Posted on 02/28/2021 8:45:15 AM PST by Capt. Tom
Eager to be aboard one of the very first cruises when cruising resumes in North America? You’ll be lucky if you get a cabin.
When cruise lines initially restart operations out of U.S. ports, presumably later this year, they are likely to only restart with a few ships, each operating at only partial capacity, executives at all the major cruise lines have said. That’ll create a squeeze on the number of available cabins that could make it hard for would-be cruisers to find space.
Indeed, the squeeze could be so sharp that some people who currently have bookings on ships for later this year might find their reservations canceled out from under them due to limited capacity, a top industry executive suggested on Thursday.
“We’re not going to be able to start (with) all 28 vessels,” Norwegian Cruise Line Holdings president and CEO Frank Del Rio told Wall Street analysts during a conference call to discuss quarterly earnings. “It’s going to be … maybe one (ship launching) a week, something like that, which means that there’s going to be a lot of customers who are booked today who will be displaced.”
It’ll be a situation of “excess bookings, if you will, at the beginning,” Del Rio said.
Del Rio said the displacement of customers with confirmed bookings for the initial period after cruising resumes will take two forms. Some passengers will have their reservations canceled outright and receive a refund. Others will be moved from ships that aren’t yet operating to others that are.
“People will move from the Norwegian Jewel in Alaska to the Norwegian Bliss in Alaska, or they’ll move from the Oceania Riviera in Europe to the Oceania Marina in Europe,” he said.
Norwegian Cruise Line Holdings is the parent company of Norwegian Cruise Line as well as sister brands Oceania Cruises and Regent Seven Seas Cruises.
Del Rio suggested the number of bookings the company has taken for cruises during the third quarter of this year already outstrips the likely supply of cabins that it will have available if cruising has resumed by then.
“We believe that there are enough bookings today (that) if we never took another booking, let’s say, for (the third quarter), assuming a reduced capacity at the start, we don’t have to take any more bookings for (the third quarter),” he said.
As more ships come on line in the months after a cruising restart, the cabin-availability squeeze will ease and fewer customers will be displaced, Del Rio told the analysts. Eventually, the company will hit an equilibrium point where supply catches up with demand.
“There’ll be a rebalancing, if you will, at some point, where we do need to start taking more bookings, but my guess is that that will be beginning month three, four (after the restart),” he said.
An initial imbalance between supply and demand for cruises is one reason that pricing for cruises for the second half of this year and into 2022 has remained high.
Echoing comments by Royal Caribbean Group executives earlier in the week, Del Rio said bookings for the coming year currently are “well ahead” of where they normally are for this time of year at prices that are “inline to up mid-single digits,” when excluding the dilutive impact of future cruise certificates.
Del Rio noted that Norwegian Cruise Line Holdings hadn’t yet received guidelines from the U.S. Centers for Disease Control and Prevention (CDC) on how much it would need to curtail capacity on ships when cruising initially resumes. The CDC regulates cruise ships operating out of U.S. ports and is establishing guidelines for how cruise ships will be allowed to return to service.
“For our own internal working purposes, we assume that at the beginning that maximum occupancy will be in the 50% range,” he said. But in theory it could be more or less.
The initial level of such capacity restrictions could have a significant impact on the initial supply-and-demand situation for cruises when cruising resumes.
Del Rio made the comments in part in response to questions from Wall Street analysts as to just how strong demand was for cruising in the wake of the coronavirus pandemic.
His responses to such questions were upbeat.
“Of all the things we worry about, filling vessels, generating demand just isn’t one of them,” he said in response to a question about demand from a Goldman Sachs analyst. “We don’t have a short-term issue … and longer-term business is better than ever.”
Another question from a Tigress Financial analyst prompted Del Rio to note that 30 million people who expected to cruise over the past year hadn’t been able to do it, creating unprecedented pent-up demand for cruises.
“This is a finite-capacity business. I can’t cruise with 150% occupancy. So there’s going to be a squeeze play here,” he said. “You’ve got less supply. You’ve got pent-up demand. You’ve got people with money in their pocket. I think this is just the making of a boom time for the cruise industry.”
Well another curve ball can be coming from the cruise lines themselves.-Tom
This all sucks! I think finding a cruise in 2021 will be difficult as you said. In 2022 I will just have to book double the number lol.
Most of them are buying trailers and traveling the US.
I’m a big customer of cruise ships (particularly RCCL) but if the vaccine is required, I’m going to probably end up getting an RV and cruising North America on my own terms during my retirement.
I worked as a cabin guy for Norwegian after HS for their summer run after 2001 for college funds. It’s a different concept of booking than hotel occupancy, as I understood it back then. If a cabin is available, I can confidently say they’ll pay any price instead of being cooped up at home. But knowing the character of cruise ship passengers, there will be a large number who wont wear a mask.
