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Cruise ship companies are still paying for COVID interrupting their business

People are cruising again on big ships following a COVID-19 decline, but it's a tough comeback for the industry.

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'We haven't recovered yet': Short-term outlook remains grim for cruise industry

Carnival Corp. lost $2.8 billion in the third quarter, but shares rose Friday after the cruise line operator said bookings for the second half of next year are running ahead of 2019 levels.

Cruising investors are looking for any glimmer of hope for an industry that has been battered by the pandemic.

Still, the short-term outlook remains grim. Carnival said the rise in U.S. COVID-19 cases from the delta variant hurt sales this summer. Rivals Royal Caribbean and Norwegian Cruise Line saw the same thing. New reported virus cases are trending slightly lower now.

Carnival said the average ship was only 59% full in August, but that was an improvement from 39% in June, and voyages generated enough revenue to cover cash costs.

“We reported a significant loss, so we haven’t recovered yet, obviously, but as we look ahead we see brighter days ,” CEO Arnold Donald said in an interview. “If things continue to trend the way they are (with COVID-19 cases), we should see positive cash flow as we get our fleet sailing broadly again.”

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► At-home COVID-19 tests: Here's what travelers should know

While there were fewer passengers, they spent 20% more on board than before the pandemic, the company said. Donald said there could be several explanations.

“People haven’t been able to cruise – maybe not even travel – for a while, so they are in a mood to spend more because they haven’t had a chance to in a while," he said.

Carnival, which is headquartered in Miami but incorporated in Panama, said that after write-downs its adjusted loss was $1.99 billion in the third quarter, which ended Aug. 31.

Eight of Carnival’s nine cruise lines including Carnival, Princess and Holland America have resumed sailing with reduced schedules. The company said it expects more than half of its fleet to be operating by the end of October and the full fleet by next summer.

► COVID protocols: Carnival Cruise Line to require masks, negative COVID test for all passengers

The cruise industry has been among the hardest hit by the pandemic. The big three cruise companies are incorporated outside the U.S., and they did not receive the same kind of federal relief that was granted to airlines. With revenue at rock-bottom levels, the companies have borrowed billions to avoid sinking.

Carnival shares rose 3% to close at $25.44.

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Cruise in 2022: the state of the industry 

Using the latest thematic insights from GlobalData, Peter Nilson looks at the state of the cruise industry.

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At the beginning of the year, many companies, governments, and travel authorities had predicted a stronger recovery for the cruise market in 2021. Unfortunately, that was not the case.

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While the cruise industry has experienced a 96% Year-on-Year (YoY) increase of passengers, reaching 13.9 million, it still does not compare to the pre-pandemic levels of 2019, where there were 29.7 million passengers globally. It has been an even worse year for travel intermediaries specializing in cruise holidays.

These companies are the primary selling points for cruise trips and are often responsible for selling upgrades, premium drinks packages and excursions. Global spending across 60 major cruise markets increased by 65% YoY, resulting in total revenues of $19.4bn. Nevertheless, this was still far from pre-pandemic levels in 2019, which were approximately $29.8bn, 35% higher than 2021’s figure.

To reduce costs, many ships were retired between 2019 and 2021. Cruise ships are the most expensive assets, making this practice a necessity for many firms to stay afloat.

However, more optimistic times lie ahead for the sector. During the pandemic, the cruise industry has witnessed new innovative cruise ships and a brand-new competitor in the form of Virgin Voyages . Many cruise liners have come good with orders for new cruise ships built before the pandemic, resulting in an exciting time for loyal cruise holidaymakers to try new ships, services, and onboard experiences.

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Global cruise passengers and revenue

2021 provided a tough lesson for the cruise industry, with businesses aiming to make a swifter recovery from the latest round of lockdowns.

The cruise industry’s recovery rate was modest in 2021. Although a 96% YoY increase sounds positive, it is still nowhere near pre-pandemic levels. In 2021, only 13.9 million passengers went on a cruise, 53% lower than the pre-pandemic levels of 2019.

With the fluctuations of global passengers, revenues will generally follow a similar pattern unless there is a substantial shift in consumer behaviour. Usually, the most significant impacts on a travel company’s revenues, aside from passenger flows, are an economic recession, foreign exchange, or a change in booking trends.

During the pandemic, it has become clear that the latter affected cruise intermediary revenues. In 2021, revenue generated for cruises from intermediaries reached $19.5bn, a 65% YoY increase from $11.8bn. However, cruise passenger flows increased by 95% YoY, which is a significantly higher rate of improvement.

