Johanna Jainchill
Johanna Jainchill

Royal Caribbean Cruises Ltd. releases its fourth quarter and full year 2008 earnings this week, and given the current economy and recent indications of just how dismal the end of '08 was, some equity analysts can be expected to downgrade the cruise sector.

Wall Street hasn't been kind to cruise companies of late. Goldman Sachs' analyst Steve Kent recommended shareholders sell shares of Carnival and RCCL and issued a cautious note on the cruise sector overall. Cruise shares have fallen to historic lows.

But at least among cruise sellers, these Wall Street analysts just don't carry the weight they did before Lehman Brothers and Bear Stearns went belly up and before some banks became beggars.

Travel agents were always quick to pounce on analysts who have called on cruise lines to cut costs, specifically those associated with the agency distribution system. It is not without a drop of schadenfreude that some of those agents now brush off any such recommendation from Wall Street.

"I can't believe you even print advice from so-called experts who were bailed out by the government because they can't manage money, not honestly anyways, to successful [cruise] companies," wrote one travel agent.

Another said, in response to a question from Goldman's Kent during Carnival Corp.'s fourth-quarter call on whether Carnival would cut agent commissions: "Leave it to Wall Street to once again recommend the cruise lines cut commissions to travel agents. We all have seen how well that worked out for the airlines," the agent wrote. "I don't think any of the banks that performed so bad that they are now subsidized by U.S. taxpayers should be doling out advice to anyone. Especially companies that have made billions by using the agency community."

Agents will no doubt be looking for RCCL executives to stand up for the community the way Carnival CEO Micky Arison did last month, when Kent asked whether Carnival would cut agent pay.

"The answer is absolutely not," Arison replied. "Times like this, more than ever we need a strong distribution system. And we need folks out there selling the cruise concept, selling our various brands all over the country; hundreds of thousands of them, the more the merrier.

"And the reality is that we will support that distribution as long as I'm CEO of this company," he added. "What was the first part of the question?"


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