Everyone loves to go on vacation. Therefore, the idea of investing in cruise lines might drum up some excitement. However, the industry is in a difficult environment, primarily due to geopolitical tensions and high fuel prices. And when it comes to Carnival (NYSE:CCL), you can add reduced traveler confidence.

Safety concerns
Carnival's safety track record over the past two years is abysmal. On January 13, 2012, in calm waters, the Costa Concordia crashed into an outcropping off Giglio, an island off the coast of Italy. Thirty-two people perished. This led to reduced bookings as travelers began to distrust the brand, especially in Europe. 

It took time for Carnival to reestablish its brand as safe and reliable. Then, in February 2012, the engine on the Carnival Triumph caught fire. Following that frightful event, in March 2013, the Carnival Dream was docked due to equipment problems. And in October 2013, a six-year-old boy drowned in a pool on the Carnival Victory. This tragic event has quickly led to a debate over whether or not Carnival should have lifeguards at its pools. The logical answer is "yes." However, Carnival might not be so quick to act considering that it's already spending between $600 million and $700 million to improve guest satisfaction. The dilemma here is that once this news becomes mainstream and reaches families who have potentially considered traveling on a Carnival ship, they're likely to opt for a company with a better safety track record.  

Safer sailing
For instance, thanks to a better safety track record, Royal Caribbean (NYSE:RCL) has benefited from Carnival's woes. While Carnival's net revenue dropped 3.8% in its most recent quarter (third quarter) year over year, Royal Caribbean saw its most recent quarter's (second quarter) revenue improve 3.4%. Travelers simply feel safer with Royal Caribbean. However, this doesn't mean that Royal Caribbean is a slam-dunk investment. It has been cutting costs aggressively, but the company has reduced its second half ticket revenue guidance by 90 basis points, and Credit Suisse expects its pricing to decrease 5.2% over the next 12 months.

Norwegian Cruise Line (NASDAQ:NCLH) has suffered recent stock depreciation along with its peers. For instance, the stock dropped 6.48% over the past month versus 5.18% for Royal Caribbean and 14.67% for Carnival. However, there seems to be more bullishness surrounding Norwegian Cruise Line recently. This relates to its new ships which include the 4,000-passenger Norwegian Breakaway (April 25, 2013). Two Breakaway Plus vessels are expected to be delivered in Fall 2015 and Spring 2017. Norwegian Cruise Line's Norwegian Epic (4,100-passenger capacity) has also received accolades from passengers. Readers of Travel Weekly rated it "Best Overall Cruise Ship" two years in a row. This is in addition to Cruise Critic rating it "Best Ship for Sea Days."

In an interview on CNBC, C. Patrick Scholes, SunTrust Lodging Cruise Line Analyst, stated that while Carnival should see negative pricing pressure of at least 4% over the next 12 months, Norwegian Cruise Line should see pricing up 5% over the same time frame. He also set a $26 price target for Carnival (currently trading at $32.08), and a $46 price target for Norwegian Cruise Line (currently trading at $30.25).

Carnival attempts to fight through adversity
Not much of the news for Carnival is positive, and rightfully so. The company simply hasn't taken all the necessary steps to keep its passengers safe. However, Carnival is still fighting back with brand-building initiatives: a major travel outreach program, a marketing campaign featuring primetime television ads, and the introduction of its Great Vacation Guarantee (if you're not satisfied with any three to eight day Carnival vacation, you receive a 110% refund.)

While these initiatives have potential, Carnival has lowered its fiscal year 2013 guidance. It expects net revenue to decline 3% and non-GAAP diluted earnings per share to come in at $1.51-$1.57, with higher fuel prices providing a $0.04 drag. Carnival expects current challenges (geopolitical tensions/subpar demand) and cost pressures to continue throughout next year. 

Stay dry
Due to current industry trends and the company's poor safety track record, which has led to reduced traveler confidence and demand, Carnival doesn't look to be a good investment. Norwegian Cruise Line should offer the most potential, but it still must fight against weakening industry trends. 

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.