According to the CEO of the Royal Caribbean Group, Richard Fain, this was not unexpected. The world’s fourth-largest cruise company has seen intermediaries such as online travel agencies (OTAs) and high street agencies lose a proportion of their market share, with customers opting to book directly with the cruise operator rather than a third party.

cruise business decline

The same sentiment was echoed by Norwegian Cruise Lines CEO Frank Del Rio, who said the company had witnessed a similar booking pattern. The result is not surprising. Many agencies have had to cut back on their workforce due to poor revenue performance in 2020, resulting in fewer sales agents to capture the rising demand in 2021. This has led to more customers booking directly with cruise companies.

Research from GlobalData also supports this, when comparing two consumer surveys from 2019 and 2021. In 2019, 44% of respondents said they typically book via an OTA. However, in a Q4 2021 survey, only 24% of respondents said they booked their last holiday via this booking method. In addition, respondents who said they booked directly increased from 32% to 36%.

New cruise ships and trends for 2022

There are many new cruise ships scheduled to set sail in 2022. Many of these boast a more contemporary feel to their décor and interior, moving away from the traditional looks of the past cruise ships and moving to a more fashionable boutique hotel design.

The motivation for this stems from the fact that cruise operators need to attract a younger market. This evolution is necessary for making cruise businesses more resilient in the future by drawing the next generation of cruise tourists.

According to a 2020 GlobalData survey, 37% of Gen Z and Millennials said that they ‘strongly’ or ‘slightly’ agreed with the notion that they would book an international trip this year. In comparison, only 22% of those older than 35 responded with the same sentiment, highlighting that the younger generation may be more likely to travel in today’s travel climate.

Furthermore, cruising has also become more popular with younger adults. In GlobalData’s Q3 2019 and 2021 global consumer surveys, the percentage of Gen Z and Millennial respondents who typically take a cruise holiday increased from 17% to 21%, indicating changes in consumer tastes.

The importance of Covid-19 safety protocols on cruise ships has never been more critical. According to GlobalData, there is a demand from consumers to receive information about Covid-19 initiatives. This data shows that consumers need substantial levels of communication from cruise providers, and that cruise companies will need to develop robust communication strategies, which need to be scaled over the next few years.

Many travellers are opting to book directly with the operator rather than via an intermediary such as an OTA. According to a Q3 2019 GlobalData survey, 44% of consumers said they typically book via an OTA.

However, this has fallen substantially over the last two years. In a Q4 2021 survey, only 24% of respondents said they booked their previous holiday via an OTA.

In addition, respondents who said they booked directly with a travel supplier increased from 32% to 36%, showing that booking directly with the supplier is becoming more trustworthy and popular.

Nevertheless, this booking behaviour could well be a temporary result, with some cruise operators expecting intermediary trade to pick up again in 2022.

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Cruise industry experiencing resurgence after getting hit hard during pandemic

By KCAL News Staff , Lesley Marin

October 5, 2022 / 11:22 PM PDT / KCAL News

After experiencing a massive blow at the hands of the coronavirus pandemic, cruise lines are reporting a significant resurgence as case numbers decline and restrictions continue to relax throughout the world. 

"Things were definitely rough," said Aaron Saunders of CruiseReviews.com. "The cruise industry is really experiencing a bit of a resurgence."

Despite the noted increase in demand for tickets aboard cruise ships, some longtime cruisers are anxious to sail the seas once again. While health and safety concerns remain in the forefront of many traveler's minds, Saunders said that the biggest change he's noticed post-pandemic is the industry's adherence to some policies they placed into effect over the last three years. 

"There are inspections that take place daily," he said. 

For those ready to return to sea, there are a number of options available. 

Travelers looking to make the most out of a trip have the option to travel via the Oceania Regatta, a five-star experience over 77 days of travel to Australia. Cruisers that opt to voyage in the lap of luxury can expect flowing champagne, lobster and filet mignon, nicely complemented by the tons of open space, high-end furnishings, library, Roman pool and private verandas -- for up to $80,000 per person if staying in the Owner's Suite.

Less expensive luxury options aboard the Oceania Regatta also exist for people still hoping to experience the best the ocean has to offer, at $177 a day -- or $4,599 total -- for trips to French Polynesia.

"You could never have a vacation on land in that kind of luxury for that price," Saunders said.

