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North America and Europe: Carnival’s most lucrative markets

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Geographical distribution of Carnival’s capacity

Carnival Corporation (CCL) operates in the most lucrative cruising markets, including North America and Europe. North America is a dominant market accounting for 55% of all cruise passengers. Europe follows with 30%.

It’s evident from the regional capacity distribution that Carnival Corporation serves the most popular cruise destinations of the world, including the Caribbean and Alaska in North America and fast-growing destinations in Europe and Australasia.

The North America destination

North America is the largest cruising market. Three-fourths of its capacity is deployed in the Caribbean region. The next largest market in the region is Alaska with 10% capacity. Carnival Corporation (CCL) operates in both these markets. Almost 35% of its capacity is deployed in the Caribbean region, which is the largest cruise destination with a global share by capacity of 36%. A capacity of 5% is deployed in Alaska. The company competes with brands offered by Royal Caribbean Cruises Ltd. (RCL) and Norwegian Cruise Line Holdings Ltd. (NCLH) in most of the popular destinations in the region.

Europe and Australasia

Europe is Carnival’s Corporation’s second-largest market. The region accounts for 29% of its total capacity. Europe and the rest of the world are fast-growing markets for cruising. Passenger growth in these markets has been faster compared to the growth in the North American market.

According to Cruise Lines International Association (or CLIA), Europe’s share of the global cruise market has risen from ~22% in 2003 to 30% in 2013, while the share of the rest of the world increased from 9% to 14.5%. Growth in the rest of the world was driven by a strong demand in Australasia where Carnival’s share of capacity has increased from 8% in 2012 to 12% in 2013.

A number of ETFs have invested in shares of cruise liners to take advantage of the growing demand. These include the PowerShares Dynamic Leisure and Entertainment Portfolio (PEJ), the PowerShares Dynamic Large Cap Growth Portfolio (PWB), and the Consumer Discretionary Select Sector SPDR Fund (XLY).

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