2012 has been a tough year for Carnival Corp. (NYSE:CCL). On Jan. 13, one of its vessels, the Costa Concordia, capsized after hitting rocks off the Italian coast. In all, 32 people were killed. Bookings immediately fell 80%-90% for its Costa brand and in the “high single digits” for its others. To revive bookings, the company turned to reduced ticket prices. As of mid-year, the strategy was working to entice cruisers back to its ships.
Headquartered in Miami, Carnival is the world’s largest cruise-ship company. It’s also a regional bellwether for Florida businesses. The tourism industry is integral to Florida’s economy, from restaurants to hotels to attractions — like theme parks operated by Disney (NYSE:DIS), Universal Studios and Sea World.
According to VisitFlorida.com, tourism is the state’s No. 1 industry, responsible for welcoming 85.9 million visitors in 2011 that spent more than $67.2 billion, generating 23% of the state’s sales tax revenue and employing more than one million Floridians.
From its Florida headquarters, Carnival commands a fleet of 101 cruise ships and about 91,300 employees. Its cruises are marketed under brands including Carnival Cruises, Holland America, Princess Cruises, Cunard, Costa, P & O Cruises and other brands. Carnival’s ships travel to Alaska, the Bahamas, Caribbean, Hawaii, the Mediterranean, New England, Panama Canal, South America, the South Pacific and other worldwide destinations.
Carnival is credited with changing the course of the cruise industry in the 1980s by pioneering shorter, lower-cost cruises and mass-marketing its “Fun Ship” cruise vacations to America’s vast middle class. The formula was hugely successful, and Carnival used profits to buy up other cruise lines, including the largest cruise companies in Europe and Australia. In May 2012, the company took delivery of its 101st vessel, the 3,690-passenger Carnival Breeze. Another seven ships are scheduled for delivery between 2013 and 2016.
Carnival has a market cap of around $27 billion. It also trades about 4 million shares a day and less than half the stock is owned by insiders or institutions. That means traders and everyday investors have significant interest in Carnival Corp.
To represent tourism-driven Florida, Carnival is our pick for the Real America Index.
Check out the complete list of Real America Index components, along with an interactive map of short-term and long-term returns.
As of this writing, Vicki Passmore did not hold a position in any of the aforementioned securities.