Cruise lines in turmoil over coronavirus

Cruise lines are struggling to protect the health of both passengers and their businesses from the spread of coronavirus infections
Cruise lines will still have some role to play in Cayman's tourism future, Paul Byles believes.

The outbreak of the coronavirus has caused a perfect storm for the cruise industry.

Given the dramatic coverage of quarantined ships, unexpected port closures and glum social media videos of disappointed passengers talking about how their luxury holiday turned into a quasi-prison ordeal, cruise companies are a particularly vulnerable segment of the travel industry.

Cruise lines have reacted to the spread of COVID-19 infections by cancelling or altering scheduled sailings to China and other ports in Asia, and by boosting screening procedures for passengers.

Still, several ports in Asia, the South Pacific and the Caribbean are continuing to bar ships with any coronavirus concerns from docking. To address customers’ unease, cruise companies have relaxed their terms for cancelling or postponing travel plans.

While the cruise companies are yet to release precise sales figures, cruise analysts estimate revenues for the $45 billion industry are down 15%. Share prices of the three largest cruise groups, which together account for about 80% of the market, have collapsed even more strongly in the past 30 days. Royal Caribbean’s share price is down 40.9%, Carnival’s fell 32.6% and Norwegian’s shares are worth a massive 45.7% less.

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Richard Fain, chairman and CEO of Royal Caribbean Group, did not sugarcoat the situation in a folksy social media video message to travel agents this week, but he also said coronavirus is not a reason to overreact.

“While the virus is something to be taken seriously, it’s not a cause for panic, not in a personal sense and not in a business sense either,” he said. “As far as the business impact on our business, it ain’t pretty. In fact, to use a technical term I learned in business school: it sucks.

“We’ve had to cancel cruises, we’ve lost revenue and our people are putting in long days looking out for the health and safety of our guests and our crew,” Fain added.

The Royal Caribbean CEO mixed his refreshing honesty with lessons learned from the past, citing other rough patches the cruise industry has gone through, from the aftermath of the September 11 attacks to the bird flu and Ebola virus health scares, as a reminder “that this too shall pass”.

Nevertheless, with 32 million passengers expected to take a cruise this year, the impact of the coronavirus on passenger confidence could be severe.

Minimal impact in Cayman so far

In the Cayman Islands, a downturn in cruise passenger numbers would be felt immediately in the local economy. So far, Cayman has only had two cancellations, according to Port Director Joseph Woods

“It’s hard to say what the real impact could be, because it could result in lower numbers of cruisers, or it could become a blessing, with people abandoning cruises to Asia and the Med in favour of the Caribbean,” he said.

Much hinges on whether the spread of infections can be contained. “At the moment, the cruise lines are doing their best to prevent it getting into their ships and Cayman has taken measures to try to prevent it coming here, or if it arrives, to contain the spread of it,” Woods said.

Last year 1.83 million cruise passengers visited the island, a decline of 4.7% from 2018’s near record 1.92 million cruise visitors. Statistics for January show another fall in passenger numbers of 11.3% compared to the same month in 2019, but this was still the second highest January figure on record.

Preliminary daily numbers for February from the Port Authority indicate only a 3.2% drop in passengers during the month that the coronavirus epidemic gained increasing media attention.

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