The U.S. Travel Association has engaged MMGY to conduct an ongoing survey to monitor the impact of COVID-19 on U.S. travelers. The online survey designed and analyzed by MMGY Travel Intelligence is conducted bi-weekly among 1,200 U.S. residents who have taken an overnight trip for either business or leisure in the past 12 months. The maximum error at the 95% level of confidence for a sample of 1,200 +/-2.83%.
These are the results for Wave II April 4-11, 2020
The coronavirus outbreak has dealt an almost knockout blow to the cruise industry.
While many airlines still are operating (albeit with greatly reduced schedules) and many hotels remain open, coronavirus-related government travel restrictions and port closures have forced pretty much every single cruise ship on Earth to stop sailing.
The outbreak also has ravaged the cruise industry’s reputation, thanks in part to a seemingly endless succession of headline-grabbing coronavirus-related disasters, from the quarantine of the Diamond Princess in Japan to the plight of the long-stuck-at-sea Holland America ship, Zaandam.
Cruising will resume at some point, of course. Ships won’t sit idle forever. But when it does, it may look a lot different than it did just a few months ago — at least initially.
It’s still unclear when cruising will be able to start again. Several major lines already have canceled sailings into the early summer. A few have dropped voyages on specific ships as far out as October, and more cancellations could be coming.
But, based on what we’re hearing from cruise line executives, longtime industry watchers, health officials and the destinations where cruises operate, here are some key changes we think we’ll see when cruise vessels finally return to the world’s oceans.
No more self-service buffets
To some hardcore cruisers, just uttering these words could be considered blasphemy, but we have to say it: The days of the free-for-all, self-service cruise buffet may be over — at least for a while.
While we don’t expect cruise buffets to disappear completely, we expect lines to increase staffing in such venues so that it’s the crew — not passengers — serving food onto plates. This would be an attempt to cut down on the transmission of illness that can happen when multiple people touch the same serving utensils.
This is not without precedence. Cruise ships often restrict passengers from serving themselves at buffet lines during onboard outbreaks of common illnesses such as norovirus. In such situations, they’ll also place crew at self-serve drink stations to hand out drinks, so passengers don’t touch the machines. They’ll remove highly touched items such as salt and pepper shakers from tables.
Already, two Asia-based cruise lines, Dream Cruises and Star Cruises, have said they would suspend self-serve food service when cruising resumes. The lines, which are both owned by the cruise and resort company Genting Hong Kong, said all food and beverage on vessels would be served by crew wearing masks and disposable gloves.
Genting Hong Kong also is the parent company of U.S.-based Crystal Cruises.
Restrictions on who can cruise
When cruising resumes, some cruise ships could be off limits for a time to older travelers and those with preexisting medical conditions — those most at risk of complications from COVID-19.
Before they stopped sailing in March, several cruise lines including Royal Caribbean and Celebrity Cruises announced new rules banning travelers ages 70 and up from ships. Only those who had letters from a doctor saying they were fit to travel could board. The lines also said they would deny boarding to anyone with a serious chronic illness of any age on ships.
The U.S. Centers for Disease Control and Prevention (CDC) may require even stricter limits on who can cruise. The above limits on older travelers and those with preexisting conditions were part of an early cruise industry plan to contain coronavirus on ships presented to the CDC. But in a nine-page “no-sail” order issued last week for cruise ships sailing out of U.S. ports, the agency suggested the industry needed to develop a far more robust plan before resuming operations.
New health screenings
Several cruise lines already have announced plans for temperature checks before passengers board. But the CDC’s “no-sail” order also called on lines to develop plans for “onboard monitoring of passengers and crew through temperature checks and medical screenings.”
What exactly that would look like is still unclear. Will cruisers need to undergo periodic in-person medical checks during voyages? Will they need to fill out health questionnaires on a periodic basis? For now, it’s all up in the air. But expect health screenings of some type to be a bigger element of your next cruise vacation.
One possibility is that passengers on some ships will be issued thermometers after boarding and asked to check and report their temperatures regularly. We could see this happening, in particular, on vessels that experience a flare-up of cases of coronavirus-like illness among passengers or crew. During the coronavirus outbreak on the Diamond Princess in Japan, health officials ordered just this sort of regular temperature testing among passengers.
Some industry watchers have urged cruise lines to conduct rapid response COVID-19 tests on every passenger just before boarding, which could help keep people who are sick off vessels. Some airlines already are considering similar measures — and one is already doing it. Earlier this week, Emirates became the first airline to implement such tests, in coordination with the Dubai Health Authority. Emirates is performing COVID-19 tests on departing passengers in Dubai that provide a result in as few as 10 minutes.
In addition to preventing passengers with the virus from boarding cruise ships, such testing would provide passengers with documentation showing they are free of COVID-19: something some destinations are now requiring for entry.
Related: Preboarding screenings and new cleaning procedures: How US airlines are working to keep flyers healthy
Enhanced cleaning on board
Cruise line executives already have promised more robust cleaning on ships, and we expect to see a lot of changes in this area. Not that cruise lines haven’t been on top of cleaning in the past.
It’s already common on ships for crew to regularly wash and disinfect handrails, elevator buttons, gym equipment and other high-touch surfaces on a frequent basis — often several times a day. Cruise lines in recent years also have aggressively pushed customers to regularly wash and sanitize their hands while on ships.
