The cruise companies are sailing in troubled waters due to the persistently high inflation, aggressive interest rate hikes, and an impending recession. The rapid rise in interest rates is making recession look inevitable in the coming months. Given the macroeconomic headwinds, recovery in global business travel spending to pre-pandemic levels is likely to be delayed, posing further challenges to debt-ridden cruise operators.
With little income and massive fixed costs, these companies raised billions in new debt and are now struggling amid the threat of slowing consumption growth and a cutback on consumers’ discretionary spending. CCL’s CEO noted that the company’s total debt balance was just over $10 billion before the pandemic, which increased to more than $35 billion in October.
