Arnie WeissmannAutumn hasn't always been kind to shareholders of Royal Caribbean Cruises Ltd. (RCCL). The stock's lowest price in 2009 occurred Oct. 30 ($20.23), and similarly, hit bottom for 2011 on Sept. 30 ($21.64). But last fall saw the trend reverse. On the autumnal equinox, shares were at $30.34, and by winter solstice, they had climbed to $46.96.

Fall officially arrives tomorrow, and if midweek trends during the third week of September hold, the stock will close near or at its all-time high, having risen a bit over 66% in the past 12 months.

Shares of Carnival Corp. and Norwegian Cruise Line Holdings have risen just under 5% and just over 10%, respectively. Trading has been dynamic throughout the sector, with Carnival and Norwegian prices swinging up as much as 33% from lows to highs during the past 52 weeks; similarly, variance in RCCL's pricing in that period was almost 89% from low to high.

Stock price isn't the be-all and end-all of evaluating a company and its prospects, but clearly analyst sentiment about RCCL has been positive, and the company's stock is, to understate the situation, outperforming its competitive set.

As it happened, I had dinner with Adam Goldstein, RCCL's president and COO, this month on a day the company's stock had closed at a record high. And, to understate the situation again, he was in a good mood.

"There's a general sense in the investment community that problems have been surmounted, and the cruise industry is now on a more positive trajectory," he said. "Sometimes they see obstacles, sometimes opportunities, and for us they see opportunities in our commitment to growth, but moderate growth.

"They also understand the global growth story. China has resonated with the investment community for us."

Earlier in the month, RCCL had sold the 19-year-old Celebrity Century to Ctrip, the largest online travel agency in China. The Ctrip press release said the two companies would form a joint venture, with RCCL managing the ship's operations, and that the two had a memorandum of understanding to "potentially broaden the relationship."

Some analysts compared the deal to the joint venture between RCCL and German travel giant TUI, which sails older RCCL ship inventory. Others speculated that RCCL would manage the Century under contract, similar to the way that hotel companies manage properties owned by independent investors. I asked Goldstein if either of these analogies reflected the path forward.

"Right now, all that's happened is that we agreed to sell Ctrip the Celebrity Century. That's all that has transpired. It's not at all like TUI. Ctrip mentioned a joint venture; that remains to be seen. A memo of understanding is not a transaction.

"That said, they're a remarkable company. We know them well, and they've been one of our staunchest supporters with charters, half-charters, big groups."

Could it evolve into the hotel management model?

"Anything could evolve at this point," he said. "But it's premature to say."

As powerful as Ctrip is in China, did he have any concerns he was helping a potential competitor?

"Put aside Ctrip for a moment," he said. "There will be Chinese-owned cruise lines. It's inevitable. It's not realistic to think Western operators will control the entire cruise market. That's inconsistent with Chinese attitudes toward any industry. They're going to decide what they're going to do, and we're going to have to decide how we're going to interact with it."

I wondered about his reaction to the recent acquisition of Prestige Cruise Holdings, which brings Norwegian Cruise Line, Regent Seven Seas Cruises and Oceania Cruises under common ownership and now leaves RCCL as the only one of the Big Three without a luxury brand.

"Our focus is on our brands and the growth we have on order: over 20,000 berths," he said. "I'm sure that's larger than the entire luxury sector, by far. This isn't to say we won't one day acquire a luxury brand but, overwhelmingly, our growth has been organic, and that will, generally, remain the case."

Goldstein has held the titles COO and president for less than six months, and his former position, CEO of the company's largest brand, Royal Caribbean International, has been vacant since April. How is the search to replace him going?

"It's going, but it's not gone. Richard [Fain, CEO and chairman] is compromised because he's been very engaged with and enjoying his oversight of the brand. And the [approaching launch of the] Quantum is a natural for him."

Having spent the day speaking with financial analysts and media, the mention of the new ship reminded Goldstein that it was not only Fain who was focused on the Quantum. The ship, for many, is a symbol of the company's future.

"Analysts are fascinated by Quantum and everything it represents," he said. "The record stock price," he added, "is exciting, but in the end, we need to perform. That's what it's about. And I think [analysts] have a lot more faith in our ability to perform than in any time since the economic meltdown."

Email Arnie Weissmann at [email protected] and follow him on Twitter.


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