Anyone who has been on a vessel lately knows that it’s almost impossible to get into a dining area without either washing your hands or using antibacterial gel, which is almost always available on stands near dining area entrances. Most cruise lines station crew at dining area entrances to require passengers to wash or sanitize their hands.
Related: You can sail on a self-disinfecting cruise ship with Hyatt points
So far, we haven’t seen crazy deals for cruises scheduled to depart later this year or in 2021. But the consensus among longtime industry watchers is that the deals are coming. Cruise lines are just waiting to see when they can resume service before kicking off heavy discounting.
In a research note sent to investors last week, leisure analyst Harry Curtis of Instinet said ticket prices could fall 25% to 30% on average after cruising resumes.
Related: Big cruise companies can survive shutdown lasting many months, analyst says
Some of the biggest markdowns could come for close-in departures that have a lot of open inventory due to customer cancellations. But further-out voyages are likely to be marked down, too. Many Wall Street analysts think it could take several years for pricing to rebound to the levels of just a few months ago.
Pricing in the cruise world is very sensitive to changes in supply and demand, and — at least initially — demand is expected to be down significantly once cruising resumes.
Less crowded ships
It seems almost unthinkable that cruise lines would run ships at less than full capacity. Operating at 100% of capacity — or even more than 100%, thanks to the filling of “third and fourth” berths in cabins designed for two — has been at the core of the cruise industry business model for as long as anyone can remember.
But some sort of reduction in onboard crowds may be a requirement for cruise vessels to return to operation in at least some parts of the world.
Buried in the CDC’s nine-page “no-sail” order, for instance, is a single line that says the industry’s plan for resuming service must include “social distancing protocols to minimize the risk of transmission and spread of COVID-19.”
The CDC didn’t spell out what sort of social distancing it would require on ships. But on some vessels designed to carry thousands of passengers, it would be tough to implement current social distancing rules requiring a six-foot separation between individuals without cutting the number of people allowed on board.
No line is talking publicly about doing that for now. But both Dream Cruises and Star Cruises already have announced plans to cut the number of people they allow in onboard entertainment and recreation venues by 50%. In theaters, for instance, half of all seats will be left empty. Dream Cruises and Star Cruises also said buses used for port tours will be limited to half capacity.
We expect to see similar moves by other lines.
Industry executives are holding out hope that cruising can resume as early as this summer. But that doesn’t mean every vessel will be back at sea.
In a conference call with media on Thursday, Carnival Corp. CEO Arnold Donald suggested cruising could resume at different times in different places, with only some vessels coming back initially.
Ships based in China, for instance, could be among the first to resume departures, if only because China has started relaxing social distancing rules ahead of other countries.
“Because of that — and that alone — it’s possible that China could be one of the first markets where cruise can be renewed,” Donald said. “There are other issues, though, not the least of which is where the cruise is going to go.”
Carnival Corp. is the parent company of Carnival Cruise Line, Princess Cruises, Holland America and six more major cruise brands.
In his recent research note, Instinet’s Curtis suggested major cruise companies might only be able to get half their fleets back into operation during the second half of the year. Longer term, we expect some older ships to be retired, and the pace of new ship building could slow. That’s something Donald alluded to on Thursday.
Already, several lines including Virgin Voyages, Princess and Crystal have pushed back the inaugural voyages of new ships this year by at least two to five months.
Shorter, closer-to-home itineraries
One thing that’s likely to be different when cruises resume are itineraries. In response to a question from TPG on Thursday, Carnival Corp.’s Donald suggested the routings on the schedule for some of the company’s ships could be revamped — at least for a few months.
In part, this will be because some ports on current itineraries simply won’t be open.
“In the near term, once we start sailing, it’s going to be different because I doubt seriously all destinations will open simultaneously,” Donald said. “There’ll be different protocols and regulations and so on in one place versus another.”
Donald also noted the return of some cruise itineraries will be dependent on a resumption of an adequate amount of airlift to regional cruise hubs.
“We do have a number of brands that are very reliant on airlift to get guests to the embarkation point, so we’ll have to wait and see,” he said. “We don’t know which destinations will open up when … until we see more movement, it’s hard to predict exactly what form and shape [the resumption of cruising] will take.”
Many industry watchers expect lines to initially offer more short sailings from “home ports” near major population centers that passengers can reach by car. Shorter sailings offer customers a way to dip their toes back into cruising without overly committing. Sailings reachable by car at least let customers avoid boarding an airplane.
Already, Norwegian Cruise Line has announced that one of its ships, Norwegian Sun, will reposition to Port Canaveral, Florida, when cruising resumes to operate short three- to five-day-long voyages. The ship originally had been scheduled to spend much of the next five months operating much longer nine- to 12-night voyages out of Seattle to Alaska.
Relaxed cancellation policies
Nearly all major lines have drastically eased cancellation policies since February, when the coronavirus outbreak began spreading beyond Asia. It’s likely we’ll see lines continue to be more flexible about cancellations for many months to come.
Cruise lines are hoping that, by being more flexible, they can convince customers it’s OK to make a booking even if coronavirus worries remain.
