Leaders from the “Big Four” cruise companies are generally optimistic about their lines sailing from U.S. ports later this year, despite the "No Sail Order" being recently extended by the U.S. Centers for Disease Control and Prevention (CDC) through October 31, That was the big “takeaway” Tuesday from the Seatrade Cruise Virtual conference.
“We are optimistic that we’ll be in a position as an industry, in collaboration with CDC … in collaboration with the [Trump] Administration to resume cruising sometime this year, but we have to work that out,” said Arnold Donald, president and CEO, Carnival Corporation (CCL). “But we are definitely cautiously optimistic.”
Later in the program, panelists were asked by moderator Anne Kalosh, editor, Seatrade Cruise News, to rank on a scale from 1 to 5 (with five being the most optimistic), of whether ships will sail from U.S. ports in 2020. "On a scale of 1 to 5, I'll say a 4.9 in terms of optimism,” said Donald, who noted that it will be a phased restart with fewer vessels.
Believing the industry has come to a “tipping point,” Richard Fain, president, Royal Caribbean Group (RCL), said that with all the information and scientific knowledge gathered within the past six months, the time for restarting from U.S. ports “seems right."
"All the forces are coming together," said Fain, noting that his confidence level was "very high," but "we're not going to do it until we're all confident that it's safe and healthy.”
Putting it another way, Frank Del Rio, president and CEO, Norwegian Cruise Line Holdings (NCLH), emphasized: “This is not a race. I am in no rush to be the first one out of the gate. I want to do this correctly.”
That said, Del Rio said the restart is coming: “Whether it's December 22 or January 3, I think we're in the ballpark. If a number of things go our way, I think we could be sailing soon."
"Standing Up" a Ship
But "standing up" a ship (a maritime industry term for readying a vessel to sail that hasn't been doing so for months) takes time. "It is not turning on a light switch,” Del Rio said, citing the need to bring crew to the ships, implement health and safety protocols and install technology. So, while he’s confident of the restart, Del Rio says it will still take his three brands 60 days minimum to get a ship back into service and it’s important to “do things correctly.”
That's important timing, as NCLH, CCL and RCL recently pushed restart timetables even further out, given the CDC’s extension of the "No Sail Order" through October 31. So, given a 30- to 60-day ship start-up operational window (varying per line), if the lines opt to move forward at the time the order is lifted, that would take the industry restart from U.S. ports into late this year or early next.
Encouraged by Europe
The leaders said they were very encouraged by the safe resumption of cruising in Europe over the past few weeks and months, citing current sailings by MSC Cruises, TUI Cruises, (part of the Royal Caribbean Group family) and Carnival Corporation’s Costa Cruises, with AIDA set to begin cruises in November.
MSC Grandiosa began European cruises in August, so Pierfrancesco Vago, MSC Cruises’ executive chairman, has first-hand "restart" experience. What was the line's biggest challenge in beginning European cruising? "Engaging with all of the authorities of all levels," he said. "It was an incredible task."
For example, MSC worked simultaneously with officials from the European Union, the Healthy Gateways effort, ports, local and regional government authorities, and national governments in Greece, France, Spain and elsewhere.
But that process showed what possibly could happen in the U.S. if lines undertake a similar "stand up" process for ships before the lifting of the "No Sail Order." Vago noted that MSC began readying the ships well before Italian government authorities approved the line to sail within Italy on August 10. That allowed the line to restart its cruise operations by August 16, less than a week later.
That said, if the CDC would lift the "No Sail Order," Del Rio said his brand could not restart in November. “Perhaps others can or will,” he said, but “we are looking at post-November as a potential start date if everything else comes along.”
"Big Differentiator:" 100 Percent Testing
All executives said a big element setting the cruise industry apart from other travel segments, and even other non-travel industries is the Cruise Lines International Association's (CLIA) commitment on Tuesday to 100 percent testing of all passengers and crew prior to boarding. That mandate applies for all member line oceangoing ships with a capacity to carry 250 or more people. It also applies for wherever the ocean ships sail across the globe, not simply within U.S. waters.
