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According to the Cruise Lines International Association (CLIA), the world’s largest cruise industry trade organization, 32 million passengers are set to travel on cruise ships in 2020, up from 30 million in 2019. Since 2009, cruise ship passengers have grown from 17.8 million to 30 million, an annual growth rate of 5.4%. In the meantime, expedition cruising companies, like Quark Expeditions and Hurtigruten, have been moving upmarket, offering luxury cruise ship accommodations on their expedition cruise itineraries.
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Cruise ships have been a focal point of the coronavirus pandemic from the beginning, widely blamed for a series of major outbreaks that spread the disease across the world. But Chinese travelers who fly to Europe then board a cruise back to the mainland make up a larger slice of customers, about 14 percent. This slice of customers is directly impacted by cruise lines’ travel restrictions, said Salerno. China is a growing market for cruise lines and currently makes up roughly 10 percent of the market, according to Salerno with the Cruise Lines International Association.
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The 1,100-foot ship was relocated from New Jersey to Shanghai as part of the effort to attract new passengers. The Polar Class 6 ships will hold around 378 guests, a little less than half of what its ocean cruise ships accommodate, and are designed to operate in summer and autumn in medium thick, first year ice. The Octantis will operate in Antarctica during the Antarctic summer and autumn and then transfer to the Great Lakes during the Antarctic winter and spring. The Polaris will operate in Arctic waters, offering cruises between Tromsø and the Svalbard archipelago in northern Norway. The Svalbard Islands are about 800 miles from the North Pole, roughly halfway between northern Norway and the top of the world. Why the cruise industry thinks it would be able to operate itineraries from U.S. ports and sail in U.S. territorial waters during a period when the CDC is expressly prohibiting it for 100 days is unclear.
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It similarly did not account for this two month discrepancy when asked by Skift. The cruise industry received another blow on April 9, when the Centers for Disease Control and Prevention extended its initial No Sail Order a further 100 days, pushing the potential resumption of the cruise industry’s operations until late July. Carnival Cruise Lines, Norwegian Cruises, and Royal Caribbean Cruises all together recently announced they’d canceled nearly 40 cruises and rerouted over 40. Shares are down across the three major cruise lines from 10 to 16 percent since January. Coronavirus concerns have pushed the $45 billion cruise line industry to cancel trips and reroute ships as it struggles to contain the impact from fearful travelers. Any restart of cruises would have to include major efforts to educate the public that cruising is safe, industry experts say.
Richard Caddell, a senior lecturer in maritime law at Cardiff University, told Skift there is no legal mechanism that would allow them to disobey the CDC order. Shares of the world’s largest cruise companies — Carnival Corp., Royal Caribbean International and Norwegian Cruise Lines — dropped as much as 26% Monday, after several weeks of declines as the virus’ toll continued to grow. Historically, expedition cruising in polar waters usually involved “roughing it” in older, Soviet era ice breakers in multiple bunk bed cabins. In recent years, however, luxury or high-end cruise lines, like Silversea, Viking, Crystal and Ponant, have offered itineraries in polar regions.
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Carnival and the other big companies have no revenue and face questions over whether customers will return once the threat of the coronavirus passes. “The cruise industry is really resilient and I don’t expect we’ll be talking about this in 2022,” she said. “If you look at prior outbreaks what you see is kind of short-lived duration impact on booking trends in the cruise space followed by a return to normalcy over the subsequent months,” said Sharon Zackfia, an equity analyst with William Blair.
Johnson of Coastline Travel Advisors said many cruise companies are waiving penalties they usually charge for passengers who reschedule a booked trip. He expects that cruise lines will eventually offer discounts to entice travelers back to the water. There are currently 278 ocean cruise line ships operating across 55 cruise companies with another 19 ships scheduled to debut in 2020. Passenger carrying capacity is scheduled to increase by one-third between 2020 and 2025.
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Quark Expeditions, for example, recently launched the Ultramarine, a luxury expedition cruise ship. While Hurtigruten just launched the MS Roald Amundsen, the world’s first hybrid cruise ship. The CDC also expressed its dissatisfaction with the steps the cruise industry has outlined thus far to ensure it does not continue to burden the U.S. health system during a global pandemic. According to the order, there are roughly 80,000 crew members currently aboard 95 vessels idling at sea. In addition, there are currently 15 ships at port or anchoring in US territorial waters with known or suspected cases of Covid-19 on board, and two more ships with passengers trying to return to port.
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The two ships will be the nucleus of Viking Expeditions, a new division of the company. Sustainability and reducing its carbon footprint have been major goals of the cruise industry. The industry has announced a goal of reducing carbon emissions by 40% by 2030 from a baseline in 2008. Forty-four percent of new ship construction relies on LNG fuel for primary propulsion. More importantly, roughly two-thirds of all cruise ships now utilize exhaust gas cleaning systems (ECGS), which results in a significant reduction in sulfur and nitrogen oxides as well as total particulate matter.
The silver lining -- though admittedly a thin one -- is that the ruling at least sets parameters for a return. And despite assurances from President Trump, they were left out of the $2 trillion stimulus package Congress passed last month. While analysts say the major cruise lines have enough money to survive at least another six months, the companies are scrambling to line up new financing in anticipation of a slowdown that could last even longer. Stewart Chiron, who reviews cruises on his website cruiseguy.com, said the coronavirus outbreak may be the worst blow that the industry has seen. But he noted that unlike the hotel industry, cruise lines can speed up the recovery by redirecting ships to new destinations that are not as heavily hit as China or Italy.
With hopes of tapping into a market of up to 83 million passengers, the world’s largest cruise company three years ago launched a new ship built specifically for Chinese vacationers. All three cruise lines had optimistic dates in mind for reopening at least some sailings. But now the Centers for Disease Control (CDC) in Atlanta has issued a new edict that could keep ships in port (or stuck at sea) for another 100 days.
The Carnival Corporation, which serves nearly 11.5 million travelers a year, or roughly 50 percent of the global cruise market, is at the center of the crisis. Over the last couple of months, the company has had highly publicized outbreaks on several of its ships, including the Diamond Princess and the Zaandam, which has been trying to unload sick passengers in Florida. The CDC’s No Sail Order — which was an extension of its initial order on March 14 — could end sooner than the 100-day timeline, but only if the U.S. Department of Health and Human Services declares that Covid-19 is no longer a public health emergency before then.
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