Royal Caribbean reveals numbers seeking refunds

Royal Caribbean Cruises has revealed just under half of its customers have requested cash refunds for cancelled cruises, with its operations currently suspended through to June 11.

In a business update, Royal Caribbean revealed it was holding $2.4 billion in customer deposits at the end of March and said, as of April 30, “approximately 45% of guests have requested cash refunds”.

The cruise giant is offering clients with cancelled bookings credits for future cruises worth 125% of the price they paid in lieu of cash refunds.

Royal Caribbean reported it started the year “in a strong booked position and at higher prices” than the previous year, but said: “Booking volumes for the remainder of 2020 are meaningfully lower than the same time last year at prices that are down [in] low-single digits.”

However, the company described booking trends for 2021 and beyond as at “more typical levels”, reporting: “The booked position for 2021 is within historical ranges . . . with 2021 prices up [in] mid-single digits compared to 2020.”

Royal Caribbean confirmed it continues to take future bookings for later this year, 2021 and 2022 and to “receive new customer deposits and final payments on these”.

Richard Fain, Royal Caribbean chairman and chief executive, said: “Travel restrictions and stay-at-home orders have severely impacted our operations.

“We are taking decisive actions to prioritise the safety of our guests and crew while protecting our fleet and bolstering liquidity.”

He reported: “The company’s fleet is now either in port or at anchor and we have developed strict protocols to protect our crew still on board ships.”

Royal Caribbean said it was developing “a comprehensive and multi-faceted programme” to address the public health challenges posed by Covid-19, including “enhanced screening, upgraded cleaning and disinfection protocols and plans for social distancing”.

Chief financial officer Jason Liberty reported the company had also undertaken “significant cost-cutting, capital spend reductions and other cash conservation measures” and said: “We continue to evaluate all options available to us to further enhance liquidity.”

The company had $2.3 billion in cash and cash equivalents available to it at the end of April and increased its secured credit facility on May 4.

Royal Caribbean’s ships “are currently transitioning into various levels of layup, with several ships transitioning into a cold layup, further reducing operating expenses”, he said.

The company has laid-off about one-quarter of its 5,000 US onshore employees and identified $4.4 billion in savings on capital expenditure this year and next.

This will see the deferral and delay of planned ship deliveries.

However, these measures have still left Royal Caribbean with operating expenses of $150 million to $170 million a month and total monthly expenses, including interest and debt payments, of up to $275 million.

Vouchers replace refunds across Europe

Travel companies in Europe’s major outbound markets are being forced to flout Package Travel Directive (PTD) rules on consumer refunds or face financial ruin with all short-term bookings cancelled.

Tour operators and travel agents are looking to replace refunds with vouchers or refund credit notes, and the governments of Italy, France, Belgium and Denmark have already confirmed vouchers will suffice in place of cash refunds despite the PTD requiring consumers be refunded within 14 days.

Lawyers point out consumers are unlikely to be able to recover money through the courts as legal systems across Europe are barely functioning amid the coronavirus lockdown.

Leading UK industry lawyer Stephen Mason, senior counsel at Travlaw, said: “Refunds are due for cancelled holidays but nobody can afford to pay them and suppliers are not giving money back.”

He told an International Travel Law Network video conference this week: “The advice we’re having to give [industry] clients is not so much what the law says but solutions that might work in the real world regardless of whether it’s the strict letter of the PTD.”

Klaus Siebert, the partner at law firm Engels-Siebert in Dusseldorf, said: “In Germany, the PTD means the tour organiser would have to pay back within 14 days.

“But what happens now in Germany is that all tour operators and cruise companies simply offer credit refunds – future credits or vouchers – with different validities, from up to the end of the year to up to December 2021.

“Of course, consumer associations say this is not compliant and there needs to be paid in 14 days.

“The German travel association is discussing this with the government and the government has called on the EC to say ‘Bring out guidelines’.”

Siebert said: “We know certain countries – Italy, France, Belgium, Denmark and others – have put in place a voucher solution.

“In Germany, that is still not in place but all the actors in the market work with a sort of voucher solution. There is no one paying back [money].”

Micheal Wukoschitz, of CKW Lawyers in Vienna, said: “In Austria, it’s the same. All my clients try to offer vouchers to customers, sometimes with some add on.

“But no traveller can be forced to accept such a voucher because of the PTD.

“Austrian travel associations are trying to get some sort of solution like the Italian or Belgian system, but there is great opposition from consumer associations and I don’t think the industry will succeed in getting an exemption.”

However, Wukoschitz said: “At the moment the court system isn’t really working. All court hearings are cancelled or delayed. So if a traveller filed a lawsuit now it would take a lot of time for judgment.”

Mason agreed, saying: “That is similar to the UK. The court system is not really functioning so for consumers to enforce their rights is difficult, and by the time they can enforce their rights holidays may have started again.”