With hopes of tapping into a market of up to 83 million passengers, the world’s largest cruise company three years ago launched a new ship built specifically for Chinese vacationers.
The Majestic Princess, operated by a subsidiary of Carnival Corp., featured 1,780 cabins, 19 decks, an atrium and nearly 1,100 square meters of luxury boutiques, representing the largest shopping space at sea.
But the ship is now docked in Singapore, with its next 13 cruise trips canceled.
With China representing ground zero for the outbreak of the deadly coronavirus and thousands of cruise ship passengers forced to undergo extra health screening or a quarantine in Oakland, Calif., the cruise industry is reeling, facing its biggest crisis in decades.
The dilemma grew worse over the weekend with the U.S. State Department recommending that Americans, particularly travelers with underlying health conditions, avoid cruise ships. The Centers for Disease Control and Prevention said “a cruise-ship environment” could increase the risk of infection.
“It’s horrific,” said Carl Winston, director of the L. Robert Payne School of Hospitality & Tourism at San Diego State University. “I can’t imagine a single industry being called out like that.”
Gloria Guevara Manzo, president and chief executive of the World Travel and Tourism Council, a branch of the United Nations, chimed in on the crisis, saying she disagrees with the State Department’s recommendations against cruising, saying sailing on a cruise ship is just as safe as visiting a movie theater or a sports stadium. She said she would have preferred that the State Department had only warned people with underlying health conditions to stay home.
The blow from the outbreak could be the most devastating in years, possibly surpassing the drop in passenger demand when the Costa Concordia sank off the coast of Italy in 2012 and the Carnival Triumph was left floating powerless in the Gulf of Mexico after an engine fire the following year, according to Winston and other experts. It’s horrific. I can’t imagine a single industry being called out like that.Carl Winston, director of the L. Robert Payne School of Hospitality & Tourism at San Diego State University
Shares of the world’s largest cruise companies — Carnival Corp., Royal Caribbean International and Norwegian Cruise Lines — dropped as much as 26% Monday, after several weeks of declines as the virus’ toll continued to grow.
The effect will also include the added costs of the new enhanced cleaning procedures adopted on most cruise lines, including more frequent cleaning of hard surfaces, and the cost to defend against lawsuits filed by passengers who have been stuck on delayed or quarantined ships.
Moody’s Investors Service lowered its outlook for the lodging and cruise industry last week to “negative” from “stable,” saying both industries face revenue losses in 2020 if the outbreak is not contained.
“If COVID-19 confirmed cases continue to rise in North America, no lodging or cruise company could be immune to financial consequences,” Moody’s said in a report Friday.
If travelers do abandon cruise trips, experts say it is not clear how long the cruise industry can withstand the revenue loss before turning to dramatic cost-cutting measures such as layoffs.
“The key question is what is their staying power,” Winston said. “How much cash do they have in the bank to stay afloat?”
