Can cruising go from Covid scapegoat to pandemic hero?

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Diamond Princess in Japan

In terms of economic and reputational damage, travel was the first industrial sector to fall victim to the coronavirus and is expected to be the last to recover.

And among travel products, none has taken a harder reputational hit than cruising.

But recently, a path to reputation restoration has opened, and with it the possibility that cruising may even be credited with funding advances related to epidemiology.

Crises of the magnitude of Covid-19 spur a binary result for enterprises: innovation or collapse. And the high degree of risk posed to cruise lines is measurable, reflected in the cost of the loans and investments they arranged to ensure midterm liquidity.

But signs have emerged that cruising will not only survive but even offer a case study of exemplary crisis management. Such a narrative might go like this:

When the initial reports of the virus came out of Wuhan, China, they were frightening but distant, clouded by medical unknowns and shrouded by official silence and secrecy.

A clearer, though far from complete account emerged from the disease’s devastating impact on a cruise ship quarantined dockside in Japan. For more than two weeks, the attention of the world focused on a microcosm of an emerging pandemic. The setting — the Diamond Princess — became a metaphor for contagion and fear. Every new and morbid development was broadcast worldwide.

How does a product that has never been universally embraced — it has devoted followers, but still struggles against outdated stereotypes and a persistent chorus of critics — overcome the stinging characterization of being a “petri dish” of infection?

Even within the travel ecosystem, cruising’s situation seemed particularly dire. Aviation and hospitality had been struck devastating blows; individual brands are still endangered. But because these sectors never stopped operating, enhanced protocols for sanitation were formulated and deployed quickly.

Compared with cruising, these are relatively simple operations. Airline passengers occupy just a few cubic feet of space over a brief period of time. Service is minimal.

Hotels are more complex, but they don’t move around and are typically surrounded by a community of supportive services.

A portion of cruising mirrors hotel operations, and like aircraft, ships move through multiple regulatory jurisdictions. But cruise companies also run shore excursions, manage private islands and maintain myriad public spaces, restaurants and recreational opportunities. They house staffs as well as guests. Maritime engineering and architecture bring additional challenges. And ships must be self-contained, often isolated from support for days.

It’s the sheer number of issues cruising must address that may ultimately give it its halo. Travel Weekly news editor/acting cruise editor Johanna Jainchill and I interviewed former secretary of Health and Human Services (and three-time Utah governor) Mike Leavitt, former Food and Drug Administration commissioner Dr. Scott Gottlieb, Royal Caribbean Cruises Ltd. chairman Richard Fain and Norwegian Cruise Line Holdings CEO Frank Del Rio last week on a Zoom call to discuss a panel they assembled to develop health and sanitation protocols.

The panel comprises working groups. One, for example, will recommend how to operate a safe shore excursion, breaking it down to components in order to minimize the possibility of introducing the virus from a port onto a ship.

Fain and Del Rio expressed willingness to share what they discover with other cruise lines, and Gottlieb noted that, because the challenges of cruising are diverse, the work done by the panel may have applications in other industries.

If so, the petri dish metaphor could be replaced by the image of a ship as a bubble of protection, an environment, as Gottlieb put it, of “exquisite control” that poses less threat than a land vacation.

Should this vision be realized, the extended No Sail Order may ultimately be viewed as an unintended blessing. The lines not only have the time to get it right but to emerge from the crisis as innovators and responsible corporate citizens.

It’s not a far-fetched outcome. There’s a parallel in the oft-cited challenge Tylenol faced in 1982 when cyanide was put, seemingly randomly, into bottles of the pain reliever on shelves of Chicago-area stores. Seven people died, and the brand became associated with fear and death.

At a cost of $100 million, the company recalled and destroyed all existing bottles of the drug and developed the multilayered, tamper-proof seals that have become standard for the industry. But more than that, manufacturer Johnson & Johnson was credited with putting values over profit. Confidence in Tylenol was restored and, as importantly, trust in the entire company was enhanced.

As noted above, cruising is a complex product. There are still hurdles to overcome, and the recruitment of big names for a blue-ribbon panel is not enough to ensure success. But after speaking with Del Rio, Fain, Gottlieb and Leavitt, I’m encouraged that if they follow through on their commitments for passenger safety, the industry will not only recover but may receive due credit in the annals of health and crisis management.

Cruise lines say loyalty will lead them back

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During Carnival Corp.’s business update last week, a Wall Street analyst asked whether the brands that were particularly tarnished by media coverage in the early days of the pandemic, such as Princess Cruises, were suffering more in terms of bookings.

The answer was no. CEO Arnold Donald said that not only was Princess not doing worse than other Carnival Corp. brands but was “trending with all the other brands in the industry.”

Wall Street might not understand this, but it doesn’t come as a surprise to travel advisors who understand how strong cruise line loyalty can be.