For those ready to reap the benefits of other, lower prices to travel the world, they can expect to spend just $36 a night, or $144 per person for a four-day Carnival Cruise to Mexico. These shorter trips are recommended for family vacations or people looking to party, featuring dine-in family movie nights and night club scenes. 

Even with the bad rap that cruises got at the beginning of the pandemic, with COVID-19 cases running rampant on dozens of different voyages, cruise lines still took steps over recent years to continue adding to the lure of ocean travel. 

Saunders said that some ships now have "zip lines on them and go-kart tracks" as well as bumper cars.

"When you see how easy and convenient it is to unpack once but see multiple places, it keeps people coming back and back again and again," he said. 

Many travelers planning to depart out of the Port of Los Angeles will no longer require proof of vaccination to board a ship, though some cruise lines may call for a negative COVID test before setting sail. 

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Cruise Tourism Economic Impact

Cruise Lines International Association (CLIA), in partnership with Tourism Economics, has released a suite of Cruise Economic Impact Studies—the first since 2019.

The cruise industry is a significant and rapidly growing segment of world tourism. Its swift, impressive rebound contributed to $138B in total economic output and 1.2 million jobs globally in 2022, as detailed in reports commissioned by CLIA and produced by Tourism Economics.

In recent decades, overall travel demand has increased across the globe due to rising standards of living, changes in consumer behavior and improved access to transport, among other factors. This growth has benefitted many tourism sectors, including the cruise industry. 

Notably, 2021 was a year of rebirth for cruises as pandemic restrictions were lifted and operations accelerated. Deployment jumped in early 2022 and by year's end, the total capacity deployed in terms of Available Passenger Cruise Days (APCD) clocked in just below 2019 levels.

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Key findings highlight that although the pandemic suppressed passenger volumes, the cruise industry's global activities in 2022 yielded significant economic benefits, supporting $137.6 billion in economic output, $68.9 billion in GDP, 1.2 million total jobs and $42.8 billion in wages. 

Learn more about our ongoing work to provide detailed, high-frequency insights on deployment, passenger volume, and pricing across 3,000 ports and destinations.

Cruise Market Watch

Growth of the Ocean Cruise Line Industry

Worldwide, the ocean cruise industry experienced an annual passenger compound annual growth rate of 5.9% from 1990 to 2024.

While the COVID-19 pandemic brought the ocean passenger cruise industry to a standstill for nearly two years, it also prompted the accelerated retirement of numerous older ships. Simultaneously, new additions to fleets adopted a more modern and environmentally friendly approach. In 2024, passenger numbers are expected to surpass the pre-COVID levels of 2019.

Between 2023 and 2024, a total of 10 new ships, with a combined passenger capacity of 25,450, are set to be added (refer to the tables below). This influx will bring the worldwide ocean cruise passenger capacity to 673,000, spread across 360 ships. These vessels are projected to carry a total of 30.0 million passengers by the end of 2024, representing a 4.2% increase over 2023 and a 9.2% increase over 2019.

2024 Growth

Shipbuilding Summary

Sources: Royal Caribbean Cruises, Ltd., Carnival Corporation and plc, NCL Corporation Ltd., Thomson/First Call, Cruise Lines International Association (CLIA) , The Florida-Caribbean Cruise Association (FCCA) , DVB Bank and proprietary Cruise Market Watch Cruise Pulse data.

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Percentage change in revenue of leading cruise companies worldwide 2020-2023

After the dramatic impact of the coronavirus (COVID-19) pandemic on the cruise market, global leading cruise companies ' revenue recovered in 2023. That year, Carnival Corporation & plc's revenue worldwide reached nearly 21.6 billion U.S. dollars, surpassing by 3.65 percent the figure from 2019. Meanwhile, global earnings of Royal Caribbean Cruises and Norwegian Cruise Line Holdings rose by around 27 percent and 32 percent, respectively, compared to 2019.

Percentage change in revenue of leading cruise companies worldwide from 2020 to 2023 (compared to 2019)

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2020 to 2023

Carnival's fiscal year ends November 30; Royal Caribbean and Norwegian Cruise's fiscal year ends December 31

Data were calculated by Statista based on the company filings published by Carnival Corporation & plc , Royal Caribbean Cruises Ltd. , and Norwegian Cruise Line Holdings Ltd .

