The pandemic brought cruises to a stop and now some are struggling to get back out to sea.
Key details
In March 2020, at the beginning of the pandemic, all three major cruise lines—Norwegian, Royal Caribbean, and Carnival—temporarily closed for safety. Now that they are open for business after 18 months of shutdowns, some cruise lines are doing better than others.
Norwegian Cruise Lines still have a lower occupancy level than before the pandemic. Its shares fell 12% on Tuesday. The company does not anticipate reaching its pre-pandemic occupancy levels until next year.
Royal Caribbean, however, expects to reach triple-digit occupancy levels by the end of this year. Carnival Cruise has similar expectations, anticipating 110% occupancy this quarter.
Even with rising occupancy levels, cruise companies are still battling labor shortages, strict COVID-19 restrictions, and COVID-19 cases onboard.
Norwegian Cruise expects their occupancy levels to reach 80% in the third quarter and bring in a revenue of $1.5 to $1.6 billion. Higher labor and fuel costs raising operating expenses could be taking a toll on the business.
Oceania Cruises and Regent Seven Seas Cruises have an occupancy comparable to their position in 2019.
Backing up a bit
When COVID-19 was first identified, cruise lines were among the first industries to be affected.
In early January 2020, cruises began canceling stops in mainland China. By February, passengers were contracting COVID while aboard the ships. British cruise liner Diamond Princess would eventually have 542 cases with passengers quarantined onboard. Some would stay nearly the entire month onboard.
Holland America’s ship Westerdam was denied access to a port in Japan though no COVID cases were reported onboard.
By the end of February, cruise line stock prices were plummeting. Carnival Corporation fell from $43.53 in January to $33.46 in February. Royal Caribbean from $117.08 to $80.41, and Norwegian Cruise from $58.41 to $37.26.
In March, restrictions were put in place for cruise ship passengers, followed shortly by a recommendation from the U.S. State Department that cruises should be avoided.
Viking Cruises suspended all cruises until later in the year, the first cruise line to do so.
Cruise lines fought to stay afloat through various loans. Many hired onboard doctors and adopted strict protocols to prevent outbreak on deck, but setting sail was still an ordeal.
With cruise ships now attempting to return to previous levels, only time will tell if the industry can recover from such a major blow.
