Royal Caribbean Is Optimistic About China Despite Pricing Troubles
Photo Credit: Ovation of the Seas is shown arriving in Hong Kong. Royal Caribbean Cruises said its China business has been struggling to absorb a big increase in capacity, specifically in Shanghai. Royal Caribbean International
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Royal Caribbean is adamant that it is in China for the long haul, despite short-term pricing pressures. It will be interesting to see how the rest of the industry responds if capacity proves difficult to absorb.
Royal Caribbean Cruises was expecting business to suffer in China this year as more ships sailed into the fast-growing market.
Turns out the hit was worse than expected.
On Tuesday, executives from the world's second-largest cruise company said that Shanghai in particular was struggling. As Royal Caribbean has upped its bet on the Chinese market in recent years, so have rivals, resulting in a more than 100 percent capacity increase in China's largest city this year.
Chief financial officer Jason Liberty would not say how much yields — or revenues per berth per day — had declined year-over-year in China, only that the drop was "a little bit worse" than anticipated.
Shares closed at $67.35, down more than 6 percent.
Still, CEO Richard Fain sought to reassure analysts and investors that the company was confident in the long-term prospects for the market.
"In China, we’ve been growing at 4