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Cruise ships

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Cruise passengers

  • Premium Statistic Number of global ocean cruise passengers 2009-2027
  • Premium Statistic Annual growth rate of the global cruise passenger volume 2017-2023
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  • Premium Statistic COVID-19 impact on cruise passenger volume worldwide 2020-2023, by source market
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  • Basic Statistic Number of Carnival Corporation & plc passengers worldwide 2007-2023
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Cruise companies

  • Premium Statistic Worldwide cruise company market share 2022
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  • Premium Statistic Net income of Norwegian Cruise Line worldwide 2011-2023
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Food and drink trends on cruises

  • Premium Statistic Leading forecast food trends in the cruise industry worldwide 2023
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The Very Slow Restart of G.M.’s Cruise Driverless Car Business

An incident that seriously injured a pedestrian in San Francisco led Cruise to take all of its cars off the road. The question now is when they will return.

A white compact car, with cameras and other equipment mounted on its roof and no driver behind the wheel, is shown on an urban street.

By Yiwen Lu

Reporting from Warren, Mich., and Mountain View, Calif.

At a sprawling complex in Warren, Mich., General Motors’ hopes for its driverless car future play out in a virtual reality headset offered to visitors.

In a video, the electric and autonomous car drives itself. Wirelessly connected to traffic lights and the surrounding streets, the car avoids collisions and reduces congestion, part of what G.M. calls its “0-0-0” vision — “zero crashes, zero emission, zero congestion.”

At least, that’s the plan. G.M.’s driverless future looks a lot further away today than it did a year ago, when Cruise, G.M.’s driverless car subsidiary, was deep into an aggressive expansion of its robot taxi services, testing in 15 cities across 10 states.

On Oct. 2, a Cruise driverless car hit and dragged a pedestrian for 20 feet on a San Francisco street, causing severe injuries. Weeks later, the California Department of Motor Vehicles accused Cruise of omitting the dragging from a video of the incident that was initially provided to the agency and suspended the company’s license in the state.

In November, Cruise voluntarily paused all operations across the country after facing widespread criticism that it was neglecting safety as it expanded its driverless taxi service. Cruise also pushed out nine executives, its chief executive stepped down , and the company laid off a quarter of its work force.

Now comes the hard part: Rebuilding a ruined reputation. In recent interviews with The New York Times, the three executives now running Cruise say they are in no rush to get back on the road. After learning the hard way about the risks of moving too fast with a cutting-edge technology, Cruise has slowed its breakneck development to a crawl to avoid another major mishap.

“For a long time before, Cruise was really moving fast and other competitors were not,” said Craig Glidden, who became president and chief administrative officer of Cruise in November. Now, he said, safety is Cruise’s “North Star.”

But going slow means the company risks falling far behind its top rivals. Waymo, a subsidiary of Google’s parent company, Alphabet, has had driverless taxis operating in the Phoenix area since 2020 and San Francisco since late 2022 without serious incidents, and it recently expanded to Los Angeles . Zoox , an Amazon subsidiary, has been testing a steering-wheel-free robot taxi in Las Vegas since last June.

“Catching up with Waymo technologically is going to take three to five years at best,” said Alex Roy, a consultant and former executive in the autonomous car industry. He added that it was even harder for Cruise to catch up commercially because Waymo was “generating revenues with trust that Cruise never earned.”

Some industry observers were surprised G.M. didn’t shut down Cruise after its public meltdown late last year. Since acquiring the company in 2016, G.M. has spent over $8 billion on its driverless subsidiary. Cruise lost $3.48 billion last year, and another $519 million over the first three months of 2024.

“I was thinking in the late part of 2023 and into early 2024 that the most likely outcome was that they were going to completely turn off Cruise,” said Reilly Brennan, a partner at Trucks Venture Capital, which invests in the future of transportation.

But after slashing $1 billion from Cruise’s 2024 budget, Mary T. Barra, G.M.’s chief executive, reiterated her commitment to the company during earnings calls. In April, she told investors that Cruise had made “tangible progress,” although G.M. is exploring different options to fund the business, including taking outside investments.

After Cruise’s former chief executive and co-founder Kyle Vogt resigned in November, G.M. appointed two presidents who report to its board: Mo Elshenawy, previously the company’s executive vice president of engineering, and Mr. Glidden, who also serves as G.M.’s general counsel. In February, Cruise hired Steve Kenner, a veteran product safety executive, as chief safety officer.

The three executives all decide on safety decisions, such as when to take the next step in deployment. Those calls, Mr. Kenner said, have to be unanimous.

So far, Cruise has taken baby steps back to the road. In April, it picked Phoenix, the home to its operations center, to be the first city to restart testing with human drivers. On May 13, after a month of driving a handful of vehicles in order to understand local road features, Cruise transitioned into supervised autonomous testing , with two safety drivers per vehicle.