Already, some lines have loosened their cancellation policies as far out as the end of the year. Luxury line Silversea, for instance, says passengers booked on any voyage departing before Dec. 31 can cancel without penalty up until two days before departure. Those who cancel will receive a future cruise credit in the amount of 100% of what they paid.
Other cruise operators that have loosened cancellation policies through December include Celestial Cruises, Emerald Waterways and Scenic Luxury Cruises & Tours.
Carnival is considering cutting passenger capacity on its cruise ships as it looks for ways to improve safety in wake of coronavirus outbreaks, sources say
Carnival Corp. is considering temporarily limiting the number of passengers on its ships when they begin sailing again, two sources close to the matter told Business Insider.
The company would do so by preventing passengers from booking certain cabins, the sources said.
Two possibilities include allowing passengers to only book cabins with access to fresh air or making sure there are empty cabins between occupied ones, sources said.
Before Carnival halted new sailings in March, the novel coronavirus spread to over 1,000 passengers and crew members on Carnival-owned ships like the Diamond Princess, Ruby Princess, and Costa Luminosa. The company was in some cases criticized for the way its ships handled the virus, but Carnival's CEO, Arnold Donald, has argued that the company has consistently followed guidelines established by the World Health Organization and the Centers for Disease Control and Prevention (CDC).
Carnival also plans to continue checking passengers' temperatures before they board their ships when cruises resume, the sources said. The company had previously introduced pre-boarding temperature checks across its nine brands in response to the coronavirus.
Carnival declined Business Insider's request for comment.
The novel coronavirus has shut down the cruise industry for the past month as many cruise lines, including those owned by Carnival, have decided to voluntarily cancel new cruises until May at the earliest. Last week, the CDC issued an order that could ban cruises in US-controlled waters until July.
While Carnival lost $781 million between December and February, compared to the $336 million profit it made during those same months a year earlier, a little under half of the customers who reached out to the company regarding canceled cruises during the first two weeks of March chose to receive credits for future cruises instead of cash refunds, suggesting Carnival's customer base will not abandon the company when it is allowed to resume sailing.
Donald said in an interview with CNBC on Tuesday that the company has enough money to survive a scenario in which it earns no revenue for the rest of this year after drawing $3 billion from its credit lines and raising over $6 billion in debt and equity. The company has also cut the pay of executives and some ship-based workers.
Since the beginning of this year, Carnival's stock price has declined by around 75%, as of Wednesday afternoon.
VARADERO, Cuba/KINGSTON (Reuters) - No one is swimming in the turquoise Caribbean waters of Cuba’s Varadero beach resort, nor lounging on its white, palm-fringed beaches. Its hundreds of hotels, shops and restaurants stand empty and eerily quiet.
The nearby airport, the lifeblood of Varadero’s economy, closed after Cuba shut its borders two weeks ago to protect against the spread of the new coronavirus. Now, undisturbed by tourists, lizards scamper around the grounds of the luxurious hotels, on the hunt.
Across the Caribbean, similar scenes of desolation are playing out as the most tourism-dependent region in the world reels from a pandemic that has shut borders, grounded airlines, berthed cruise ships and sent much of the planet into isolation since mid-March.
From the historic towns of the Dominican Republic to the isolated coves of Tobago, tourism employs an estimated 2.5 million people and generates - directly and indirectly - nearly one-third of the region’s economic output, according to the Caribbean Tourism Organization.
As a result, there are few places where the economic impact of the pandemic may be as immediate as the archipelago’s 26 small island states and dependencies, many of them already heavily indebted.
“Almost all my family, all my cousins, work in tourism,” said Maria Elisa Torres, who rents rooms in her home in Santa Marta near Varadero.
“My cousin is a shopkeeper. She is out of a job. Her husband works in rent-a-car (company). He is out of job. My brother works with tourists on the beach and is also out of job.”
So far, the Caribbean region of 45 million people has reported only about 7,000 coronavirus cases and 300 deaths, the majority in the Dominican Republic.
Yet millions have already lost their jobs or revenues due to the outbreak.
The World Tourism Organization (UNWTO), a U.N. body dedicated to promoting the industry, last month forecast a 20% to 30% plunge in arrivals this year.
The Caribbean Development Bank went further, forecasting a 50% slump if restrictions continue until September and a 100% fall if the policies stay in place all year. The International Monetary Fund (IMF) predicts the eastern Caribbean, heavily dependent on cruise lines, will be among the hardest hit.
Carnival Corp (CCL.N) said this week it was canceling all sailings until at least June 26, while Royal Caribbean Cruises (RCL.N) suspended trips until June 11 to ensure the safety of guests and crew.
In Barbados, the yellow cranes that line the port of capital Bridgetown stand starkly against a hazy blue sky amid the absence of any cruise ships. Usually six or seven ships would be docked here but the major lines have canceled their trips well into the peak summer season, said Sheldon Layne, the manager of terminal operations.
‘A SERIES OF UNKNOWNS’
Just a few months ago, the Caribbean Tourism Organization - the local branch of the UNWTO - was in high spirits, citing a robust recovery for the region after many islands were pummeled by hurricanes Irma and Maria in 2017.
Now, the organization’s staff is working from home under a lockdown and scrambling to keep up with an unprecedented drop to nearly zero visitors.
Neil Walters, the Caribbean Tourism Organization’s acting secretary general, said businesses are focusing on how to integrate new health protocols into travel to allow tourism to resume when restrictions gradually ease.
