Cruise Industry Carefully Charts Its Return to Sailing

Despite the CDC lifting its No Sail order, in place since the pandemic arrived on U.S. shores in March, the cruise industry has gone from dry docks to a metaphorical Bermuda Triangle, with no clear timeline as to when their ships can actually set out again. After the order expired at the end of October, the industry graduated from an outright ban on sailing in the U.S. to a conditional sail order, in which cruise brands will have to prove to regulators that the proper protocols are in place to limit the spread of Covid-19. Each brand will be responsible for chartering “test voyages” with either unpaid guests or company employees to test these protocols, including rapid tests before boarding and social distancing policies at sea. While the No Sail order had an expiration date, the conditional sail order is expected to lift Nov. 1, 2021 or the "expiration of the secretary of Health and Human Services’ declaration that Covid-19 constitutes a public health emergency." “I would say that the brands do see the conditional sail order and its specificity and guidelines as some additional clarity, that doesn't mean that it makes the timeline any shorter,” said Paul Golding, an analyst specializing in leisure and online travel at global financial firm Macquarie. Given its tall order, it could be some time before the industry begins investing in marketing again. According to MediaRadar, a consulting firm that tracks advertising spend, the cruise industry’s ad spend is still down 79% since March, with television advertising down 99% compared to 2019. Print and digital advertising is faring slightly better, down only 68% compared to 2019. When the industry does return, capacity is expected to be cut severely, though executives have assured investors that their companies can operate at roughly 25%-35% of onboard capacity and still break even on sailing. Cruisers who have had their itineraries canceled and opted to accept credits for future cruises will be the first to board before ships are able to make more cabins available. Monday’s news of a promising vaccine might quicken that timeline. “If there’s a 90%-plus opportunity to avoid infection, does that mean that you can go back to 100% capacity sooner in 2022, 2023?" asked Golding. “Or, now that the option is out there, does that mean that the onus is now on the individual and not on the corporation or the government?” Either way, the marketing levers will be flipped when there are once again cabins to fill. “Filling ships to maximum capacity is the mantra of the cruise lines,” said Arnie Weissmann, the editor in chief of Travel Weekly. He expects brands won't start advertising again until the second half of 2021. “You’re going to see a huge marketing push because it won’t be about filling cabins—it’ll be about changing people’s mindsets,” said Daniel Craig, a travel marketing consultant who’s worked with cruise brands. “Covid has been a public relations disaster for the cruise lines, and a vast majority of their clientele is in high risk groups. They've got some cleaning up to do in terms of giving people confidence again.” Additionally, every week a cruise itinerary gets pushed back or canceled—for the record, you can book a Carnival cruise for the first week of January—a traveler is given the opportunity to opt for an all-inclusive resort vacation instead, especially in Mexico which has remained open to U.S. travelers this summer and fall. “People are deciding, 'You know what, we're not going to cruise next year, we're going to do something different,'” Craig said. “The longer this goes on, the more devastating the financial impact is.” Speaking to investors on Tuesday, Norwegian Cruise Line CEO Frank Del Rio said the brand is expected to burn through $150 million a month this quarter, and that it could be another six to nine months before its entire fleet was up and running. “I look at 2021 as a transition year,” he said. "'22 is the road to normalization. And then '23 forward is normalization.” Norwegian CFO Mark Kempa chimed in to emphasize that cruising’s return was “not a race.” “We want to instill confidence in all the constituents with our brand. So you only get one shot to do that right,” Kempa said. “We're going to take it on a methodical approach and do it right because, again, you have one shot to do it.”