Cruise used to say its robot taxis were, on average, safer than a human driver. But so-called edge cases — incidents like road construction or erratic cyclists that humans can intuitively react to — bedeviled the robot taxis. Mr. Elshenawy said the cars had improved their navigation of construction zones and how they deal with emergency vehicles.

Cruise hopes to offer driverless ride-hailing service in one city by the end of 2024, while operating with safety drivers in fewer than five cities, Mr. Glidden said. That is, if the edge case issue can be improved.

While Mr. Elshenawy’s engineering team works to improve the technology, Mr. Glidden and Mr. Kenner have been traveling across the country to meet with regulators. Cruise has met with local officials and state regulators in Arizona, Texas and California, as well as with the National Highway Traffic Safety Administration. It has also spoken with several cities in the Southeast where it previously tested its fleet.

In California, Cruise has answered questions from state regulators about driverless testing, but it is unclear if or when it could regain a permit. The talent pool in Silicon Valley is essential to Cruise’s business, so executives say they are committed to staying in the state.

Whether Cruise’s cautious approach restores faith in the company among regulators is an open question. Dave Cortese, a California state senator representing Silicon Valley, said the autonomous vehicle industry’s aggressive testing on public roads in the past had “created tension and distrust.”

For the company to win over regulators, it needs a “profound demonstration of transparency” to demonstrate that an incident like Oct. 2 will not happen again, said Mr. Roy, the consultant.

“We may not agree, but I think there are lots of places where we do agree,” said Tilly Chang, executive director of San Francisco County Transportation Authority. “But it is also unclear to us what it would take for them to get reinstated.”

Yiwen Lu reports on technology for The Times. More about Yiwen Lu

Driverless Cars and the Future of Transportation

China’s Advantage: Across China , more assisted driving systems and robot taxis are being tested than in any other country, with censors limiting discussions about safety.

A Very Slow Restart: An incident that seriously injured a pedestrian in San Francisco led Cruise, G.M.’s driverless car subsidiary, to take all of its cars off the road. The question now is when they will return .

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Along for the Ride: Here’s what New York Times reporters experienced during test rides in driverless cars operated by Tesla , Waymo  and Cruise .

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What Is the Future of the Cruise Industry After COVID-19?

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According to industry trade organization Cruise Lines International Association, over 30 million people took cruises last year. It’s safe to say that number will be lower in 2020.

During a highly contagious outbreak, a vacation in which thousands of people are traveling together on a ship is seen as potentially life-threatening. And even during the travel industry’s recovery period, airlines and hotels will have to be operating before cruise lines do. Passengers need a way to get to the ship and a place to stay the night before their departure.

I’ve followed cruise line stocks for financial services firms for 17 years and taken over 30 cruises personally, giving me a good perspective on what we might expect to see as both a financial analyst and passenger. While I think the industry will recover, it may not be until 2021 or later — and even then, ships likely won’t sail full at first. And while some changes will be temporary, there are others that could change cruising permanently. Here are a few.

Health checks are in

Cruise lines became much more stringent about health requirements after articles about norovirus threatened to scare off passengers. Signs about washing hands appeared everywhere, bottles of hand sanitizer showed up at restaurants, and passengers were asked to fill out a short health questionnaire before boarding.

Those precautions are likely to seem quaint after COVID-19. I’m not saying you’ll be required to present a doctor’s note of immunity to board a ship, but you’ll get more than a few questions about your health and may be subject to a temperature check or similar screening. The muster drill, which is the first-day assembly to discuss safety, may be as much about health risks as it is about emergency evacuation.

Here’s the part that could hurt the most: Until there is a vaccine for the novel coronavirus, a ship will likely go into lockdown as soon as anyone onboard shows symptoms of the disease, particularly given passenger demographics.

A few years ago, a Carnival Cruise Line executive told me that the average age of passengers was about 50, meaning that a good number of cruisers fall into an age group that seems more susceptible to complications from COVID-19. That’s what’s most likely to impede the recovery of the industry. It’s going to be hard to get customers to pay for a vacation that might result in their being locked in a cabin for a week or longer.

Self-serve buffets are out

The one image everyone seems to have about cruises is the midnight buffet, with passengers picking at pastries as the stars shine overhead. And while that particular event is no longer necessary (mostly because many cruise lines have become 24-hour feasts), the buffet still plays a large role in the cruise experience.