“We are really in a series of unknowns, searching to find what very well could become the new way that tourism could operate,” Jamaican Tourism Minister Edmund Bartlett told Reuters.
In the meantime, authorities are trying to keep their tourism industries afloat and their people safe from the pandemic.
Jamaica has announced an $8.7 million package for tourism-related business operators and workers, as well as a skills training program for people while they are idle.
“Businesses do appreciate the government initiatives,” said Robin Russell, owner of the Deja Resort in Jamaica’s Montego Bay, who has applied for aid. He is paying staff half their salaries and using the downtime to do refurbishments.
“But it’s difficult, not knowing your cash flow,” he said.
Many Caribbean governments, hammered by the cost of fighting the pandemic amid a collapse in tax revenues, say they need financial help to weather the crisis.
The only Caribbean nation to benefit automatically from debt relief is Haiti, after the G20 group of rich industrialized nations agreed on freezing debt for the world’s poorest countries.
But the IMF said on Thursday that some eight Caribbean countries had already applied for emergency aid.
On Wednesday, the Caribbean bloc CARICOM urged the international community to consider that while some Caribbean nations have a relatively high income per capita, their often single-industry economies, highly dependent on imports and exposed to natural disaster, are vulnerable.
David Jessop, a consultant to the Caribbean Council, said a recovery would be complicated by a global recession that would depress demand for tourism.
“It all suggests a time horizon for the start, not the end, of Caribbean recovery being as late as the fall or winter of 2021,” he told Reuters.
In the meantime, those who still have work in the region’s ghost-town resorts are trying to get by as best they can.
Carlos Padron, who helps care for 15 captive dolphins at an aquarium in Varadero, used a whistle to summon them as they vied for his attention.
“I think they miss the public a little,” he said.
BY TAYLOR DOLVEN AND ROB WILE Miami Herald.
APRIL 17, 2020 06:00 AM, UPDATED APRIL 17, 2020 03:09 PM
Despite mass cancellations of voyages, Miami-based Carnival Corporation, Royal Caribbean Cruises Ltd. and Norwegian Cruise Line Holdings — the three largest cruise companies — have raised enough cash to last at least 10 cruise-less months, according to analysts. The fourth largest, MSC Cruises, is privately held.
But will people want to cruise again after thousands have been infected with COVID-19 after cruises and dozens have died?
That’s the million-dollar question, said Rockford Weitz, director of the Fletcher School Maritime Studies Program at Tufts University.
So far, the industry has disputed federal health officials’ repeated warnings that cruise ships are a more dangerous place for infectious disease spread than other environments. If companies want a shot at luring back customers, Weitz said, they better accept reality.
“The industry has to understand that expectations of their passengers have increased,” he said. “It’s going to be expected by the customer base that the industry is doing more than they did before to maintain a sanitary environment. That’s what the industry should be focusing on.”
Travel agents say they are seeing a steady stream of bookings for 2021, according to The Points Guy and industry publication Travel Weekly. Some of those are re-bookings using future credits offered by companies to passengers who saw their vacations canceled due to the pandemic.
Cruise companies were shut out of the federal coronavirus stimulus bill in late March because they claim U.S. tax exemption by incorporating overseas. Carnival Corp. is a Panamanian company, Royal Caribbean Cruises a Liberian company, and Norwegian Cruise Line a Bermudan company. All register their ships abroad, too.
Still, they have managed to buy time through capital markets, as well as through reducing expenses. Carnival has raised nearly $6 billion through new debt and equity positions. Among those purchasing stakes was Saudi Arabia’s Public Investment Fund. Royal Caribbean has also drawn on about $3.5 billion from existing credit instruments. Royal Caribbean laid off 26% of its U.S. staff Wednesday. Norwegian Cruise Line has made pay cuts.
None have published schedules for upcoming earnings calls or analyst updates. But in a call with media Thursday, Carnival Corp. CEO Arnold Donald said the company is prepared for a $0-revenue scenario through 2020.
“We’re reducing capital expenditures across our company and working hard to add liquidity,” he said. “We hope that will prove to be unnecessary, but we need to be prepared for the worst. We are prepared for the worst-case scenario.”
In a securities filing, Carnival Corp. said it has identified $1 billion in capital expenditure reductions, including reducing and eliminating sales and administration projects. Donald said Wednesday the company is working to repatriate crew members to get down to a skeleton crew on each ship to further reduce expenditures. The company has not announced any layoffs.
All three public cruise companies entered the crisis in strong financial health. Carnival Corp. reported a profit of $3 billion in 2019; Royal Caribbean reported a profit of $1.9 billion, and Norwegian Cruise Line reported a profit of $930.2 million.
Cruise stocks have stopped falling, for now, though all have taken a beating. Year to date, Carnival shares closed at $11.85 Thursday, down 79%. Royal Caribbean shares closed at $34.01, down 75%. And Norwegian shares closed at $11.35, down 81%.
Carnival Corp. operates more than 104 ships across its nine cruise brands: Carnival Cruise Line, Princess Cruises, Holland America Line, Seabourn, P&O Cruises (Australia), Costa Cruises, AIDA Cruises, P&O Cruises and Cunard. Royal Caribbean Cruises operates 51 ships across its four brands Royal Caribbean International, Celebrity Cruises, Silversea and Azamara. And Norwegian Cruise Line Holdings operates 27 ships across its three cruise brands Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises. MSC Cruises operates 18 ships.
