Cruise Lines Tout Deals Even Though It's Still Not Clear When They'll Sail

Norwegian Cruise Line can’t tell travelers when its ships will resume sailing in North America, but when they do, drinks are on the house. Kids? Bring ‘em for free. Worried about airfare? They’ll take care of it. It's all part of the brand’s Free at Sea promotion, a bundle of freebies and discounts aimed to lure travelers to book a trip in 2021—or beyond—despite the ongoing pandemic that’s kept the cruise industry in purgatory. While the occasion promotion and comped airfare isn’t new, cruise brands have never been more flexible. And considering that federal officials still haven’t given the industry the green light to return to operations, there's plenty of reason to be. Travel adviser Jill LaBarre of Jill's Great Escapes just sold Norwegian's package to one of her clients. “The greatest change that has come into play, besides the protocols and new standards, are the ‘cruise with confidence’ policies,” LaBarre said. “They want you to book, they want you to plan your vacation, but if you can’t take the vacation, you’ll be able to adjust.” Those who book a Norwegian cruise from January through October 2021 can cancel their trip 15 days before departure for a future credit, or 60 days before departure for a full refund. Royal Caribbean's policy is even more generous, offering a 48-hour cancellation window until Dec. 31, 2021. Carnival is running a deal offering trips for as little as $65 a day (before taxes and port fees) through 2023, with a cash refund if the cruise gets canceled. The brand has canceled all cruises until Dec. 1 but Carnival CEO Arnold Donald told investors he had “every reason to believe” its ships would be sailing again by the end of the year. Still, more guests were asking for refunds than accepting future cruise credits. Virgin Voyages, which had planned to launch this month but is now delayed, has seen its prices remain consistent but has given customers 48 hours to cancel to receive credit for a future cruise. “It’s table stakes," said Jessica Fleisher, Virgin’s director of sales and business development. "We talk about his internally; none of us are making personal travel plans with a brand that’s not completely flexible." In the first month of the pandemic, Virgin was quick to offer customers credit worth double their booking if they didn’t ask for a refund. Fleisher said most travelers took the brand up on the option, but couldn’t provide specifics. Virgin also sweetened its deal with travel advisers, bumping up commissions from 10% to 16% in July. “That was an investment," Fleisher said. "We quickly realized that when we came out of this pandemic, those that will sail are going to be cruisers, and most people in the U.S. and Canada book their cruise through a travel agent." In 2018, travel advisers represented 68% of the cruise industry's total sales, according to Phocuswright, a travel industry research firm. Long term, Virgin hopes that more than half of its customers will come from travel advisers, although Fleisher couldn’t say whether that was the case now as the pandemic has skewed the brand’s booking figures. As far as deals, price points probably won’t encourage a return to travel as much as safety policies and procedures will, said Fleisher. To boot, the consumer conditioning that may result from those deals may haunt companies for years to come. “I don’t think lower prices are going to be the thing that brings people back to cruising,” she said. “There’s always a line, and that falls across the industry. I think it’s hard to come back from low rates; it’s hard to claw your way out of that." LaBarre agrees. “When cruises start, they’re not going to be sailing at 100% capacity and there is a pent-up demand for the product. They’re going to have no trouble filling the limited ships that are going to start out initially," she said. "They don’t need to cut the price and devalue the product with all that they're offering." Of course, there’s still no product yet. While the Centers for Disease Control and Prevention's No Sail order is set to expire at the end of the month, it could very well be extended (as it has three times previously). “We think sailings out of the U.S. may continue to be delayed until March 2021,” according to a report published earlier this month by the investment firm Macquarie. The risk of a false start, where brands rush to prepare ships and crew only to get shut down, is too great. (Particularly when cash is tight: Carnival is burning through an average of $530 million a month.) “A forceful restart sooner is too risky to balance sheets,” the report said. Earlier today, Royal Caribbean revealed it had lost $1.2 billion this quarter but that “with very minimal marketing activity,” the brand had seen a “steady improvement” in 2021 bookings, predominantly for summer trips. Pricing has remained the same year over year. Most cruise lines agree that, to break even, occupancy on a cruise ship should be roughly between 25% and 35%. But that doesn’t account for the cost of getting an entire fleet back in the water when travel does resume. One point Royal Caribbean has emphasized, relevant especially as Covid cases rise in the U.S., is that a cruise environment should be safer than a traveler's hometown. “We’re not just suddenly coming back,” said Royal Caribbean CEO Richard Fain. “We’re to have the opportunity to see the protocols in action and adjust them. We believe it's possible to make it safer on a cruise ship than you are on Main Street.”