I am surprised the CEOs of these Cruise Lines keep cheerleading the fact that no income may go on for another year thru 2021.
Without looking it up, I would imagine the big 3 cruise Lines CARNIVAL, ROYAL and NORWEGIAN, make about 40% of their income on cruises originating in the USA, or coming into the USA.
IMHO downsizing is in the future for these lines, or some form of bankruptcy.-Tom
The JnJ one shot vaccine was just approved yesterday, by the FDA.
I hope the CDC and the Biden group won't require two shot vaccines like Pfizer and Moderna to get onboard a cruise ship. -Tom
They’re laying the groundwork for bailout begging.
I didn’t have any trouble getting a cabin.
I’m taking a cruise on the SS Sinker to see all the sights in Wyoming.
Great dining!
“You’ll eat when we find a McDonalds by the ocean.”
Broadway style entertainment!
“Cats? You want cats? Well we’ve got rats instead. The head one just beat the crap out of some cat who tried to get onboard. Now that was entertainment!”
Lots of enriching activities!
“You think them decks scrub themselves? Here I’ll count out loud and you can pretend it’s aerobics.”
The ports are pure paradise!
‘Wow. I didn’t know you could pile coal that high.”
You’ll make new friends!
“So, Governor Newsom let you out of prison. What were you in for? Oh. You murdered an entire family. Our cabin number? We’re actually staying on the bridge. With guns. Lots of guns.”
I have a different take. IMHO, the telecom is an effort to convince the uninformed that they should book now or their cruise may not be available.
IMHO downsizing is in the future for these lines, or some form of bankruptcy.
I agree!
I would also add that there could be some mergers between bankrupt cruise lines.
In a bankruptcy, the big loser will be the small investor who did not get out in time.
Thanks for posting the info on the "cruise industry".
I wonder when “normal” like ‘17-’19 normal will return to anything?
Won’t go on a cruise until the freeforall ends. Maybe not then.
Should sell the Airstream, campgrounds are more like high density housing.
Think I’ll just stay on the farm, it is much quieter here.
Building supply and lumber prices have gone up 2-3 times since ‘20. Stupid to spend money to build much.
Work from Home? What work? Things are not getting done.
Education from home? Not happening. We are going to have a group of deficit children. It is bad enough already but it will be worse.
It's possible, maybe even likely. Just once, on one ship, would be enough for a panic exodus of ALL ships currently at sea, wouldn't you think?
Full disclosure: I've never been on a cruise, and never intend to...
I wouldn't worry about it. The Points Guy shills non-stop for the cruising industry and I find this "you'd better book right now! more consistent with their shilling than any real trends. All through COVID they were featuring one article after another on the glories of cruising. Combine that with their smug left wing promotion of social causes. I don't know but I would be VERY surprised if they get less than half their money from the cruise lines.
Alert! Alert! Pure propaganda from the cruise ship industry!
This is a kin to the propaganda media saying “oh there’s a shortage of vaccines you better hurry up and get in line for your turn”
cgbg wrote: “All the die-hard pro vaccine folks rushed to get the two vaccines. If they had a little patience they could have had just one. Notice that .gov propagandists didn’t bother to tell them this was coming.....”
I think most people were aware of the coming one-shot vaccine.
I know my wife and I really don’t care if its a one-shot or a two-shot regimine.
We had our first Pfizer shot last thursday.
Looking forward to our second shot in a couple of weeks.
It’s really no big deal. Neither of us have experience any unpleasant side effects. Some very minor soreness. I’ve been fairly tired but I had surgery a couple of weeks ago. Not sure if it’s the surgery or the shot.
Our neighborhood has many in their seventies or even their eighties. Based upon this experience, the side effects of the shots are greatly exaggerated.
Forgot to mention. We have had two cruises cancelled. We have a 2022 cruise booked. We will cancel that one if the CDC/Cruise lines require masking, etc. Whether they require a vaccine is unimportant. We will have had our shots before the end of this month.
We have a 9 day cruise booked for Jan 2022 so I think it will be okay. I might want to go on another cruise that summer to make up for lost time.
IMHO the ship returns to the port it sailed from, and the port health oficials subject the crew and passengers to testing and quaranteen, and other regulations.
If the ship returned to this country, the lawyers and hostile PRESS and TV and our CDC show up and make it sound like the plague has arrived here, and will be spread by departing passengers, who need to be quarantined also, and all cruise ships cancelled from cruising until further notice. -Tom
The Points Guy /Cruise Critic etc. are all shills for the cruise and travel industry. These are the same guys who were advising people to go on their sailings when governments were not allowing ships and their passengers to disembark.
Can’t blame them trying to to help drum up business for the cruise lines or they won;t have anything to write about, but their predictions are worth about as much as the stuff that comes out of AOC’s mouth.
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