UBS analyst Robin Farley estimates the largest company, Carnival Corporation, has enough liquidity to last the longest without revenue, at around 14 months, followed by Royal Caribbean with enough for 11-12 months, and Norwegian Cruise Line with enough for 9-10 months.
Analysts at Deutsche Bank see a “U” shaped recovery for the industry, with normal business not returning until as late as 2023. The trough will depend on how cruisers respond to the threat from coronavirus.
“Whether things ultimately pan out this way depends in large part on consumers’ willingness (and financial ability) to return to the seas,” Deutsche Bank said in a note to clients. “We believe there is a sizeable continent of cruise enthusiasts/loyalists who will board as soon as they are able to do so again, but we also believe there will be many (particularly first time would-be cruisers) who may hesitate to get on a ship for a certain period.”
President Donald Trump included Carnival Corp. chairman Micky Arison, Royal Caribbean Cruises chairman Richard Fain, and Norwegian Cruise Line Holdings chairman Frank Del Rio on the White House task force for reopening the economy during the COVID-19 pandemic.
Despite a “no-sail order” in place from the U.S. Centers for Disease Control and Prevention through July 24, or whenever the COVID-19 pandemic is declared over, cruise companies are still saying they’ll return to cruising before then.
Weitz said cruising is going to need to look a whole lot different on the other side of COVID-19.
Just last week, Genting Cruise Lines — owner of luxury brand Crystal and Asia-centric brands Star and Dream — announced the company will introduce new protocols when allowed to operate again, including mandating face masks for all crew and disinfecting common areas with hospital-grade chemicals as often as every two hours.
Said Weitz, “the best thing the industry could do is spend the energy trying to make sure all of the different members are focusing on getting up to standards so that the industry as a whole doesn’t suffer. There’s going to be an opportunity for the industry to dramatically reduce the risk of infectious disease.”
But the largest cruise company, Carnival Corp. is resisting committing to any similar protocols just yet.
“We’re going to have to let society run its course in determining how it’s going to deal with a world going forward that has COVID in it for some time until a vaccine is developed,” said Donald on a press call Thursday. “We are going to be compliant. We are going to have medical experts decide what the course of action is.”
Meanwhile, outbreaks continue on cruise ships around the world among the crew who remain on board. The CDC and U.S. Coast Guard charged the industry with coming up with a plan this week to quell the infections on its ships, citing a strain on healthcare resources to care for crew needing hospitalization.
Donald declined to provide any details about the industry’s plan.
“We’re confident we have protocols in place that will satisfy the CDC,” he said. “We are not in any way burdening the nation with lots of people being sent to shore needing to be hospitalized. I don’t want to get into the details.”
Apr 18, 2020
Their megaships turned from a revenue-generating asset into an expensive-to-maintain nightmare.
On February 1, 2020, a passenger from Hong Kong who had recently disembarked from the cruise ship Diamond Princess tested positive for Covid-19. This initiated a nightmarish experience for the ship passengers and crew, including 712 confirmed infections out of the 3,711 people aboard; it has tragically claimed 12 lives so far.
This was followed by a series of outbreaks on cruise ships, ranging from the extremely serious (Ruby Princess, with 662 testing positive out of 3,800 aboard) to the relatively light (Westerdam, with one testing positive out of 1,500 aboard).
In response to these outbreaks, Viking Cruises – headquartered in tax- and privacy-friendly Basel, Switzerland – was the first cruise line to announce a complete suspension of operations on March 11, followed in close order by operators worldwide big and small.
The cruise industry is in serious trouble: It is estimated at very least 400 of the existing 423 ocean-going cruise ships will spend the whole month of April without generating revenues and costing the industry about $1 billion in layup costs alone for the month. The lost revenue? That’s another matter.
At the moment, the only major cruise line with plans to restart operations is Carnival, in the second half of June. But it remains to be seen how much appetite for cruises there will be then, and much more critically, if port authorities will allow the ships to leave and enter their ports.
To understand why the numbers are so mind-boggling, we need to take a step back and look at how the cruise market has evolved over the past thirty years.
In 1987 Royal Caribbean Cruises launched the first modern cruise ship or “megaship”: the MS Sovereign. Sovereign has Gross Tonnage (GT), a measure of overall internal volume and hence of how “big” a ship is, of 70,000GT. This is over three and a half times larger than the SS Pacific Princess, the cruise ship used to film the soap opera Love Boat which was typical of the pre-megaship era.
Thanks to the enormous success of the Sovereign and her two sister ships, the megaship concept increased in popularity during the 1990s and surged after 2001, when Fincantieri of Italy introduced the Vista-class, 11 behemoths of over 80,000GT which went on to serve with several Carnival subsidiaries. Since then at least 10 brand new megaships have been added every year, and their size has ballooned, so to speak: presently, the record is held by the monstrous Oasis-class ships, all larger than 220,000GT.
A single Oasis-class megaship costs Royal Caribbean $1.35 billion. That’s just for the ship, not counting insurance, maintenance, pay and training for the crew and everything that has to be stocked aboard to keep the passengers happy and the crew fed and well-clothed. And that’s a lot of stuff: An Oasis-class megaship has a crew of 2,200 and a standard passenger capacity of 5,500 (cruise ships rarely, if ever, sail at maximum capacity).
