Cruise operators hurt COVID-19, but history says they will recover



This article is part of a series tracking the effects of the COVID-19 epidemic on major businesses, and will be updated.

The cruise industry was hardened by the COVID-19 epidemic, with many fearing the virus could leave a permanent injury in a sector with a history of onboard disease outbreaks. But it is in fact that what history suggests this time will be no different, and the cruises will eventually flourish again.

Cruise operators have many variables to worry about during non-outbreak periods, including fuel costs, weather, economic cycles, fluctuations in foreign exchange rates, foreign port availability, limited number of usable shipyards, and regulatory restrictions. Are included.
Throw in an outbreak of a disease, a global pandemic is rare, and it’s easy to question why anyone would get into business.


“What has been demonstrated time and time again, from various outbreaks and epidemics, is that people have a small memory.”


– Dr. William Lang, Chief Medical Officer of Worldclinic and former Director of the White House Medical Unit.

As an example of the risk to the Cruise Company’s business, the “Risk Factors” section of the S&P 500 index component Royal Caribbean Group’s RCL,
+ 5.28%
The latest 10-Q quarterly filing is 14 pages long. In comparison, Apple Inc. AAPL’s latest 10-Q risk factor segment,
-0.16%,
Less than half a page.

Royal Caribbean’s second quarter revenue fell 94% from a year earlier, while fellow S&P 500 components and cruiser Carnival Corp’s CCL,
+ 6.76%
Revenue dropped 85% in the quarter ended May 31. Nor has the company responded to a request for comment.
What has been demonstrated time and time again, from various outbreaks and epidemics, is that people have a short memory.
Take 2019 as an example. Less than a year later when a shipyard crash was seen that lowered earnings outlooks, a gastroenteritis outbreak, a Trump administration ban on cruises to Cuba, concerns over rising fuel costs following an attack on a Middle East oil refinery and A negative income due to the storm. Stock of Dorian, Royal Caribbean still managed to reach a record on 17 January.
The stock has lost nearly 50% year to date as of Thursday. Carnival shares have fallen more than 68% this year, while the S&P 500 SPX,
+ 0.67%
An increase of 7.9%.
This difficulty in running a business can be seen as a positive, as it increases the barriers to entry. But like the hotel industry is more important, cruises are a basic human wants, to be social and get away, and it satisfies them both at the same time. This not only encourages customers to forget the outbreaks, it also makes them very loyal.
The Chief Medical Officer of WorldClinic and former Director of the White House Medical Unit, Dr. William Lang stated that it is important to separate the cruise industry from the rest of the travel industry during the current COVID crisis. A cruise ship is “significantly different” than a dryland environment, he said.
Add to this that there is a possibility of being stranded at sea, if an outbreak occurs on another ship. But this did not stop people from taking cruises after the outbreak of the disease in the past.
“What has been demonstrated time and time again by various outbreaks and epidemics is that people’s memory is low,” Lang told Marketwatch.

However, an element of fear would be to close bookings for future cruises in the near future, given the uncertainty of the long-term impact of the COVID-19 virus, “which will pass,” Lang said. “People forget about it. This is a time limited event on cruises. ”

Unknown unknown

One problem with anticipating the rebound of an event is how can you do it before you even know that cruise ships can start sailing again?
What makes the cruise industry different that others in the travel business, is that the US government has direct control of the Disease Control and Prevention (CDC) when ships can sail.
Last month, the CDC announced an extension of its “No Sale Order” through September 30. But this does not mean that the day will pass after the cruises. The CDC said that following its order showed that there were 99 outbreaks of illness cases such as COVID-19, or COVID on 123 cruise ships during the period from March 10 to March 1.
Do not miss: The PAL order may be just the beginning without CDC expansion as cruise shares fall.
“Now, ever since the crisis started, we increased our operations seven times, now to have the most visits by 31 October,” Royal Caribbean chief executive Richard Fenn said in a call with analysts on 10 August. There is still a lot of uncertainty. ”
Carnival’s Italy-based cruise operator Costa Cruise plans to gradually begin operations on Sept 6, but its Holland America line is expanding its halt on cruises on 15 December.
Despite all this worry and uncertainty, customers remain loyal. Royal Caribbean has said that bookings for 2021 are “going well”, and are within historical limits, and Carnival said it “continues to see demand for new bookings for 2021,” enough in marketing Despite the shortage.
Cruise companies are considering several changes in the experience of boarding passengers and onboard to make their guests feel safe. A professor at Pace University’s Lubin School of Business, Drs. Andrew Coggins said the cruises would lead to greater cleanliness, reduce capacity, evacuate restaurants, upgrade filtration systems and use of ultraviolet cleaning equipment.
Buffet, a longtime favorite of cruisers, “can go away completely.”
As Worldclinic’s Dr. Buffet is a great way to pass the virus and other respiratory diseases, says Lang. But he said it is an easy fix for a cruise line, as it can go from an open buffet to a cafeteria-like line or a conveyor belt that trays pass through various food stations.
“These are just examples of what can be done that does not significantly change the experience, but can reduce the risk of exposure,” Lang said.
Another way to reduce the risk is to use technology to help scatter entire people before they ship.
Nadir Ali Cruz, CEO of Indipixon, an indoor intelligence company, is working with hotels. The Inpixon app works like a Waze GPS for an indoor environment, as it allows cruise operators to manage density by showing where traffic is, and allowing users to avoid crowded sidewalks and dining areas gives.
“People are going out of their homes, [so] How do you make them feel safe? “Ali said in an interview with Marketwatch. “You provide technology that allows people to see where you are and where you are going.”
Like other industries that use technology-based solutions, to make a CO-COVID world more contactless and efficient, guests will likely prefer to use it, and remember it when they can’t: “Security There may be a driver, but it definitely becomes a convenience tool, ”said Ali.
read this also: ‘It is unlikely that we can prevent widespread transmission of COVID-19 among students if our graduates return to campus’: College students on an unusual fall semester.

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