Coro­n­avirus poses a big chal­lenge for cruise in­dus­try

China has been one of the travel in­dus­try’s big­gest growth mar­kets in re­cent years

Toronto Star - - BUSINESS - TARIRO MZEZEWA

For the cruise in­dus­try, the coro­n­avirus is a pub­lic-re­la­tions night­mare.

For more than a week, the world has watched as the Di­a­mond Princess ship has been quar­an­tined in the Ja­panese port of Yoko­hama, its 3,600 pas­sen­gers and crew stuck and the num­ber of people in­fected by the coro­n­avirus climb­ing to at least 175.

A sec­ond ship has been sail­ing the South China Sea like a mod­ern-day ver­sion of the Fly­ing Dutch­man, turned away from five ports over fears that a per­son on board was in­fected.

Even thou­sands of kilo­me­tres from the out­break, in Bayonne, N.J., four Chi­nese pas­sen­gers aboard a cruise liner were briefly quar­an­tined af­ter health of­fi­cials screened more than two dozen pas­sen­gers. They turned out not to have the coro­n­avirus.

The cruise lines have faced crises be­fore, from their on­go­ing bat­tles with the norovirus, which can tear through an en­tire shipload of pas­sen­gers caus­ing gas­troin­testi­nal prob­lems, to the 2012 sink­ing of the Costa Con­cor­dia, whose cap­tain ran it aground off the coast of Italy, killing 32 people.

But COVID-19, as the dis­ease stem­ming from the virus has been named, whose ul­ti­mate world­wide spread is still to be seen, could be its big­gest chal­lenge yet. “The longer ships like the Di­a­mond Princess stay in the press, the more people who have never taken a cruise be­fore think of cruis­ing as a less than ideal va­ca­tion,” said James Hardi­man, manag­ing di­rec­tor of eq­uity re­search for Wed­bush Se­cu­ri­ties, who fol­lows the in­dus­try.

Cruise com­pa­nies have been re­luc­tant to re­lease any data about whether there has been any im­pact on book­ings in the $45.6 bil­lion (U.S.) global in­dus­try in the weeks since the out­break be­gan in the Chi­nese city of Wuhan, but some travel ad­vis­ers said they are off by10 per cent to 15 per cent.

The com­pa­nies, in­clud­ing the big­gest lines like Nor­we­gian Cruise Lines and Car­ni­val Corp., which in­cludes Princess Cruises, have ei­ther de­clined to comment or re­leased state­ments re­it­er­at­ing that their pri­or­ity is pas­sen­ger safety.

Each cruise line also listed the pre­cau­tions it is tak­ing to keep pas­sen­gers safe: Be­cause they typ­i­cally have thou­sands of people in a small space over an ex­tended pe­riod, cruise ships are known to be in­cu­ba­tors for ill­nesses.

Royal Caribbean of­fered a glimpse into the sit­u­a­tion in a Feb. 4 state­ment but would only go so far as to say “the Wuhan coro­n­avirus and the ef­forts to con­tain it are ex­pected to neg­a­tively af­fect our re­sults.” The com­pany, whose ship was briefly stopped in Bayonne, an­nounced that no one with a Chi­nese pass­port would be al­lowed to em­bark on a Royal Caribbean cruise, a de­ci­sion later re­scinded af­ter an out­cry.

But Erika Richter, se­nior di­rec­tor of com­mu­ni­ca­tions for the Amer­i­can So­ci­ety of Travel Ad­vi­sors, an in­dus­try group, said that de­mand for cruises, which had been on an up­ward tra­jec­tory be­fore news of the coro­n­avirus broke, was off from 10 per cent to 15 per cent, ac­cord­ing to some ad­vis­ers.

Not sur­pris­ingly, cruises in Asia and the Pa­cific were es­pe­cially hard hit. Alex Sharpe, pres­i­dent and chief ex­ec­u­tive of Sig­na­ture Travel Net­work, a con­sor­tium of 7,000 travel ad­vis­ers, said that, “New de­mand for these cruises is very low cur­rently,” and that spring sail­ings were “un­likely to sell from our mar­ket.”

“If the in­dus­try doesn’t get its arms around this, it could af­fect cus­tomer con­fi­dence in China to­ward cruises for a very long time,” said Hardi­man, of Wed­bush Se­cu­ri­ties.

China has been one of the travel in­dus­try’s big­gest growth mar­kets in re­cent years, and trips in the Asia-Pa­cific re­gion make up about10 per cent of the in­dus­try, ac­cord­ing to the Cruise Lines In­ter­na­tional As­so­ci­a­tion, a trade group. Be­tween eight per cent and nine per cent of pas­sen­gers on cruise lines rep­re­sented by the trade group are from China, Ma­cao or Hong Kong, and the num­ber of ships deployed in Asia grew 53 per cent be­tween 2013 and 2017.

