Leisure & Hotels Overview at Morgan Stanley

In a report published Friday, Morgan Stanley analysts mentioned that their monthly travel agents survey and webscraping work indicate that some cruise lines may be reducing promotions, which is an "encouraging indication" of robust demand. The investigations also support commentary by

and

on "record booked load factors and attempts to stem discounting," the analysts said. In the report Morgan Stanley noted, "After a solid "wave season", with both RCL and NCLH citing record booked load factors at their Q1 results, there are indications from the travel agent community that some operators are removing some promotions. While this seems to have created a lull in bookings for some, April is a quiet month, and more importantly this hopefully is a good indication of operators taking a firmer approach to pricing, something both RCL and NCLH have discussed." Following the Q1 results season, the three major listed cruise operators are all guiding to similar constant currency net revenue yield growth for FY15, with Carnival Corp

guiding to 3-4 percent growth, Royal Caribbean Cruises projecting 2.5-4.0 percent growth and Norwegian Cruise Line Holdings guiding to 3.0 percent growth. "We see upside to yield guidance for all operators given record booked load factors (for RCL and NCLH, with CCL still playing catch-up), solid demand indicators, and a nice macro tailwind. Just as important, this sets the scene nicely for 2016, which will have easy Q1 comps. The recent share price sell-off seems to reflect sentiment after the bounce in the oil price, but the translation benefit of recent USD weakness broadly offsets the fuel headwind," the analysts mentioned.