Checking in on the Cruise Industry

Testing the Waters

Cruise ships around the world have been docked since mid-March due to COVID-19. The CDC has a no-sail order in place until September 30 in the US. However, the cruise industry is slowly beginning to come back to life in Europe and Asia.

Carnival, (CCL) the largest cruise line in the world, has plans to restart trips out of Germany on August 5. Several other cruise companies have already set sail with new safety measures in place. These include TUI Cruises, a German company partially owned by Royal Caribbean Cruises (RCL), Hurtigruten, a Norwegian company, and Genting Cruise Lines, a company based in Hong Kong. Most of the boats in operation at the moment are much smaller than typical giant ships owned by Carnival, Royal Caribbean, and Norwegian Cruise Line Holdings (NCLH).

New Safety Protocols

Cruise lines are coming up with creative ways to keep passengers and workers safe. Sanitation protocols have been ramped up and crew members are regularly tested for COVID-19. Ships in operation now are only carrying 50-60% of their normal passenger loads to make social distancing measures possible. This is likely to continue if and when larger ships resume operations.

Large buffets, a hallmark of some cruise lines, will be replaced with table service. This will present a significant increase in labor costs for cruise companies. Activities on cruise ships like shows and meals will also be staggered to avoid large numbers of people gathering in the same place.

Looking Ahead

Some cruise industry leaders feel optimistic about recent developments. However, others see rough waters ahead. Before the pandemic, analysts projected that in 2020, the cruise industry would make $71 billion and carry 32 million passengers. Now these numbers are expected to be down by about 50%.

It took three years for the cruise industry to recover from the 2008 financial crisis. Now cruise lines are not only dealing with economic downturn—they also need to find ways to help their customer base feel safe on cruise ships again. Investors will be carefully watching to see if these first cruises are successful, and what that could mean for the industry going forward.

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS080302