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Impact of COVID-19 on Cruise Liners by Expert Market Research

Impact of COVID-19 on Cruise Liners

In the last few months, it has been all but smooth sailing for the cruise liners. The virus has fundamentally affected every person in some ways or another. The cruise liners industry too has been left in a turmoil due to the global pandemic. The enormous number of people confined in a place together makes them more susceptible to the virus.

The Diamond Cruise came into the light first, being put into isolation off the Japanese coast, and was followed by multiple other ships. Although most people on these ships have returned home, there are many implications of the virus on the cruise liners like the stuck crew members, the value of these ship-owned companies, and the future recovery of this multibillion dollars industry.

To no one’s surprise, major cruise liners like Carnival (NYSE: CCL), Norwegian Cruise Line (NYSE: NCHL), and Royal Caribbean Cruises (NYSE: RCL) have been hard hit by the COVID-19 pandemic. The stock prices have fallen more than 65% for all the three companies. Although it looks like the stocks of CCL and others are on sale, it is unlikely that they will bounce back quickly. These companies are under pressure and are forced to look into financing options because of the unforeseeable shutdown and the crashing stock prices. There are chances that even after raising the capital, they are heading towards bankruptcy. Moody’s, an American credit rating agency, gave the highest junk grade to Carnival and lowered its rating by one notch. It does not find Carnival fit for any investment grading in the near future. It still carries the S&P Global Rating’s investment grading, which might also be lowered soon.

The influence of the cruise liners industry is far-reaching. A lot of small nations depend on the money from the travel they get from the cruise liners industry. The cruising industry contributes to nearly 5.9% (USD 2 billion) of the Caribbean’s GDP. Any fall in the tourism industry is disastrous for these countries. The only light in all this is the fact that nearly 55% of cruise travellers opted for a cruise credit over cash credit. This speaks a lot about people’s sentiments regarding cruising and the chances of it existing in the future. Sure, it seems distant, but there is also the approach that says that people are going to need vacations. The recovery for cruise liners is a matter of time, like other industries.

The short-term goal for cruise liners is to be able to make it to the other side of the pandemic and survive by taking loans. If they are unable to source funding, this would be difficult. The long term is to recover from the defamation and image destruction during the past few months. And since no one can predict when this will end, it would be difficult for these companies to exist till then. The nature of cruise liners post coronavirus has to be far different than the current ones, in order to exist. There will be shorter lines, less staff, more automation, an exceptional level of sterilization, advanced healthcare, and way more preparedness than ever before. In spite of all these, whether travellers will be attracted to sailing in the future, only time will tell, and, till then, it is a long and slow journey towards recovery for all the cruise liners.

*At Expert Market Research, we strive to always give you current and accurate information. The numbers depicted in the description are indicative and may differ from the actual numbers in the final EMR report.

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