In a note to investors Wells Fargo Securities said multiple media are reporting China and South Korea have agreed to quickly move beyond a nearly year-long dispute that since April prompted the Chinese government to boycott South Korean goods and services including suspending package tours that visit Korea, including cruises.
The restriction prompted cruise lines to modify itineraries with calls at South Korea—approximately 40% of all China cruises, according to Wells Fargo—and seek alternative ports in Japan or add sea days,
The result was net yield growth turning negative.
'We believe the path to a resolution is a positive for China/Asia 2018 net cruise yields providing a likely upside surprise to global yields given approximately 5-10% lower 2018 China industry capacity,' Wells Fargo analyst Tim Conder said in the note.
The brokerage put 2017/2018 China capacity as a percent of global operator capacity at 6%/5% for Carnival Corp. & plc, 4%/8% for Norwegian Cruise Line Holdings and 10%/7% for Royal Caribbean Cruises Ltd.
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