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Regardless of your thoughts and feelings on cruise vacations, the entire industry — worth well over $100 billion — is one of many that has been rocked by the COVID-19 pandemic and pulled up anchor.
Before we dive into how badly the industry has run aground, let’s take a step back.
Full steam ahead
Prior to the coronavirus, the cruising industry was flying in Australia.
An annual economic impact statement, released by the Cruise Lines International Association (CLIA) and the Australian Cruise Association in October last year, claimed the industry’s value to the Australian economy had increased by more than 11 per cent over the 2019 financial year, contributing over $5 billion.
It supported more than 18,000 full-time jobs, while over 1200 ships visited Australia with roughly 3.8 million crew and passenger visit days, which totalled a direct expenditure of $2.5 billion.
Run aground
However, it all came to a grinding halt when the COVID-19 pandemic swept the world and shut everything down.
Cruise ships were responsible for many coronavirus cases, and, unfortunately, a number of fatalities.
Most notably, the Ruby Princess disaster here in Australia is believed to have been linked to 700 cases and at least 22 deaths, and is now the subject of a special enquiry.
Similar situations have unfolded all around the world, and it seemed the industry was dead in the water. Nowadays, many have referred to the floating palaces as floating petri dishes.
CLIA Managing Director, Joel Katz, said the industry was putting together new frameworks to ensure that not only health standards are increased, but the trust of travellers was earned back.
“Our industry has committed to restoring confidence in cruising among guests, governments and the communities we visit.”
Managing Director, Joel Katz
“While it’s too soon to outline specifics, the aim is to have the best possible measures in place when the time is right to resume sailing, so that we can uphold the health and safety of passengers and crew as our top priority,” Joel explained.
“This may include more robust screening protocols; expanded cleaning and sanitation practices for ships and terminals; and comprehensive shipboard prevention, surveillance, and response measures, on top of what the industry already has in place,” he continued.
The cost
On January 17 2020, prior to COVID-19 reaching pandemic proportions, it was high tide for some of the world’s biggest international cruise liners, who are listed on the New York Stock Exchange.
Stocks in Royal Caribbean were cruising at US$135 per share, Norwegian Cruise Lines were riding high at US$59.6 per share, while Carnival Corp was travelling nicely at nearly US$52 a share.
Three months later, on March 18, when the world was starting to realise the full scale of the coronavirus and international travel bans were being implemented, the stock market sunk, and cruise stocks plummeted like an anchor racing to the ocean floor.
Royal Caribbean had 85 per cent of their share price washed away to just over US$19 per share, Norwegian capsized to US$7.70 per share in an 87 per cent drop, and Carnival had more than 80 per cent of the share price stripped, falling to less than US$10.
The resurgence
Following the storm of the COVID-19 pandemic, the world has begun to calm. Investors have been buoyed by cruise ship stocks once again, with the three previously mentioned liners beginning to resurge.
Despite no clear indication when ships can sail again, Royal Caribbean has rallied and has nearly hit US$50, Meanwhile, Norwegian has more than doubled its share price to US$15.98 and Carnival has sailed to just over US$16.
That sentiment of relieving isolation-induced cabin fever can be felt right around the world.
Despite some cruise ships being responsible for many coronavirus cases and deaths, the desire to travel could be the main reason why travel stocks, and cruise shares in particular, have started to bounce back.
Regardless of the bad PR cruise ships received and the increased hygiene practices following the coronavirus pandemic, the fans, and even some newcomers, said they would cruise again once the pandemic has sailed its course.
A survey conducted by CLIA revealed that 75 per cent of respondents who had cruised before would do it again, even after what’s transpired from COVID-19. Surprisingly, 66 per cent of respondents who hadn’t cruised before said they would set sail once given the go-ahead.
“It is difficult to speculate on the longer-term impact of COVID-19 on travel patterns generally. While there are many challenges ahead, we have a passionate customer base, and are confident our industry has the resilience to overcome the current situation,” Joel remarked.
Will the desire to travel alone be enough to pull the industry out of rough waters and return it to where it was just three months ago? Or will the bad wrap cruising has gained from some poorly handled coronavirus outbreaks be a bridge too far?
