Carnival’s new Fathom brand to sail to Cuba

P&O Adonia to become Fathom

Carnival Corp.’s new Fathom brand has already received permission from the U.S. government to mount cruises to Cuba and it plans to start next year.

Fathom’s Cuba cruises are scheduled to begin in May 2016, a month after the brand launches its inaugural social-impact travel experiences in the Dominican Republic. Carnival said the U.S. Treasury and Commerce departments have signed off on the cruises, which will qualify for exceptions in the law that prevents general travel to Cuba by U.S. citizens.

“We are excited about receiving U.S. approval as the very important first step to ultimately take travelers to Cuba under the existing 12 criteria for authorized travel,” Carnival Corp. CEO Arnold Donald said in a statement. “We look forward to working with the Cuban authorities for their approval to help make the social, cultural and humanitarian exchanges between U.S. citizens and the people of Cuba a reality.”

Donald appeared on “CBS This Morning” on Tuesday to talk about cruising to Cuba.

The move is a major departure for Carnival Corp., which like other U.S.-based cruise lines has strictly avoided business dealings with the Castro government.  The issue has been particularly sensitive in the large Cuban-American community in Miami, where Carnival and several other major cruise brands are headquartered.

Many Cubans in Miami emigrated there after the Communist-led coup in 1959, some emigrating after their businesses or properties were confiscated by the government and many leaving all of their possessions and property behind as they sought political refuge.

General travel to the island has been off-limits to Americans since a trade embargo enacted in the early 1960s.

The new diplomatic thaw with Cuba initiated by the Obama administration has several cruise lines seeking an opening for cruises to the island. Over the weekend, MSC Cruises, based in Geneva, Switzerland, said it will begin weekly seasonal cruises from Havana on its 2,106-passenger MSC Opera in December.

In the Dominican Republic, Fathom has identified two domestic organizations that are doing social-improvement projects already in the country. Carnival’s announcement didn’t say who it would work with in Cuba, or whether the organizations would be affiliated with the Cuban government.

However, the Carnival statement said one of its partners in the Dominican Republic, the Instituto Dominicano de Desarrollo Integral, would be interested in partnering with Fathom in Cuba.

“IDDI has longstanding relationships in Cuba and more than a decade of experience working on the ground side-by-side with local officials to make a positive impact in Cuban communities,” IDDI founder and executive director David Luther said.

Carnival said prices for a seven-day Cuban itinerary will start at $2,990 per person, more than triple the cost of a typical seven-day Caribbean cruise from Miami on its flagship Carnival Cruise Line brand. It said the price includes onboard social-impact immersion experiences and on-the-ground cultural immersion activities, but excludes taxes, port charges and other fees.

Tara Russell, president of Fathom and global impact lead for Carnival Corp., said she was incredibly excited by the potential for expanding the brand’s mission to Cuba.

“We are looking forward to building what we intend to be a beautiful and lasting friendship with the Cuban people,” she said.

Carnival Corp. records $222 million in net income in Q2

Carnival Corp. reported $222 million in net income in the second quarter, up more than 126% from second quarter 2014. Revenue for the quarter, the company said, was $3.6 billion, compared with $3.63 billion in 2014.

Carnival said its net income in the quarter included unrealized gains on fuel derivatives of $34 million and $7 million on restructuring expenses.

Net revenue yields rose 4.1% in the quarter on a constant-dollar basis, beating the company’s estimate of increases in the 2% to 3% range; gross revenue yield decreased 3.5% due to changes in currency exchange rates, it said.

Fuel prices declined 37%, to $411 per metric ton; the company spent $333 million on fuel in the quarter, compared with $527 million in Q2 2014. Net cruise costs, excluding fuel, increased 6.1%, which the company primarily attributed to an increase in drydock days.

Carnival Corp. CEO Arnold Donald said in the earnings statement that all company’s North American brands “enjoyed strong revenue yield improvement”; he singled out the Carnival Cruise Line brand and said it “performed particularly well again this quarter.”

The company said that fleetwide booking volume for the next three quarters was running “well ahead” of last year, at slightly lower prices due to transactional currency impacts. Donald said that the strong booking volume “clearly demonstrates strong consumer demand for our brands,” and he added that Carnival Corp. would step up marketing investment for the remainder of the year.

Carnival said its third-quarter net revenue yields were expected to be up 2% to 3% in constant dollars compared with Q3 2014.

This report was updated to clarify a statement from Arnold Donald regarding yield improvement in the company’s cruise brands.

Princess Cruises to put new build in China

Photo of the Regal Princess.
Princess Cruises said its 3,600-passenger ship under construction for delivery in 2017 will be deployed to China full time, with special modifications for the Chinese market.

The announcement makes Princess the second line, and the first owned by Carnival Corp., to commit an as-yet unfinished ship to China.

Royal Caribbean International broke the mold by announcing last year that the Quantum of the Seas would be stationed year-round in Shanghai after a six-month season in New York. More recently, it said a third ship in the Quantum class, the Ovation of the Seas, would also be devoted to China and Australia.

With the news, Princess Cruises dramatically increases its involvement in China. To date, Costa Cruises has been the main Carnival Corp. vehicle for China-sourced business, with the Sapphire Princess stationed in China only last year for a four-month summer season.

“Deploying our next new ship in China underscores our strong commitment to growing the China cruise market,” said Princess President Jan Swartz.

The new ship, as yet unnamed, is based on the same platform as the Royal and Regal Princess. However, it will also include distinctive features created for the Sapphire Princess, such as the World Leaders Dinner, traditional English afternoon tea, a Lobster Grill, Ultimate Balcony Dining, an ocean-view hot pot dinner option, ballroom dancing and an unparalleled duty-free shopping experience.

“And as this ship is still in the design phase we are looking forward to creating other new and exciting venues and experiences catering to the Chinese vacationer, which we will reveal in the coming months,” Swartz added.