As of March 2020, there were 42 cruise ships over 120,000GT on order or under construction, with prices for each ship ranging from $600 million to $1.8 billion, with the top end being for the yet unnamed Global-class megaship Genting Hong Kong ordered from MV Werften of Rostock. That’s an enormous amount of money right there.
And all the megaships that are already in service are turning from a revenue-generating asset into an expensive-to-maintain nightmare.
Right now all these idled megaships are in a state called “hot layup,” during which the ship has a full deck and engine crew on board to maintain all systems operational; and a “skeleton” hotel crew to keep the interior clean, run the water daily, check and maintain the amenities etc. In this state, a ship can be brought back into service in a matter of days, usually just the time needed to recall the full hotel staff and put the finishing touches on the ship for service.
As can be imagined hot layup is expensive. According to Carnival’s most recent SEC filing, the cost for a hot layup range from $2 million to $3 million per month for each of their vessels. And that’s on top of the lost revenue and other fixed expenses for the cruise line such as debt servicing.
Most of these megaships won’t be back in service anytime soon. At some point, they will have to enter a state called “cold layup” to save money. This means calling in a specialized service provider such as Wilhemsen of Norway, that will first assist the deck and engine crew in shutting down all systems, and that will then install “deactivation equipment,” such as dehumidifiers for sensitive internal areas, additional cathodic protection for the hull, watertight sealing of underwater openings, external diesel generators, etc.
The service company also provides watchmen (usually two per each ship), a team that periodically inspects the ship and updates the log and makes emergency repairs, and a security detail on standby near the layup area.
The costs for a megaship in cold layup are around $1 million per month.
And what will happen when a megaship is needed once again? While the crew is recalled in phases to reactivate more and more systems, the service provider will progressively remove the layup equipment. This procedure takes approximatively 14 days.
After this, the hotel crew is brought back in phases and starts to clean the megaship from top to bottom, and checks everything, from water faucets to the tables in the dining rooms. Repairs are carried out as needed. This phase may take another 14 days, but on the largest megaships it can take around 20 days.
The costs for this procedure are estimated to run in the range of $2 million to $4 million for each megaship.
And there’s one final piece of bad news for cruise lines. Under the terms of the CARES Act to be eligible for a dip at assorted US government funds, a company has to be “created or organized in the United States or under the laws of the United States” and have a majority of their workers “based in the United States.”
The big problem is of course that the major US cruise lines are all incorporated overseas: Carnival in Panama, Royal Caribbean in Liberia, and Norwegian in Bermuda. Coupled with their propensity for hiring foreign nationals to staff their megaships – which in turn fly flags of convenience from the Bahamas to Panama – these companies are at the present ineligible to get even a single dollar of bailout money.
Apparently, this was not an oversight but a bipartisan agreement and there’s little or nothing that can be done short term to rectify it. Cruise lines will just have to weather at least this first phase of the storm on their own.
By David Jessop
News Americas, LONDON, England, Fri. April 17, 2020:
The challenge that will soon face almost every Caribbean country will be the recovery of its tourism sector. Without this, future economic growth will be all but impossible.
The COVID-19 pandemic has shuttered the industry globally, made hundreds of thousands of workers unemployed, pushed many hotels, airlines and cruise companies into financial meltdown, and caused travelers to fear placing themselves at risk in any situation where public health cannot be guaranteed.
For the Caribbean, the most tourism dependent region of the world, the obvious consequence is an urgent need to consider when it can reopen for business, how it positions itself when international travel again becomes possible, and if it should adapt its offering.
Some Caribbean countries, most notably Jamaica, are already well ahead of the curve. Its tourism ministry has put in place a multi-disciplinary task force to determine not just how and when to bring visitors back, but to review and ask difficult questions about its tourism model, if change is needed to respond to altered visitor sentiment, and to recognize long-term industry trends.
At a recent online press conference, Jamaica’s Minister of Tourism, Edmund Bartlett, set out government’s thinking about the issues that need to be addressed. He identified the key areas that a new task force will consider. In outline these are: to establish a realistic view of the tourism baseline that Jamaica has to recover from; give consideration to multiple alterative versions of the island’s tourism future; establish as far as possible a time line; and to develop a strategic posture for the journey back the sector will have to make, taking account of national imperatives and scenarios.
He also spoke about the need for strategies that create a much closer integration with agriculture and new data led thinking about market development.
It is an approach that recognizes that tourism and the manner in which it recovers will not be as before and that thought needs to be given to forms of sustainability that go far beyond the arrivals numbers game that the industry likes to play.
Although it is early days yet, it is already possible to identify in general some of the challenges that post-COVID tourism recovery teams will have to consider in developing exit strategies.
One of the greatest but so far little spoken about issues, absent either a vaccine and/or some form of reliable health certification for every visitor, is that the virus could asymptomatically be imported into the region from countries that have not done enough, have failed to deliver an efficient response, or are simply in denial.
Visitor receiving countries will then find themselves in the invidious position of having to take a political decision on which countries have done all that is necessary to restore public health and then in all likelihood having to agree bilaterally with the country concerned the basis on which visitors from those nations can travel.
