tourism industry in Europe, but the cruise industry is hurt disproportionately because it involves ocean travel, Donald said.
Carnival has had to stop its ships twice this year to pick up refugees in the Mediterranean Sea. That’s a fraction of the voyages the company’s ships have made, Donald said.
In July a Carnival ship, the Island Princess, rescued 117 refugees off the coast of Greece, according the Migrant Report.
The Miami-based company reported third-quarter profit on Tuesday that beat analysts’ expectations. The stock was down 5.5 percent to $49.79 at 2:24 p.m. in New York, after Carnival forecast fourth-quarter profit, excluding some items, of 36 cents to 40 cents a share.
Analysts projected 46 cents, the average of estimates compiled by Bloomberg. Donald said the business is still strong and he can’t control what analysts anticipate. “We feel pretty good,” he said. “We feel like we deliver results.”
The crisis could have negative impact on Royal Caribbean Cruises Ltd. the world’s second-largest cruise line operator, and closely held MSC Cruises, Patrick Scholes, an analyst with SunTrust Robinson Humphrey Inc., said in an e-mail. Royal Caribbean didn’t immediately respond to a request for comment.
–With assistance from Justin Bachman in New York.
This article was written by Christopher Palmeri from Bloomberg and was legally licensed through the NewsCred publisher network.