I think it’s safe to say the buffets will stay. Passengers like them too much and food costs are low. But their nature may change. Instead of serving yourself, it’s likely that all food will be served to you by a crew member from behind a sneeze guard. It doesn’t matter how much hand sanitizer you use before you enter a buffet, the cruise line isn’t going to take a chance with people rifling through pieces of fruit, cookies or any of the other food to which passengers help themselves.

Cruise lines hate to do anything that increases their costs, and full-serve buffets could certainly do so. But labor costs are low (since cruise lines are generally not subject to U.S. labor laws), and I suspect that passengers will take less food when someone serves it to them.

» Learn more: How a new cruise ship is built

Taxes are in (maybe)

While most cruise lines operate out of Florida, their incorporation status is more controversial. Carnival Corp., for example, is incorporated in Panama. This status offers them some benefits, and two of the most important are being shielded from U.S. labor laws and U.S. taxes. In 2019, Carnival paid a tax rate of just over 2%, similar to its publicly traded peers. In normal economic times, nobody makes an issue of it.

But these aren’t normal economic times. The cruise lines have already gone to Wall Street to borrow money or sell stock to finance themselves during COVID-19. If they run out of money again, they may need to approach the government for aid.

That’s where things get interesting — technically, the cruise lines are not U.S. companies. But I think it’s highly unlikely that the federal government will allow them to go under, particularly in an election year, given the number of people they employ in Florida.

And it will be equally unlikely that they will be forced to incorporate in the United States. That ship has sailed, so to speak. But if the companies are forced to approach the U.S. government for a loan, Washington will be in a strong position to get some long-term concessions. The cruise lines won’t be forced to pay the full corporate taxes that other industries pay, but I would not be surprised to see financial implications that would affect them long after whatever loans they receive are paid back.

Is that good? If you’re a U.S. citizen, absolutely. More money in the coffers is always a good thing. But somebody has to pay those added costs, and they will likely be passed along to customers, at least in part.

The bottom line

COVID-19 is going to force cruise lines to change the way they operate. You will see some of the impact onboard, while much of it will be behind the scenes. But I’d bring a thermometer along, just in case.

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cruise business decline

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S&P 500 Gains and Losses Today: Adobe Becomes Latest Stock to Enjoy AI Boost

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Key Takeaways

  • The S&P 500 posted a minimal loss on Friday, June 14, 2024, settling just below its all-time high after a four-day string of record closes.
  • Shares of cruise operators declined as Bank of America analysts reported a minor drop in pricing for ocean cruises.
  • Adobe shares soared after the media software maker beat estimates and raised its guidance amid strong demand for AI products.

Major U.S. equities indexes were mixed and little changed to close out an eventful week for the markets.

The most recent Michigan Consumer Sentiment Index (MCSI) report showed perceptions of the economy dropped to a seven-month low in June , even as inflation shows signs of abating, pressuring stocks in Friday's session.

The S&P 500 ticked less than 0.1% lower, closing in negative territory for the first time this week following a four-day streak of record closing highs, while the Dow was down 0.2%. The Nasdaq edged 0.1% higher, extending its record-setting streak to five sessions as artificial intelligence (AI) enthusiasm once again lifted the tech sector.

Shares of cruise lines sank after Bank of America analysts reported a slight decline in pricing for ocean cruises. Norwegian Cruise Line Holdings ( NCLH ) shares suffered the steepest losses of any S&P 500 component, dropping 7.5%. Shares of fellow cruise operator Carnival Corp. ( CCL ) fell 7.1%, while shares of rival Royal Caribbean Cruises ( RCL ) lost 4.4%.

Shares of First Solar ( FSLR ) slipped 6.2%. Although analysts at Zacks recently boosted their quarterly earnings estimates for the solar cell manufacturer, the Fed's more muted rate-cut forecasts released earlier this week could be weighing on the stock, as solar projects tend to accelerate when borrowing costs move lower. First Solar also faces challenges related to high operating costs.

Align Technologies ( ALGN ) shares declined 5.6% after the manufacturer of orthodontic treatment devices reported its second-quarter financial results. Although the company reported revenue and earnings growth, Align issued underwhelming guidance, reflecting an uncertain outlook for China's consumer market.

Adobe ( ADBE ) shares skyrocketed 14.5%, notching the strongest gains of any stock in the S&P 500, after the software maker posted better-than-expected quarterly sales and profits and boosted its full-year guidance. The maker of Photoshop and other media software noted robust demand for its suite of generative artificial intelligence (AI) products helped drive the strong performance. Adobe's beat-and-raise report appeared to ease concerns that generative AI technology could infringe on its sales.