Without a vaccine, such an eventuality will remain politically and electorally sensitive for several years and have xenophobic implications. It will also impact on the frequency of air and sea lift, foreign relations, public health policy, taxation, food security, insurance provisions, and much else, well before the marketing specialists are able to begin addressing consumer perception and willingness to travel.
Secondly it is likely that in the Caribbean’s major source markets of North America and the EU, both region’s hit hard by the virus, their governments may not immediately encourage external travel, preferring to incentivize staycations in an attempt to stimulate domestic economic growth and protect public health.
Thirdly, although industry optimists are hoping to see visitors return this coming winter season based on the statistics on recovery after 9/11 and the 2017/18 global financial crisis, these provide no guide to where the world economy and by extension tourism now is. At best the world is about to enter a recession and without concerted multilateral global cooperation on the edge of a depression.
It may also be that case that not every category of visitor the Caribbean has welcomed in the past will wish or be able to travel. While it is likely that least at-risk higher spending categories such as millennials and their children will be the first to want to do so, older travelers may be reluctant and may no longer be able to obtain medical or travel insurance
to visit markets or via nations deemed to be at higher risk. Moreover, hotels and other visitor facilities may be cautious about litigation should the virus reappear in a manner traceable to one of their properties or facilities.
There is also much to be considered in relation to the cruise lines, the need first to stimulate employment-generating long-stay land-based tourism, and the still missing regional response to the cruise company’s divisive approach to destinations.
Addressing these and other issues will require much thought, joined up local and regional solutions, a high degree of realism about how markets will reopen, and most likely fierce global competition as all nations see visitors as the means to rapidly power economic growth.
It all suggests a time horizon for the start, not the end of Caribbean recovery, being as late as the fall or winter of 2021.
BY JACQUELINE CHARLES Miami Herald.
APRIL 14, 2020 07:09 PM
Caribbean leaders say a financial bailout offered to some of the world’s poorest countries this week by the International Monetary Fund to help cushion the economic blow of the coronavirus pandemic doesn’t go far enough — and stressed that they, too, are in desperate need of a rescue.
On Monday, the International Monetary Fund announced that it was canceling six months of debt payments, totaling $215 million, from 25 nations. Haiti, which gets to keep about $4.8 million, was the only Caribbean nation to make the cut along with Afghanistan, Yemen, Sao Tome, Solomon Islands, Nepal and mostly war-torn African countries.
“Up until now, there is no rescue plan for the Caribbean, and we need a rescue plan,” said Antigua and Barbuda Prime Minister Gaston Browne. “This is not a situation where we are trying to ask for assistance conveniently. It is an absolute necessity.”
With the Dominican Republic leading the region with 3,167 confirmed COVID-19 infections and 107 deaths as of Monday, the Caribbean region has registered more than 5,000 cases of the deadly rapidly spreading respiratory disease. The effects have not only been devastating in the loss of lives but also jobs, as governments closed airports and cruise ports and shuttered hotels to try to stop the spread.
The World Bank, in a report released on Sunday, said the pandemic could send economies across Latin America and the Caribbean plunging by 4.6% this year.
Browne believes the projection is too conservative and fundamentally flawed, and underestimates the impact of the coronavirus on the Caribbean’s tourism-dependent economies.
Using his own debt-ridden and still hurricane-recovering island-nation as an example, Browne said, Antigua has already lost 20,000 jobs, which is half of its national workforce. He estimates another 6,000 could also be laid off as the government struggles to make payroll for its 12,000 public servants.
Meanwhile, he said, “they are looking at our per capita income and saying we’re so wealthy, we’re not eligible for assistance when, one, we have no surplus and second, about 80 percent of our revenue could be wiped out. How the hell can we survive?”
Since the coronavirus outbreak first reached the Caribbean’s sun-bleached shores last month, Caribbean leaders say they have tried to get their creditors to help. They point out that many nations were already struggling to recover from a rash of devastating hurricanes over the last two years, and COVID-19 has only made life harder, forcing them to make extra investments in healthcare even as they have to keep making debt payments with no foreign revenue coming in.
“Right now the region needs a Marshall plan,” Browne said, calling for a write-off on debt payments and grants from the IMF and other Washington-based financial institutions. “I believe that after the next 60 to 90 days, [our] countries will become totally broke and would not be able to meet certain expenses, so there needs to be some level of international coordination and cooperation.”
Browne hopes to get the 15-member Caribbean Community regional bloc, known as CARICOM, to speak with one voice on the matter following an emergency virtual meeting Wednesday. High on the agenda are the virus’ economic impact and how leaders can best address the challenges resulting from it.
“We are doing whatever we can,” said St. Vincent and the Grenadines Prime Minister Ralph Gonsalves, who shut down his nation’s crystal blue waterways to yachting and recently offered citizens a stimulus plan valued at 4 percent of gross domestic product.
Even though Caribbean leaders are used to “adversity and making a little go a long way,” he said, it’s clear the current crisis is a threat and no Caribbean nation is immune from its potentially devastating impact.
“We’re looking to international partners, including institutions like the World Bank, IMF, the Caribbean Development Bank and some bilateral links,” Gonsalves said.
