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Quark Expeditions, for example, recently launched the Ultramarine, a luxury expedition cruise ship. While Hurtigruten just launched the MS Roald Amundsen, the world’s first hybrid cruise ship. The CDC also expressed its dissatisfaction with the steps the cruise industry has outlined thus far to ensure it does not continue to burden the U.S. health system during a global pandemic. According to the order, there are roughly 80,000 crew members currently aboard 95 vessels idling at sea. In addition, there are currently 15 ships at port or anchoring in US territorial waters with known or suspected cases of Covid-19 on board, and two more ships with passengers trying to return to port.
Some nasty seas ahead
Among the dozens of issues are crew readiness, securing provisions, implementing passenger health screenings, and determining which ports will be open — and which might turn away a visiting ship. Then there's the challenge of simply getting potential passengers to the ship in the first place. "If any one of those 50 things don't happen, then cruise lines will have to extend the pause," Driscoll writes.
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And he added that cruise passengers are typically very loyal customers and are likely to return to cruising after the shock of the outbreak wears off. Hoping to tap into a surging middle class in China, several cruise companies began in 2016 to add lines to serve Asian markets. Royal Caribbean’s Quantum of the Seas swapped out a Johnny Rockets retro burger joint for a noodle restaurant and replaced the duty-free shop with a luxury leather boutique.
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The silver lining -- though admittedly a thin one -- is that the ruling at least sets parameters for a return. And despite assurances from President Trump, they were left out of the $2 trillion stimulus package Congress passed last month. While analysts say the major cruise lines have enough money to survive at least another six months, the companies are scrambling to line up new financing in anticipation of a slowdown that could last even longer. Stewart Chiron, who reviews cruises on his website cruiseguy.com, said the coronavirus outbreak may be the worst blow that the industry has seen. But he noted that unlike the hotel industry, cruise lines can speed up the recovery by redirecting ships to new destinations that are not as heavily hit as China or Italy.
State Of The Cruise Industry: Smooth Sailing Into The 2020’s
According to the Cruise Lines International Association (CLIA), the world’s largest cruise industry trade organization, 32 million passengers are set to travel on cruise ships in 2020, up from 30 million in 2019. Since 2009, cruise ship passengers have grown from 17.8 million to 30 million, an annual growth rate of 5.4%. In the meantime, expedition cruising companies, like Quark Expeditions and Hurtigruten, have been moving upmarket, offering luxury cruise ship accommodations on their expedition cruise itineraries.
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With hopes of tapping into a market of up to 83 million passengers, the world’s largest cruise company three years ago launched a new ship built specifically for Chinese vacationers. All three cruise lines had optimistic dates in mind for reopening at least some sailings. But now the Centers for Disease Control (CDC) in Atlanta has issued a new edict that could keep ships in port (or stuck at sea) for another 100 days.
CDC Delivers Crushing News for the Cruise Industry, Cruise Line Stocks
After the capsizing of the Costa Concordia off Italy’s Tuscan coast and the fire on the Carnival Triumph, demand for cruise trips slowed to about 2% to 3% growth per year, down from the industry’s typical 7% annual increases. Travel agencies say most of their clients who had previously booked cruise trips — even river cruises in Europe — are now postponing those trips for several months instead of canceling them altogether. “If COVID-19 confirmed cases continue to rise in North America, no lodging or cruise company could be immune to financial consequences,” Moody’s said in a report Friday. This ruling removes any ambiguity or choice for Royal, Carnival, and Norwegian in terms of their U.S. cruise schedules. That sounds like cold comfort, but it means that when the industry returns, it will come back with the permission of the U.S. government.
It similarly did not account for this two month discrepancy when asked by Skift. The cruise industry received another blow on April 9, when the Centers for Disease Control and Prevention extended its initial No Sail Order a further 100 days, pushing the potential resumption of the cruise industry’s operations until late July. Carnival Cruise Lines, Norwegian Cruises, and Royal Caribbean Cruises all together recently announced they’d canceled nearly 40 cruises and rerouted over 40. Shares are down across the three major cruise lines from 10 to 16 percent since January. Coronavirus concerns have pushed the $45 billion cruise line industry to cancel trips and reroute ships as it struggles to contain the impact from fearful travelers. Any restart of cruises would have to include major efforts to educate the public that cruising is safe, industry experts say.
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Johnson of Coastline Travel Advisors said many cruise companies are waiving penalties they usually charge for passengers who reschedule a booked trip. He expects that cruise lines will eventually offer discounts to entice travelers back to the water. There are currently 278 ocean cruise line ships operating across 55 cruise companies with another 19 ships scheduled to debut in 2020. Passenger carrying capacity is scheduled to increase by one-third between 2020 and 2025.
Cruise ships have been a focal point of the coronavirus pandemic from the beginning, widely blamed for a series of major outbreaks that spread the disease across the world. But Chinese travelers who fly to Europe then board a cruise back to the mainland make up a larger slice of customers, about 14 percent. This slice of customers is directly impacted by cruise lines’ travel restrictions, said Salerno. China is a growing market for cruise lines and currently makes up roughly 10 percent of the market, according to Salerno with the Cruise Lines International Association.
The industry provided 1.177 million jobs and an annual payroll of $50.24 billion, an average salary of around $45,000. Contrary to the widely held belief that cruise industry jobs are low paying, the industry has among the highest average salaries in the tourism and recreation sector. This has pushed the industry to the brink because the cruise lines are not included in any stimulus packages -- Royal Caribbean, Carnival, and Norwegian are not U.S. companies. They are also very vulnerable to public perception when an illness or other problem breaks out on board. The CDC taking charge may also help absolve the cruise lines from potential lawsuits that might have arisen had any of the three decided to head back to sea sooner than the others and experienced negative consequences.
Richard Caddell, a senior lecturer in maritime law at Cardiff University, told Skift there is no legal mechanism that would allow them to disobey the CDC order. Shares of the world’s largest cruise companies — Carnival Corp., Royal Caribbean International and Norwegian Cruise Lines — dropped as much as 26% Monday, after several weeks of declines as the virus’ toll continued to grow. Historically, expedition cruising in polar waters usually involved “roughing it” in older, Soviet era ice breakers in multiple bunk bed cabins. In recent years, however, luxury or high-end cruise lines, like Silversea, Viking, Crystal and Ponant, have offered itineraries in polar regions.
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