The cruise industry is back

Several cases of coronavirus have been identified on cruise ships since the restart of US operations in June, including six passengers who recently tested positive on Royal Caribbean’s Adventure Seas, testing cruise lines’ new Covid-19 protocols, which include isolation, contact tracing and passenger testing to prevent spread virus. Most of the ships were able to complete their route without issue, but American Cruise Lines, a small shipping company, cut short a crossing to Alaska earlier this month after three people tested positive for the virus.

The recovery of the industry is far from guaranteed. The highly contagious Delta variant, which is causing virus outbreaks around the world, could hamper the industry’s recovery, especially if large outbreaks occur on board. But analysts are generally optimistic about its outlook and the potential for passenger numbers to return to pre-pandemic levels, perhaps as early as next year. This optimism is fueled by what could be the industry’s best asset: an unwavering and loyal customer base.

Even during the pandemic, a large number of people who had booked chose not to accept refunds, instead converting payments already made into credit for future travel, which companies often offered at a higher value as an incentive. . Last fall, Carnival reported that about 45% of customers whose trips were canceled opted for credit instead of cash back. About half of customers in a similar position with Royal Caribbean Cruises did the same at the end of last year, the company said at the time.

“The demand is there,” said Jaime Katz, analyst at Morningstar. “You know there have been 15 months of people who have booked cruises that have been canceled.”

In April 2020, the industry was in crisis. Cruises have been halted around the world after alarming epidemics on ships, resulting in shipping bans from CDC and other global authorities.

Despite employing large numbers of Americans, the major cruise lines are all incorporated overseas and were ultimately left out of the $ 2 trillion federal stimulus package known as the CARES Act as lawmakers resent from the prospect of bailing out largely tax-exempt foreign companies. Environmentalists have lobbied against aid, citing the industry’s poor track record on climate issues. And criticism of how companies handled the first virus outbreaks aboard ships have undermined any remaining political will to help. Huge losses have accumulated as questions arose over whether cruise lines could avoid bankruptcy.

“All of our conversations here were, ‘At this rate of cash consumption for each of these companies, how long can they survive?” Said Pete Trombetta, accommodation and cruise analyst at Moody’s.

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