Caribbean economist Marla Dukharan said that in determining which countries are most deserving of debt cancellation, the IMF and the World Bank look at countries’ classifications as low income, middle-income, high-income. The classification, she said, is riddled with weaknesses and omissions that the Caribbean has raised with the multilateral agencies for years. More weight needs to be given to a country’s vulnerability to other factors, she said.
“For example, the Cayman Islands has one of the highest GDPs per capita in the world, but based on recent reports by Moody’s, it is the most vulnerable to sea level rise, and climate change more broadly, in the world. This factor, and others which drive vulnerability, cannot be ignored when you are trying to determine if a country needs help, what kind of help they need, and to what extent,” Dukharan said.
Whether Caribbean nations get the help they are seeking, they should brace themselves for higher unemployment, which could double based on projections of zero cruise tourism for the rest of the year, and a roughly 80 percent drop in tourism this year compared to 2019, she said.
“Regardless of the rate of contraction, which is really guesswork at this point, it is clear that we will need help, lots of it, and for a long time,” said Dukharan, who lives in Barbados. “Regional cooperation is arguably more important now than ever before.”
Jamaica Tourism Minister Edmund Bartlett said that of the 20 most tourism-dependent small countries in the world, 13 are in the Caribbean, with the British Virgin Islands leading the list. Others include the Bahamas, St. Lucia, Grenada, St. Kitts and Nevis, Jamaica and the Cayman Islands, Bartlett said, rattling off the names from memory.
More dependent on tourism than perhaps any other region in the world, Bartlett said, the Caribbean employs about 1 million people in tourism, which accounts for more than 30 percent of the foreign exchange coming into the region.
Closer to home, more than 50 percent of Jamaica’s foreign exchange is generated by tourism. “Last year, we brought in 3.7 billion U.S. dollars; 1 in 10 of all the workers in the country are directly employed in tourism,” said Bartlett.
Americans Will Approach Travel Cautiously and Differently Post Pandemic.
April 13, 2020 by Destination Analysts
Based on a survey of 1,263 respondents.
Key Findings to Know
Americans are feeling somewhat better that the worst of COVID-19 in the U.S. may soon be over.
While nearly 70 percent continue to say they miss travel, few will jump right back in when the coronavirus situation has passed. Nine in ten American travelers say they will approach travel carefully with at least some trepidation
It will not be a simple return to pre-pandemic sentiments and behaviors: Now, nearly 40 percent of American travelers say they will change the types of destinations they choose to visit when they begin traveling again
American travelers increasingly say they will be avoiding crowds — including conferences/conventions — destinations hardest hit by coronavirus, and destinations slow to put social distancing measures in place. Also, on a continual rise: the number agreeing they will take a staycation this summer and the number of younger travelers who say they will take more road trips to avoid airline travel (49.4% from 43.4% one month ago)
When asked the place they will visit on their first post-pandemic trip, beach/resort destinations top the list, followed by small towns/rural areas, then cities
Americans are feeling somewhat better that the worst of COVID-19 in the U.S. may soon be over. The percent feeling the coronavirus situation in the United States will get better in the next month nearly doubled to 29.5% from 15.4%. The percent who say they have had travel impacted by coronavirus remained at the same level this week (72.8%).
And yet while nearly 70 percent continue to say they miss travel, few American travelers will jump right back in when the coronavirus situation has passed. As demonstrated by the images they selected to represent how they will approach travel in the post-coronavirus period, nine in ten American travelers feel this will be done with care and at least some trepidation.
Furthermore, it will not be a simple return to pre-pandemic sentiments and behaviors. Now, nearly 40 percent of American travelers say they will change the types of destinations they choose to visit when they begin traveling again—this is up nearly 10 percentage points from just one week ago.
Beyond the substitution of destinations, the coronavirus pandemic looks to have a, hopefully temporary but, fundamental impact on how Americans travel and the experiences they choose. American travelers increasingly say they will be avoiding crowded places (55.7%)—including conferences/conventions (40.3%)—when they begin traveling again. They are also increasingly saying they will avoid destinations hardest hit by coronavirus (50.5%), and destinations slow to put social distancing measures in place (32.7%). Also on a continual rise: the number agreeing they will take a staycation this summer (55.2%, up from 41.3% one month ago), and the number of younger travelers who say they will take more road trips to avoid airline travel (49.4% from 43.4% one month ago)
When asked the place they will visit on their first post-pandemic trip, beach/resort destinations top the list (38.2%), followed by small towns/rural areas (30.0%) then cities (26.6%). Taking a cruise was one of the least popular options at 5.7%.
If you are looking to discounts and deals as a strategy to attract travelers, this is likeliest to be most effective with younger travelers. This week, 42.1% of Millennial and GenZ travelers say price cutting and discounting makes them more interested in traveling in the next three months. In comparison just 31.3% of GenX and 25.3% of Boomers agreed. Also, while July and August are currently the months with the highest percentage of travelers saying they have trip plans, later months continue to show gains, including October and December.
IMPORTANT: These data and findings are brought to you from our independent research, which is not sponsored, conducted or influenced by any advertising or marketing agency.
For the full report click link below.
This survey (wave 4) was fielded online among a nationally representative sample of 2,023 U.S. adults from March 21-22, 2020.
Jim Hepple is an Assistant Professor at the University of Aruba and is Managing Director of Tourism Analytics.