Cruise Curse: More Rough Waters for Carnival's Costa Line

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Maybe it's time for Carnival (CCL) to bid the Costa brand farewell.

Another mishap on Carnival's beleaguered Costa cruise line took place this week. An engine fire on Monday aboard the Costa Allegra left the ship powerless and stranded on the Indian Ocean. It took three days before the boat was successfully tugged to shore.

It's worse than you probably think. Until reaching dry land on Thursday the passengers had no air conditioning, no running water, and no warm food. Many of the more than 600 passengers had no choice but to sleep on the ship's top deck given the unbearable heat in the rooms. Food and bottled water were routinely flown in by helicopter, but having to bathe with bottled water isn't a luxurious first-world problem.

Making matters worse, the powerless and vulnerable vessel was being slowly tugged through pirate-infested waters.
If Carnival was experiencing a slowdown in bookings across all of its lines after the Costa Concordia disaster, things aren't about to get any easier now.

Not-So-Bon Voyage

The Costa Allegra fire can't compare to January's tragic Costa Concordia incident off the Tuscan coast of Italy. More than two dozen people died in that disaster, and there are still a handful of passengers and crew members who have yet to be accounted for.

The Concordia maritime disaster made global headlines for days. Media coverage this week as hundreds of Allegra passengers disembarked in the Seychelles capital of Victoria on Thursday morning doesn't even come close.

However, the two mishaps will be fresh in the minds of potential travelers as they begin planning their next vacation. Suddenly that "Are we there yet?" road trip across the country doesn't seem so bad. It's 2012. Did anyone really think that a cruise ship getting a generator fire under control would still result in three days of waiting to be rescued?

High Noon for Midnight Buffets

Carnival will have a hard time keeping the Costa brand afloat after this latest event. It has plenty of other brands in its arsenal including Holland America, the Princess line that was made famous by The Love Boat, and -- of course -- its own namesake brand. Its Cunard, AIDA, and P&O lines are very popular overseas. However, won't this incident be a blow to bookings across its fleet?

We're not just talking about bad news for Carnival. Rival cruise ship giants Royal Caribbean (RCL) and Norwegian Cruise Lines will also have to ramp up their promotions to fill cabins now. This will be a great time for opportunistic bargain seekers to get a great deal on a future cruise.

The timing is also unfortunate. Fuel prices have been creeping up all year, and that's a major expense component for the gargantuan cruise ships. It's not just travelers that may be steering clear of hitting the open seas. Investors now have another reason to cross Carnival and its peers off from their portfolio itineraries.

Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article.



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35 Comments

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rnewman514

My wife and I made the mistake of taking a Costa cruise some 36 years ago and it was the pits. It seems that time and management have not been able to improve this marginal line. At what point do you "cut your losses" and run. Years ago the cruise lines were independent of each other. today, Carnival has a virtual monopoly on the business, but one bad apple can spoil the barrel. There are great parts of Carnival such as Holland America and Princess. Don't let a line that has set a record of decades of cruise misery contaminate the whole organization. Rename it and make it the WalMart of cruise lines.

March 04 2012 at 12:07 PM Report abuse rate up rate down Reply
geoff1walker

Carnival will probably re brand Costa under a new name. But ulnless they do something about the quality of service it will pull Carnival down further.

March 03 2012 at 2:34 PM Report abuse rate up rate down Reply
geoff1walker

Carnival will probably re brand Costa under a new name. But ulnless they do something about the quality of service it will pull Carnival down further.

March 03 2012 at 2:34 PM Report abuse rate up rate down Reply
Michelle

Good!

March 02 2012 at 9:16 PM Report abuse rate up rate down Reply
jona817

Perhaps Costa Cruise Line could draw more passengers by advertising their cruises as a genuine "Titanic" or "Pirates of the Caribbean" experience. I wonder if investors think Costa Cruise Line is a "sinking" business investment.

March 02 2012 at 7:44 PM Report abuse rate up rate down Reply
jona817

Perhaps Costa Cruise Line could draw more passengers by advertising their cruises as a genuine "Titanic" or "Pirates of the Caribbean" experience.

I wonder if investors think Costa Cruise Line is a "sinking" business investment.

March 02 2012 at 7:44 PM Report abuse rate up rate down Reply
Mr. Rockafeller

if costa cant get their act together they should be severed from carnaval.......carnaval has it hard enough without costa weighing it down futher

March 02 2012 at 4:39 PM Report abuse rate up rate down Reply
Mr. Rockafeller

there is no good reason it should have taken so long to get these folk to dry land.......other than lack of accountability and inaction by those that should have overseen a prompt evacuation.......okay...okay.....it is an area subjected to pirate attack......but it wasnt the bermuda triangle area.......nor was it in the mist of harsh cold and iceburg infested waters.....so carnaval should threaten severance from costa crociere if they dont get their act together.....

March 02 2012 at 4:36 PM Report abuse rate up rate down Reply
Mr. Rockafeller

there is no good reason it should have taken so long to get these folk to dry land.......other than lack of accountability and inaction by those that should have overseen a prompt evacuation.......okay...okay.....it is an area subjected to pirate attack......but it wasnt the bermuda triangle area.......nor was it in the mist of harsh cold and iceburg infested waters.....so carnaval should threaten severance from costa crociere if they dont get their act together.....

March 02 2012 at 4:36 PM Report abuse rate up rate down Reply
dvdfrnzwbr

Bring back the Love Boat. I miss Doc, Gopher, Isaac, Juilie McCoy, and Captain Stubing.

March 02 2012 at 3:55 PM Report abuse rate up rate down Reply