A grow­ing num­ber of ports across the Pa­cific, from Bu­san, South Korea, to the New Cale­do­nian ports of Li­fou, Mare and Isle of Pines, are ban­ning cruise ships. Hong Kong has been closed since Feb. 6.

Pas­sen­gers said that rather than try­ing to ac­com­mo­date them, cruise com­pa­nies have been un­com­mu­nica­tive and un­help­ful. Maranda Priem, 24, of Wash­ing­ton, D.C., and her 53year-old mother, from Min­nesota, were sup­posed to be aboard the Nor­we­gian Jade, a 2,200-pas­sen­ger ship op­er­ated by Nor­we­gian Cruise Lines, which was orig­i­nally sched­uled to de­part from Hong Kong on Feb. 17 for a cruise stop­ping in Sin­ga­pore, Viet­nam and Thai­land.

As her con­cerns about the coro­n­avirus grew, Priem re­peat­edly emailed and called the com­pany ask­ing if she could switch to a dif­fer­ent cruise or re­ceive a re­fund or fu­ture credit. Her re­quests were de­nied. In an email Feb. 4, Rox­ane San­ford, co-or­di­na­tor of guest re­la­tions for the cruise line, re­minded Priem that “main­land China does not in­clude Hong Kong, Ma­cao or Tai­wan” and added that “re­gret­tably, we are un­able to pro­ceed with can­cel­la­tion and re­fund.” When the Hong Kong port closed, the com­pany moved the sail­ing to Sin­ga­pore, a change in itin­er­ary that re­quired Priem and other pas­sen­gers to re­book their flights and ab­sorb any ex­tra costs. On Wednesday she de­cided to can­cel, with­out know­ing if she would get the nearly $1,700 (U.S.) she paid for the cruise back.

“It’s been a bit of a night­mare deal­ing with Nor­we­gian,” she said. “Nor­we­gian won’t tell us what they will re­im­burse, and they haven’t been help­ful.”

Nor­we­gian Cruise Line did not re­spond to re­quests for comment.

When a ship’s itin­er­ary is changed, “pas­sen­gers have lit­tle re­course as a prac­ti­cal mat­ter,” said Jim Walker, a mar­itime lawyer who rep­re­sents people su­ing cruise lines. “Cruise lines are able to freely al­ter their itin­er­ar­ies, and if you don’t have in­surance, you’re just stuck, and the trou­ble with in­surance is, it of­ten has ex­cep­tions for pan­demics and things like this.”

Walker said that he has re­ceived a “sig­nif­i­cantly higher” vol­ume of calls from trav­ellers look­ing for guid­ance on how to deal with cruise lines chang­ing itin­er­ar­ies with­out of­fer­ing re­funds or the chance to resched­ule.

Cruises tend to be ex­pen­sive — with an av­er­age nine-day sail­ing in Asia run­ning about $1,800 (U.S.), travel ad­vis­ers said — and book long in ad­vance. An­gela Jones, 56, from Can­ton, Ga., a pas­sen­ger on the MS Wes­ter­dam, the Hol­land Amer­ica ship that was stuck in limbo look­ing for a port that would take it, booked her trip 1.5 years ago.

When news about the coro­n­avirus broke, her daugh­ter, Jor­dan Jones Dor­man, said Tues­day, “She con­sid­ered can­celling, but the com­pany said re­peat­edly that they’d be OK and wouldn’t offer a re­fund if she can­celled. She’d been sav­ing up for this trip. Hind­sight is 2020, but why was the cruise still hap­pen­ing?”

Sihanoukvi­lle, in Cam­bo­dia, fi­nally agreed to let the ship dock Wednesday. Hol­land Amer­ica Line said that it would ar­range and pay for all pas­sen­gers’ flights home, in ad­di­tion to giv­ing a full re­fund for the cruise.

Hardi­man, of Wed­bush Se­cu­ri­ties, es­ti­mated that it cost Royal Caribbean about $4 mil­lion to can­cel a re­cent four-day cruise.

“Cruise com­pa­nies have never seen this be­fore and just don’t know what to do,” said Ross Klein, a so­ci­ol­o­gist at Me­mo­rial Univer­sity of New­found­land who stud­ies the cruise in­dus­try. “For the cruise lines and the in­dus­try, a lot of these de­ci­sions are based on eco­nom­ics. They are ask­ing them­selves, ‘How do we get by spend­ing the least amount of money and los­ing the least amount of money?’ ”

“Cruise com­pa­nies have never seen this be­fore and just don’t know what to do.”

ROSS KLEIN ME­MO­RIAL UNIVER­SITY OF NEW­FOUND­LAND SO­CI­OL­O­GIST

BEHROUZ MEHRI GETTY IM­AGES FILE PHOTO

A grow­ing num­ber of ports across the Pa­cific are ban­ning cruise ships. Hong Kong has been closed since Feb. 6.

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