“No other industry in travel does that—not airlines, not hotels,” Fain stressed.
For advisors who wonder if any potential new vaccine could be the total solution to the COVID-19 issue, Vago believes a vaccine “isn’t a magic wand." Instead, “vaccines will be part of the solution, but testing will be the solution,” he emphasized, adding that cruise ships that can become a “safe cocoon.”
Still, the cruise leaders acknowledged that positive COVID-19 cases possibly could occur here and there, as they do elsewhere in society, despite the absolute best precautions, and, so, it's important for cruise lines to effectively isolate and treat any COVID-positive guests and to have a good plan for doing that.
Donald, in particular, stressed the importance of creating an environment in which cruise guests on vacation don't fear being stuck on a ship—if someone else on the ship happens to test positive. Fain said the lines can both isolate anyone with COVID-19 without inconveniencing guests or the communities visited on port calls, and use technology to better handle contact tracing than other entities.
Perception Has Shifted
But what about guest satisfaction? Are guests enjoying the cruise despite all the new health and safety protocols? From his group's recent European experience, "we are getting exceptionally high ratings from our guests even with all of the protocols in place,” Fain said.
Executives downplayed any negative perception caused by last spring's highly publicized COVID-19 outbreaks and quarantines on cruise ships. They simply pointed to good advance bookings. That demonstrates the “resiliency of the marketplace,” said Del Rio. “Cruising is going to come back strong.”
If there was one theme of this year's "State of the Industry," it was the importance for collaboration on all levels. The executives said that while they’re optimistic for the global return of cruising, much work is still needed in collaboration with both U.S. government agencies, ports, destinations and other entities, as well as those in the Caribbean, South America, China, Australia/New Zealand and other spots across the globe.
The cruise company executives stressed that they've sought out the advice and expertise of the best medical and scientific experts, and they've shared that information with others.
Noting he was “quite pleased to see how much the industry has found ways to learn from the science as we’ve gone forward,” Fain is looking forward to “expanding on the work we’ve done in starting up in Europe." But, "this is not an area where we are competing," said Fain. "We’re all working for the health and safety of our guests and the communities we serve."
Ship Orders on the Horizon?
Asked by the moderator about any potential upcoming new ship orders, the executives stressed that none of their companies had cancelled existing orders for ships. In fact, Vago said his company has 11 new ships on order, "enough" for its present growth plan.
Donald noted that through 2025, Carnival Corporation already has "quite a book of orders," but he also said they’ll be needed as the industry returns to its growth path.
Fain noted that there is already a long lead time for deliveries and this year there are supply chain and shipyard delays too. In addition, the leaders talked about phasing in service, not relaunching all ships at once, so companies shouldn't require more new ships right away.
Del Rio pointed out that those new build orders already on the books for Norwegian Cruise Line and Oceania Cruises are for totally new classes of ships (Leonardo Project ships for NCL and Allura-class for Oceania). Typically, first vessels in a class are evaluated after delivery and interior design, public spaces and accommodations are often tweaked for future sister ship deliveries.
That's typically determined after the first-of-a-class ship has been sailing for several months. So, Del Rio said any potential new ship order, if one were to occur, would likely be for his Regent Seven Seas Cruises brand, as that would be another ship from its existing Explorer-class.
Fain said that for his group’s cruises in Europe, customer ratings from guests who’ve sailed are “exceptionally high” even with the health and safety protocols. So, he sees a “very bright future.”
Donald told the Seatrade audience that there is sizable "pent-up" consumer demand for cruising, while Vago revealed that MSC Cruises' guest satisfaction ratings from recent European cruises are high and some consumers are even booking back-to-back cruises.
Acknowledging that no industry “has taken it on the chin from COVID-19 more than the cruise industry," Del Rio too showed optimism. “This is a bump in the road. Cruising is going to come back strong.”