Shares of toymaker Hasbro ( HAS ) jumped 6.0% after Bank of America upgraded the stock to "buy" and boosted its price target. The analysts cited several reasons for bullishness on Hasbro, including the strength of Monopoly Go! and its digital gaming strategy as well as a positive outlook for its Magic: The Gathering card business.

Broadcom ( AVGO ) shares were up 3.3% on Friday, adding to the massive gains posted in the previous session after the chipmaker beat quarterly revenue estimates , lifted its sales forecasts, and announced a 10-for-1 stock split effective on July 15. The company highlighted that revenue from AI products reached a record level of $3.1 billion during the quarter. Including Friday's gains, Broadcom stock popped nearly 23% this week.

cruise business decline

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August 17, 2023 6:13 PM

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Primary content.

AILSA CHANG, HOST:

Cruise ships are making a comeback. South Florida's cruise companies are buoyed by a surge in passengers, but they're still paying for the pandemic interrupting their business. From member station WLRN in Miami, Tom Hudson reports.

TOM HUDSON, BYLINE: This is what PortMiami's Terminal B sounded like in May of 2021. It was a beautiful day to cruise. The sun was shining. It was in the mid-80s with a slight breeze. Two ships sat dockside, but there were no crew members, no stevedores, no passengers. The cruise business was still closed because of COVID-19.

(CROSSTALK)

HUDSON: And here's what PortMiami sounded like a couple of weeks ago as thousands of passengers lined up to board the Disney Magic for a five-day cruise. The cruise business has come, well, cruising back, stronger than it was before the COVID-19 virus shut down sailing, costing tens of thousands of jobs and billions of dollars.

(SOUNDBITE OF ARCHIVED RECORDING)

JASON LIBERTY: I'm thrilled to share with you this morning our strong second-quarter results and another step change in the trajectory of our business.

HUDSON: That's Jason Liberty, the CEO of Royal Caribbean Group, based in Miami. He was speaking on a conference call after the company released its second-quarter financial results last month.

LIBERTY: We not only delivered another outstanding quarter that significantly exceeded expectations but are also increasing our full-year earnings guidance by another 33%.

HUDSON: The cruise operator expects this year's profits to be stronger than it predicted just a few months ago. And it's not alone in riding this wave of passenger demand.

JOSH WEINSTEIN: There was much to celebrate in the second quarter.

HUDSON: This is Josh Weinstein, the CEO of Carnival Corporation, based in Doral, Fla.

WEINSTEIN: We just hit all-time highs for bookings and customer deposits. And remarkably, we are still experiencing a phenomenal wave season which started early, gained strength and is still going strong midway through the year.

HUDSON: And it was a similar message from Harry Sommer, the CEO of Norwegian Cruise Line Holdings in Miami, though the company's forecast was less than anticipated.

HARRY SOMMER: We achieved record revenue of 2.2 billion in the second quarter, an increase of 33% over the same period in 2019.

JAIME KATZ: I think that these companies have really been able to figure out how to run in a much more efficient way.

HUDSON: This is Jaime Katz. She's a stock analyst at Morningstar.

KATZ: This time off has really given these management teams a way to think about, how do we optimize revenue management? And I think that has permitted these companies to come back with really diplomatic pricing tactics.

HUDSON: Diplomatic pricing. Instead of simply offering deep discounts to fill up the ships, package together amenities.

(SOUNDBITE OF AD)

QUEEN: (Singing) Oh, how I want to be free.

HUDSON: This allows the cruise ships to add or subtract items based on demand. The more people buying, the fewer amenities included in the base price.

QUEEN: (Singing) I want to break free.

UNIDENTIFIED NARRATOR: And so much more.

HUDSON: Strong demand has allowed the companies to keep prices up. And they need the cash. This trio of South Florida-based cruise giants have lost tens of billions of dollars combined since the beginning of the pandemic. All three were profitable in the second quarter if you don't count the hundreds of millions of dollars they spent paying interest on loans. But they have to pay that interest, and it takes a big bite out of profits. Those loans kept the companies afloat when they weren't allowed to sail. Together, these three big cruise companies owe almost $70 billion to lenders.

PETER TROMBETTA: It's still massive. It's still, you know, much higher than it was pre-pandemic.

HUDSON: Pete Trombetta is a senior analyst with Moody's, the credit rating agency. The companies have spent more paying interest on those loans this year than they have spent paying for fuel for their ships.

