Smooth sailing not assured as cruise lines prepare to set sail
Some cruise lines are hoping to set sail later this summer but with images of coronavirus-ravaged ships still fresh in many minds, the industry could face years of choppy water ahead.
The global cruise industry expected to carry 32 million passengers and take in $71 billion in revenue this year. That will fall by at least 50% this year, says Euromonitor International, a consulting firm. It took the industry three years to recover from the 2009 recession; this time, it will take longer, Euromonitor analyst Alex Jarman said.
“Unlike the previous downturn, the pandemic has put the safety of cruises into question,” Jarman said.
Cruise lines stopped sailing in mid-March after several high-profile outbreaks at sea. More than 600 people fell ill aboard Carnival Corp.’s Diamond Princess while it was quarantined off the coast of Japan, for example. Fourteen passengers died.
Christina Kerby was trapped aboard a Holland America cruise ship in February after several ports in Asia refused to allow it to dock.
“I will take a cruise again someday,“said Kerby, of Alameda, California. “Just not anytime soon.”
Since they stopped sailing, Carnival, Royal Caribbean International and Norwegian Cruise Line — which control 75% of the market — have furloughed thousands of staff and obtained billions in bank loans to stay afloat. Major cruise companies weren’t eligible for U.S. government loans because they’re incorporated overseas.
Norwegian warned of a possible bankruptcy in early May, but then raised $2.2 billion through a sale of stock and debt. It now says it can withstand a shutdown for as long as 18 months. Smaller operators could have more trouble, experts say. Virgin Voyages, a new cruise line owned by Richard Branson’s Virgin Group, has twice postponed its first sailing. Virgin Australia — an airline in which Branson holds a stake — filed for bankruptcy protection in April.
The U.S. Centers for Disease Control has prohibited cruises in U.S. waters through July 24. Operators in Europe and Asia could sail sooner; some German river cruises resumed last week. But most big cruise lines are using this time to refine their plans, upgrade their ships and figure out how to resume safely.
Norwegian says it’s installing medical-grade air filters on its ships and adding medical staff, for example. Carnival is raising the temperature in its washers and dryers to make sure napkins and sheets are fully sanitized.
Cruise companies are talking to U.S. regulators, to foreign ports and to each other, said Brian Salerno, senior vice president for maritime policy at the Cruise Lines International Association, a trade group that represents 95% of ocean cruise companies. That doesn’t always happen in the fiercely competitive business.
“A safety failure for one affects them all,” Salerno said
For now, cruise lines are offering big discounts. Brian McLaren, who leads the cruise division for the Liberty Travel agency, said it’s common to see 20% discounts or $200 off per person. McLaren said bookings for 2021 cruises are solid, partly because people with cruises this spring have been rebooking.