Majestic Research

USA Today

Cruise analyst: Fares for Oasis of the Seas will drop 'significantly' over time

By Gene Sloan
Published: November 18, 2009

Are you in shock over the sky-high fares Royal Caribbean is charging for cabins on Oasis of the Seas? Don’t worry. They’re coming down.

That’s the word from Wall Street analyst Matthew Jacob of Majestic Research, who noted Tuesday in a report that pricing already is softening for Oasis sailings beyond December.

“We expect Oasis’ premiums to drop significantly over time, as we have seen with other recent new ship introductions,” Jacob says in the report. “In fact, we have already observed smaller premiums for Oasis’ (first quarter) sailings compared to the premiums the ship appears to be generating for its initial sailings.”

Jacob makes clear that Oasis will continue to command notable premiums over other Royal Caribbean ships well into 2010. Indeed, he says, interior cabins for Oasis sailings in the first quarter of 2010 are selling for about 102% more, on average, than similar cabins on other Royal Caribbean ships. But while high, that’s significantly less than the 142% premiums the ship’s interior cabins are getting for December, he notes.

Jacob says the numbers come from Majestic Research’s proprietary price-tracking data.

Jacob says that, excluding Oasis, Royal Caribbean’s net yields—a measure of the amount of money it brings in per cabin—actually could be down in the first quarter as the “halo effect” from Oasis that many industry watchers were expecting has not materialized.

“It appears that Oasis is cannibalizing the rest of (Royal Caribbean’s) fleet,” Jacob says. “Most telling is the impact to (Royal Caribbean’s) Freedom class and (sister line Celebrity Cruises’ Solstice class ships, which have seen their premiums decline significantly since the launch of Oasis.”

Looking for good value on a cruise? Royal Caribbean’s three Freedom class ships may fit the bill. Jacob notes the much-ballyhooed vessels, which took the cruise business by storm just three years ago, have seen their premium versus the rest of the Royal Caribbean fleet plummet to just 7% during the first quarter of 2010 from 27% during the third quarter of 2009—the last full quarter prior to the launch of Oasis.

Celebrity’s Solstice class ships have seen their premiums over other ships in the fleet decline to 30% during the first quarter of 2010 from 68% during the third quarter of 2009, Jacob says.