TROMBETTA: They had to borrow to stay alive. So it's going to take time for them to start tackling that debt. But they're definitely on the right path.

HUDSON: This big rebound of cruising is big for South Florida, with two of the top three busiest cruise ports in the world. Already this year, the number of passengers moving through Port Everglades is up 77% compared to a year ago. The Fort Lauderdale port has been renovating a terminal that will be dedicated to Disney in time for the winter cruise season later this year. And this comes after renovating a separate terminal earlier this year for Royal Caribbean's Celebrity brand, says director Jonathan Daniels.

JONATHAN DANIELS: We're actually hiring additional people. We're creating our own cruise operations department, which the port has never had.

HUDSON: More passengers mean more revenue for Miami-Dade and Broward counties in Florida, the owners of the ports. Cruise passenger revenue in Miami fell 95% when ships were ordered to stop sailing. It already tops $100 million this fiscal year, on par with 2019, the year before the pandemic put a stop to cruises.

(SOUNDBITE OF TV SHOW, "CBS EVENING NEWS WITH NORAH O'DONNELL")

NORAH O'DONNELL: Now to a developing story in South Florida, where two cruise ships carrying passengers with coronavirus have been allowed to dock. For some on board...

CARLOS SUAREZ: Another cruise ship with COVID-positive passengers has docked at PortMiami.

HUDSON: Some of the early COVID cases and headlines came from cruise ships.

UNIDENTIFIED REPORTER #1: After weeks in limbo at sea, overnight, two Holland-American cruise ships...

HUDSON: Some ships were quarantined and not allowed to dock for days over fears of passengers spreading the virus on shore.

UNIDENTIFIED REPORTER #2: The Coast Guard is currently monitoring more than 50,000 crew members on various ships that are in U.S. waters.

HUDSON: Thousands of crew members remained on board other ships for sometimes months after the industry was ordered to suspend operations. It added up to plenty of negative publicity at the time, but it has not hurt the optimism now from the industry's CEOs.

(SOUNDBITE OF MONTAGE)

WEINSTEIN: We are clearly gaining momentum on an upward trajectory.

LIBERTY: Clearly, the very healthy demand environment we are seeing is quite encouraging.

SOMMER: This acceleration in demand, the record booking levels really are increasing our optimism about 2024.

HUDSON: In order for that optimism to be realized, the industry needs to continue attracting first-time cruisers and converting them into repeat customers. Worldwide, one out of every three cruise passengers are at least 60 years old. But the average age for passengers sailing in the Caribbean, where ships from South Florida travel, is in the mid-40s. Joe Cilli is an assistant dean at Florida International University and creator of the school's cruise line operations management degree.

JOE CILLI: You're starting to see somewhat of a trend of, let's lure a younger demographic here. And that's not related to the family cruises with all of the, you know, waterslides and go-karts and things like that on it.

HUDSON: Shareholders certainly are optimistic about the fortunes of the firms. Norwegian stock was up almost 80% in the first half of the year. Carnival and Royal Caribbean shares more than doubled in price during that same time period. In fact, Royal Caribbean stock has almost returned to its pre-pandemic price. For NPR News, I'm Tom Hudson in Miami.

(SOUNDBITE OF CHILDISH GAMBINO SONG, "REDBONE") Transcript provided by NPR, Copyright NPR.

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IMAGES

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  5. A Deep Dive Into The Cruise Line Industry

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  25. Norwegian Cruise Line (NYSE:NCLH) Stock Price Down 5.2%

    June 14, 2024. Norwegian Cruise Line Holdings Ltd. ( NYSE:NCLH - Get Free Report )'s share price fell 5.2% during mid-day trading on Friday . The stock traded as low as $16.97 and last traded at $16.97. Approximately 1,359,757 shares traded hands during mid-day trading, a decline of 90% from the average session volume of 13,001,523 shares.

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  29. People are vacationing again on cruise ships following a COVID-19 decline

    People are cruising again on big ships following a COVID-19 decline, but it's a tough comeback for the industry. Transcript. AILSA CHANG, HOST: Cruise ships are making a comeback. South Florida's cruise companies are buoyed by a surge in passengers, but they're still paying for the pandemic interrupting their business.

  30. Royal Caribbean's Utopia of the Seas gets ...

    It's a subsidiary of Royal Caribbean Group (NYSE: RCL), which is led by Jason Liberty, the cruise operator's president and CEO. The company's stock closed at $148.50 on Friday, a 6.8% drop ...