Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

Cruise Ship Bow

Due to the contagious nature of the Covid-19 pandemic certain industries have been unevenly impacted. Travel and tourism is undoubtedly one of the badly hit industries but cruise industry is definitely the worst-hit sector in the industry.

According to an article by World Economic Forum, the global cruise industry valued at $150 billion and was expected to sail about 32 million passengers in 2020. Unfortunately, most of these passengers had to cancel their traveling plans or had to be repatriated from stranded ships.

In the early days of the pandemic, a massive outbreak of the disease unfolded on board the cruise ship Diamond Princess, which lead to the industry being negatively associated with the spread of Covid-19. Later, several other cruise ships also reported a large number of positive cases which earned the industry a bad name as critics harshly called cruise ships “floating petri dishes”, reports Statista.

Things started to look better when the CDC withdrew its no sail order and announced implementing a “less restrictive conditional sailing order”, but the industry suffered another setback when a Caribbean cruise reported several of its passengers had tested positive for Covid-19. Soon after, US Representative Doris Matsui (D-CA) and Senator Richard Blumenthal (D-CT), wrote a joint letter to the CDC, requesting them to reinstate the no sail ban on cruise ships leaving from US.

The cruise industry business has been so badly impacted that revenue streams have completely dried and many mammoth ships with theatres, swimming pools and high-end restaurants are now being decommissioned. Carnival, a key industry player announced removing 13 ships from its fleet. Further, due to complete stalling of cruise ships small islands and destinations that these ships used to tour has severely hit the livelihood of these places.

The global cruise industry consists of over 50 cruise lines with more than 270 ships, but the sector is dominated by three major players – Carnival, Royal Caribbean Group and Norwegian Cruise Line. The below chart demonstrates how badly the revenues have fallen for these three companies, since Covid-19 hit the world with full might in March.

In comparison to 2019, Royal Caribbean and Norwegian lost 74% and 75% of their revenue in the first nine months of 2020. Carnival appears to be in a slightly better position with revenue drop of 65%, however, this is due to the fact that the company’s fiscal year starts in December, which gave it one extra month of normal operation.

Given the circumstances, there is no clarity on when normal cruise operation could be resumed, although certain river cruises have restarted operations in the European region. There is a big question looming whether the cruise industry can weather the Covid-19 storm, and if and when it does how bad the damages would be. But it’s only with time that we will have definite answers to these questions.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

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