“What we noticed in our sales numbers is that Princess has remained strong since that incident,” said Vicky Garcia, COO of Cruise Planners, No. 24 on Travel Weekly’s 2020 Power List. “It did not affect them. Princess has a very loyal following, so they almost went into a reactionary mode and said, ‘I’m going to be even more loyal because they got so beat up.’ They were so loyal they wanted to defend and support it.”

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Majestic Princess

In fact, Cruise Planners data shows that Princess 2021 departures are up 11% over the same time last year and almost 40% versus the same time two years ago.

It is this level of loyalty to brands and to cruise vacations in general that has cruise line executives confident that past cruisers will be the ones to bring the industry back once ships can start sailing again. It is that confidence that also prompted Donald to declare during the call with analysts that Carnival expects demand to be “more than adequate to fill ships in a staggered restart” with fewer ships sailing, citing the two-thirds of its global guests, 8 million each year, that are repeat cruisers, and the company’s active database of nearly 40 million past guests over its nine brands.

According to CLIA’s 2020 State of the Cruise Industry Outlook, 82% of cruisers say they are likely to book a cruise as their next vacation.

While that survey was done before the pandemic, UBS Investment Bank recently asked 94 cruisers in the U.S. about  their “inclination to cruise again” and found that, while the sample is small, the survey showed that over 85% of respondents are “likely to cruise again,” while less than 5% say they “will not or [were] unlikely to cruise again.” The remainder says they “will not cruise for a long time.”

Of the cruisers surveyed, 56% expect to take a cruise in the next 18 months, and 16% said they expect to wait until there is a vaccine. Expectations for cruising this year remain somewhat low, the survey found, with 13% of those surveyed expecting to cruise in the next six months.

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Carnival Cruise newest ship Mardi Gras

Reliance on past cruisers and customer loyalty, however, will not long sustain an industry with more than 100 new ships on order through 2027, which Donald acknowledged.

“That doesn’t mean we don’t have work to do once we start cruising with much larger volumes of capacity to attract new-to-cruise,” he said. “Of course, we will have work to do, but right now the brands are strong, the bookings are encouraging, and with the staggered start we’re going to have in the resumption of cruising, there should be plenty of pent-up, latent demand with previous cruise-goers to fill the ships.”

Carnival to Delay New Ship Introductions

Costa Firenze Under Construction at Fincantieri

Carnival Corporation said it expects only five of nine new ships set for delivery in the fiscal year 2020 and 2021 to be delivered prior to the end of the fiscal year 2021.

Carnival said that due to shipyard delays and the COVID-19 pandemic, it expects later deliveries of ships originally expected for the fiscal year 2022 and 2023.

Arnold Donald, CEO, speaking on the company’s business update call earlier in the week, said they had negotiated 16 delayed deliveries. The company expects two to three new ships to be delivered on a yearly basis going forward.

The company did not elaborate on which ships would see delays and further commented there would not be cancellations.

“We are not in discussions about cancelling ships,” said Donald. “We are in discussions with the yard about timing and deliveries.”

Pre-COVID Carnival Corporation Anticipated Delivery Schedule/Orderbook:

Cruise Line Ship Cost1 Tonnage Capacity Yard Sailing Delivery
lngP&O Cruises Iona $950 183,900 5,200 Meyer Europe 2020
Princess Enchanted Princess $760 141,000 3,660 Fincantieri Eur/Carib 2020
lngCarnival Mardi Gras $950 183,900 5,200 Meyer Turku Carib 2020
redCosta Cruises Firenze $780 135,500 4,232 Fincantieri China 2020
lngAIDA Cruises AIDAcosma $950 183,900 5,400 Meyer Europe 2021
Holland America Ryndam $520 99,000 2,660 Fincantieri TBA 2021
expSeabourn Venture $225 23,000 264 Mariotti World 2021
Princess Discovery Princess $760 141,000 3,660 Fincantieri TBA 2021
lngCosta Cruises Toscana $950 183,900 5,224 Meyer Turku TBA 2021
expSeabourn Unnamed $225 23,000 264 Mariotti World 2022
lngP&O Cruises Unnamed $950 183,900 5,200 Meyer TBA 2022
lngCarnival Unnamed $950 183,900 5,200 Meyer Turku TBA 2022
Cunard Line Unnamed $600 113,000 3,000 Fincantieri World 2022
lngAIDA Cruises Unnamed $950 183,900 5,400 Meyer TBA 2023
lngPrincess Unnamed $1,000 175,000 4,300 Fincantieri TBA 2023
redCarnival China Unnamed $750 135,000 5,000 CSSC China 2023
redCarnival China Unnamed $750 135,000 5,000 CSSC China 2024
lngPrincess Unnamed $1,000 175,000 4,300 Fincantieri TBA 2025

(1) In Millions (USD) | Costs May Be Estimated

lng: LNG Powered

exp: Expedition Vessel

red: China/Asia Market Dedicated Vessel

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