Norwegian Plans Phased Return to Service

Norwegian Dawn
Norwegian Dawn

“I will do everything humanly possible to be able to look my own family in the eyes and say they will be safe on our cruise ships,” said Frank Del Rio, chairman and CEO of Norwegian Cruise Line Holdings (NCLH), on the company’s first-quarter earnings call.

Del Rio said NCLH is working with experts to develop health protocols that will be robust to gain CDC approval and generate confidence among the public. The same process must be replicated around the world.

When the no-sail order is lifted by the CDC, Del Rio said he expects that the company’s brands will return to service in a phased order of roughly five vessels a month, assuming ports are open and they can sail their designated itineraries.

Norwegian Bliss

With 28 vessels, it will take roughly six months to bring the whole fleet back into service. It is also unknown at this point whether they will be allowed to sail at 100 per cent capacity.

Consumer demand is still there, according to Del Rio, despite all the negative press. He noted that bookings are still coming in, despite the suspension of marketing activities, and expects that cash coming in will overtake the net cash outflow (refunds) in the next 60 days.

“There is pent up demand; people want to cruise again,” he added, noting that world cruise segments for the Regent and Oceania brands were sold out, with customers flying to embarkation points in Japan and Dubai.

However, with a booking curve from six to eight months out, it will take time before the pipeline is full or nearly full, he said.

Mark Kempa, CFO and executive vice president, commented that he sees 2021 as a transition year and that NCLH may be able to rebuild in earnest in 2022, bringing the company back on the track it was prior to COVID-19.

Newbuild deliveries may be delayed 12 to 18 months, added Del Rio.

It’s not a great time to woo first-time cruisers

Cruise ships in Costa Maya, Mexico.
Cruise ships in Costa Maya, Mexico. Photo Credit: Byvalet/Shutterstock

In January, Jessica Fricchione and 10 of her family members booked what would have been her first cruise, a Bermuda sailing out of Baltimore leaving on May 31.

Due to the coronavirus crisis, the group’s sailing was cancelled — and they have no interest in taking a future cruise credit.

“No one in the family wants to book a cruise again,” she said, adding that they were looking into a stay at an all-inclusive resort instead. “I don’t ever, ever want to be stuck on a cruise ship.”

Justified or not, the cruise industry’s reputation took a hit from the high-profile Covid-19 outbreaks on a handful of ships in March and April.

Industry stakeholders acknowledge that media coverage of those ships being turned away from ports and, in some cases, of passengers being quarantined in their cabins for weeks on end is most likely to have an impact on the potential-cruiser set.

In a media call last month, Carnival Corp. CEO Arnold Donald said there was “no question” that the media attention would have an impact on that market segment.

“There have been people who may have been considering [a cruise] who would be having second thoughts at this point in time,” he said.

The first-time cruiser has always been considered critical to the growth of cruising. Despite CLIA lines’ global passenger growth of about 60% since 2009, to 30 million in 2019, cruising is still vastly underpenetrated compared with other vacations: 11.9 million Americans cruised in 2019, only about 3% of the population.

Travel advisors expect that the crisis will cause a decline in the new-to-cruise market.

“When you’re dealing with first-time cruisers, you typically have to overcome some fear of the unknown with cruising, such as seasickness, boredom, claustrophobia,” said Anthony Hamawy, President of Cruise.com. “The current negative press around cruising will add to those fears.”

Signature Travel Network CEO Alex Sharpe said that those who’ve never been on a cruise can’t draw upon personal experience to put into perspective what they are seeing and hearing from the media.

“If you’ve been watching the news and you’re not a cruiser and you can’t put what [ships with Covid-19 outbreaks] have been through in any context with your own family’s great times on a ship, it’s hard to reconcile that and say, ‘That’s my next vacation,’” Sharpe said. “I think new-to-cruise will take a hit in the short term. That will take some time.”

Some cruise lines have found that booked passengers who were new to cruise have been more likely to cancel cruises they had booked during the current operations pause.

