Passengers are returning to their favorite ships. And cruise line industry leaders are feeling better about their prospects after the COVID-19 pandemic nearly destroyed their businesses three years ago.
Where do the world’s big cruise lines, a major cog in South Florida’s tourism industry, go from here?
Answers emerged quickly Monday at the annual four-day Seatrade Cruise Global conference at the Greater Fort Lauderdale Broward County Convention Center in Fort Lauderdale, Florida. The business-to-business oriented event is attracting 20,000 industry professionals, 80 cruise brands and more than 4,000 suppliers from 140-plus nations.
A panel of executives from cruise lines and ports painted a somewhat guarded but optimistic picture for tourism worldwide, which in turn is driving record numbers of cruise passengers from North America. The Caribbean and the Bahamas, which are bread-and-butter markets for cruise lines based in South Florida, are seeing strong traffic. they said. Port facilities at Nassau, Bahamas, for example, are handling 30,000 passengers daily.
But a full recovery is likely to come later for places such as Australia, which reopened its economy after the United States. Asia also has been slow to recover, while Russia’s invasion of Ukraine is disrupting the Baltic Sea cruise business.
From dead stop to recovery
Three years ago around this time, cruise lines voluntarily suspended sailings worldwide as COVID-19 spread aboard ships, sickening countless passengers. Carnival Corp., Norwegian Cruise Line Holdings and Royal Caribbean Group, which all operate multiple lines, scrambled to raise money in the financial markets to sustain themselves during the siege.
But in early 2022, the Cruise Line International Association, the industry trade group, projected a “full recovery” for the industry from COVID-19 this year, when passenger volume was expected to “surpass 2019 levels by the end of 2023.”
Terry Thornton, senior vice president of Princess Cruises, said North America took the lead as being the main source of major market recovery while others lagged for a variety of reasons.
“All geographic areas are not the same,” Thornton said. “What we found so far, and I’m talking about where guests live, North America led the return by far.”
Australia, he said, “is about a year behind” as it “just started back up in June.”
“I think we have to say Europe sourcing right now is still somewhat challenged, and I think there are obvious reasons [as] to why that is,” he said, citing the war in Ukraine.
“And Asia has just peeked their head out a little bit,” Thornton added.
But overall, Thornton added, customer volume and pricing in tourism — particularly in hotels in resorts worldwide — has been surprisingly strong.
“There have been unprecedented increases in occupancy and rates in the hotel and resort business,” he said. “It is amazing what has happened in the hotel and resort business.”
What does that do for the cruise industry?
If history is any guide, it could be in line for a big lift in would-be vacationers who are trying to decide between going to sea or staying ashore in a hotel or resort. For years, the cruise industry has asserted that their ships offer better deals because of wide price gaps between the two sectors.
“There has always been a very strong value proposition for the cruise compared to land-based resort vacations,” Thornton said. “But I guess the gap right now may be as much as 40% .... what an opportunity right now for the cruise business to hammer home the value of a cruise vacation.”
More new ships are on the way, as well, with 17 entering the worldwide market this year and 66 by 2028. Moreover, new operators are entering the business including those with special themes and niches. Two examples: Ritz Carlton and the Four Seasons, both high-end luxury hotel and private residence operators.
In the meantime, older less efficient ships are leaving the industry’s fleet as new vessels come online. It’s adding up to strong advance bookings and occupancy, as well as healthy pricing.
“All of the big companies are driving to return to 2019 levels of performance by 2024,” Thornton added, “and I think that is a major testament to what is happening in the industry.”
Jonathan Daniels, CEO and director of Port Everglades, attributed the comeback to a sweeping collaboration among all the players associated with the industry as it struggled with issues ranging from protocols to safeguarding customers against COVID-19 and recalibrating their itineraries,
“I applaud the efforts of the lines,” he said, “I applaud the efforts of the destinations, the home ports. All of us are in this together. If we do it singularly, we are going to fail.”
Gains for Port Everglades
The multi-day Seatrade gathering is likely to be a marketing and promotional plus for Broward County’s seaport, the No. 3 ranked port in the world, which considers cruising as one of three major contributors to its business alongside cargo and energy imports.
Nine cruise lines and a ferry service to the Bahamas currently use the port. And more than 3 million passengers are expected to pass through the seaport during its fiscal year 2023.
The port is scheduled to become a second home for the Disney Cruise line starting this fall.
In an interview, Daniels said the port is continuing to position itself to take on bigger ships, such as the Icon of the Seas being built for Royal Caribbean. The massive vessel, which is 1,198 feet long, is expected to become operational next year.
Carnival narrows losses
Carnival Corp. of Doral, Florida, the operator of nine cruise lines, reported a loss of $693 million or 55 cents a share on Monday for its first fiscal quarter ended last last month. The result was better than expected by Wall Street analysts who forecast a 62-cent-a-share loss.
Revenues came in at $4.43 billion for the quarter, also beating forecasts of about $4.35 billion thanks to strong leisure travel demand, higher ticket prices and strong spending by passengers aboard the company’s ships.
Still, the company’s stock fell by more 5% to $7.21 in late afternoon trading on the New Stork Stock Exchange as management said pretax earnings in the second quarter would be lower due to higher energy costs among other things.
Carnival, Royal Caribbean Group and Norwegian Cruise Lines Holdings are all reporting high demand from consumers who were frustrated by protracted COVID-19 restrictions, but are relatively unfazed by inflation.
Carnival CEO Josh Weinstein said in a statement the company is still benefitting from a record peak season, which is lasting longer than usual. He said the company is more than 70% booked for the remainder of the year,
Weinstein is among the cruise line CEOs expected to visit Seatrade on Tuesday.
The conference, which is scheduled to run through the end of Thursday, migrated to Broward County from Miami Beach this year to avoid a conflict with the Formula One Grand Prix event, which is scheduled to draw tens of thousands of racing fans May 5-7 in Miami Gardens. Seatrade normally takes place in late April.