Mark Conroy, Silversea Cruises’ managing director of the Americas, said that new cruisers have been more likely than past passengers to cancel and take a refund versus a future cruise credit because they are “more nervous.”

Loyalty program members “will come back first,” he said. “They’re the people that know us and love us and travel with us every year or every other year. They’re the ones that are eager to go.”

Repeat cruisers will lead the way

Many think that those who were once potential cruisers and are now on the fence can be swayed back once cruise lines are up and running.

Charles Sylvia, CLIA’s vice president of membership and trade relations, said that there will be “more challenges ahead with regard to the first-time cruisers” but that people returning from cruises with positive stories will put them at ease.

“Once they see the resumption of operations and once they see friends and family members and co-workers going on cruises and coming home with that same level of enthusiasm and satisfaction, then they will be back — the first-time cruisers will come to us,” Sylvia said.

Donald also said that returning cruise passengers, as well as travel advisors, will be the most important messengers in overcoming the additional concerns non-cruisers have. He added that this is something the industry is accustomed to dealing with.

“We were busy knocking down myths before, and we’ll have to return to that,” he said, adding that the two “most powerful ways” to do that is through travel advisors, “with their knowledge and experience and personal relations with their clients,” and the passengers, who will “provide the kind of testimonials and credibility with their friends and colleagues and relatives.”

And as has always been true for travel coming out of every crisis, for some people, the right price is a big persuader.

“I think, with time, this will be overcome because the vacation value will ultimately win out,” Hamawy said.

When the Major Cruise Lines Plan to Restart Service

Carnival Splendor

The major cruise lines are planning to start operations again this summer.

Carnival Cruise Line

Carnival Cruise Line, in an update, said it intends to start cruising again with some ships in North America starting on August 1, while other itineraries and ships are projected to start service again later this year. Carnival plans to have eight ships in service from Miami, Port Canaveral and Galveston on short cruises.

Royal Caribbean International

Royal Caribbean announced it had extended its suspension of sailing for its global fleet through June 11, 2020.

The company said it plans to return to service on June 12, 2020, with some previously announced exceptions.

The most crew is also being sent home.

MSC Cruises

MSC Cruises announced a further extension of the halting of all its new cruise departures fleetwide through to July 10.

MSC Cruises USA is offering guests affected by this measure a Future Cruise Credit (FCC) where they have the opportunity to transfer the full amount paid for their cancelled cruise plus an additional 25 per cent credit to a future cruise of their choice, on any ship and any itinerary, departing on or before December 31, 2021.

Norwegian Cruise Line

Norwegian Cruise Line announced in late April an extension of its pause of service through the end of June. Norwegian Cruise Line Holdings recently raised enough capital to keep it going in a zero-revenue situation through early 2021.

Costa Cruises

Costa ships are out of service through early July at this point.

Princess Cruises

Princess Cruises, in a recent update, cancelled the remainder of its summer season. 

AIDA Cruises

All AIDA sailings through June 30 are currently cancelled.

Celebrity Cruises

Royal Caribbean, which owns Celebrity, announced it had extended its suspension of sailing for its global fleet through June 11, 2020.

Holland America Line

Holland America Line has extended its pause of global cruise operations and cancel all Alaska, Europe and Canada/New England cruises for 2020, according to a press release.

In addition, Amsterdam will not operate the 79-day Grand Africa Voyage from Boston, Massachusetts, to Fort Lauderdale, Florida, that was scheduled to depart on Oct. 3, 2020.

TUI Cruises

German brand TUI Cruises has hit pause through June 11, in line with Royal Caribbean, which is a partner in TUI Cruises in a joint venture arrangement.

Marella Cruises

Should it be safe to set sail, Marella Cruises will commence its summer 2020 program in July 2020, with three of its five ships sailing. More details here.

Bahamas Paradise

Sailings will resume onboard Grand Celebration on June 13 and onboard Grand Classica on July 10, according to a press release.

Hurtigruten

Hurtigruten is planning for a gradual restart of operations on the Norwegian coast. The first planned departure will be Finnmarken from Bergen on June 16.