When will all of Carnival Corporation’s cruise brands restart in the U.S. and globally? Arnold Donald, Carnival's chairman and CEO, gave perspective on that and other hot topics of interest to travel advisors in a fireside chat yesterday with questions posed by John Lovell, president of Travel Leaders Group.
Gradual U.S./Global Restart
“Unfortunately, when we do restart as an industry and as a company, it’s not going to be a light switch,” Donald stressed. “It’s not going to be, ‘the ships, well, now they’re all in.’"
Instead, he said: "It will be a gradual introduction"—a layered approach of adding ships back in phases as "all the destinations aren’t going to open simultaneously at once,” given differences in regulations and local conditions.
While Donald (shown at right) said he couldn’t predict a restart date, “what I will predict is that certainly by the end of this year, most, if not all, of our fleet, I’m optimistic, will be in action… I think there’s a really high possibility that all of it will be back by early next year, if things continue to progress the way they have.”
Citing advances in COVID-19 treatments, the ready availability of low-cost, relatively accurate testing, multiple brands of vaccines and plenty of vaccine availability potentially coming in the not-too-distant future, he said, “I think the combination of all of that bodes really well .. and puts us in a good condition."
Add to that, “all the things we’ve learned about how to advance all the protocols onboard… ultimately, the trick is to mitigate the spread,” Donald said. Carnival Corporation’s goal is to make certain there’s no greater risk being on a cruise than with similar activities shoreside.
Consumers—particularly past cruisers—are eager to sail. Donald stressed that “our bookings have been very robust throughout the [pandemic] period and, so, there’s clearly pent-up demand, especially for cruising."
He said past guests tend to repeat every few years and right now they don’t seem to have any reservations about cruising going forward: "We’re very encouraged by the bookings that we do see, and very encouraged by the attitudes and surveys that we’ve taken, and the experiences we’ve had with guests calling in to us.”
Bottom line? “We’ve gone almost a full year without people being able to get their cruise fix, so there’s plenty of pent-up demand,” Donald said.
When Carnival Corporation begins sailing once again, it also will reemerge as a company with 19 fewer ships than in the past. The result? Donald believes that at prior to and during the restart, the company will continue to see strong consumer demand that exceeds the company's berth capacity: “We don’t see a crisis of consumer confidence.”
An important step moving forward, though, after the initial restart, will be to lay groundwork to attract a "harder sell: "Those consumers who haven’t cruised in the past and to create messaging to attract them.
“As time goes on some of that [a decision by first timers to book] will happen on its own because they’ll know people who have cruised who say, “you know you’re crazy, cruising is great, you need to come,” Donald believes. “The word of mouth will be powerful.”
He also stressed that all the lines will be talking about enhanced protocols, depending on what the current COVID-19 risk at that time is, and “what society perceives it to be,” said Donald.
Canada’s Decision and Alaska
Lovell (shown to the right) asked about the potential loss of the big-ship Alaska season, given Transport Canada’s decision to ban cruise ships from Canadian waters and ports through February 28, 2020.
Could a partial Alaska season emerge if that Canadian edict is modified or the U.S. provides an exemption in its law to forbid foreign-flagged ships to sail between U.S. ports without a foreign port call?
“Do you see the Alaska season in 2021 at all, or is it a complete wash at this point?" Lovell asked.
“Given the unexpected length of the [Canadian] order, it’s going to take us some time to assess whether there are any options to preserve a portion of the 2021 Alaska season and we’re diligently working on that,” Donald said. “We’re obviously consulting U.S. and Canadian authorities before we take any additional action.”
He said he was hopeful that, if the Canadian order was not rescinded, that there might be a temporary exemption from U.S. law to allow the company’s ships to sail from one U.S. port to another without the foreign port call.
“Alaska needs it,” Donald stressed. “The people of Alaska need it, and so many people are anxious to go there and cruise is the best way to go.
While he hopes things will change, if not, “this would obviously require our brands to cancel our Alaska and Canada/New England seasons this year.” That said, Donald said the company was committed to operating its land-based operations for 2021 vacations. That covers destination properties that attract visitors to Denali, Fairbanks and Kenai, among other spots.
The Caribbean Restart
Asked by Lovell about the Caribbean restart and any issues with destinations there, Donald said: “I’m not anticipating any major blockages but I am expecting it to be not homogeneous.”
He said each nation and island state has its own regulations and local views, so "we’re going to have to be flexible and adaptable,” he noted, adding “but that’s always the case," as pre-COVID-19, Carnival Corporation’s ships sailed to 700 destinations across the globe and carried 13 million people annually.
What he’s confident about is that “our intention, and I’m sure the industry’s intention is never to be caught in a situation [similar to what] we were caught in at the beginning of this pandemic. Places were closing while people were on the ship,” resulting in extended ships stays and obliterated itineraries. “Folks were not sure what to do," he acknowledged.
Instead, he said that the company and its lines will work out with each destination in advance what will happen in the event of COVID-19 symptoms or cases onboard, so everyone knows what will happen—“preapproved, so that everyone’s vacation isn’t so dramatically disrupted.
CDC Framework and Progress
Donald said what the cruise industry has right now from the U.S. Centers for Disease Control and Prevention (CDC) is an overall framework to potentially restart in the future, “and the only active part of that framework is the pause part, where we have crew onboard.”
As ships aren’t akin to planes that can be parked in a hangar, “they have to continue to operate,” he said, “so that’s the part that’s operational right now.”
As for the next step on cruises restarting, “we’re waiting for the additional technical guidelines” and “we’ll have to see what actually comes out in the end from the CDC.”
Lovell specifically asked about progress on setting up the simulated sailings, mentioned in the CDC’s "Framework for Conditional Sailing" Order. Any start dates or timeframe? Donald said “no,” citing a change in administration, a new CDC director and “there’s lots going on there as they try to get the vaccine out” and that they have “lots of priorities. We're amongst them I hope,” adding that the company continues to work with the CDC and communicate.
While “obviously it’s taking longer than any of us would like" for a concrete plan and timeline, “at the same time, the pandemic has been amplified more than anybody wanted," he noted.
Beyond the CDC, elsewhere across the globe, other nations have their own rules and regulations that must be followed too. “Our number one priority is compliance, environmental protection, and the health, safety and well-being of everybody,” Donald said.
On the Vaccine Front
“Vaccines, even though they’ve come really fast in the scheme of things, it’s still slower than any of us were liking,” he said in talking about the recent start-up of vaccine distribution. He says that’s just the circumstances.
“We’re all in it together,” Donald emphasized, pledging to continue to work with the CDC, other nations’ health authorities and scientific and medical experts.
Will the company make a vaccination a requirement for crew? Carnival is now sailing from Germany without that, Donald mentioned. To make a declaration to require a vaccine “when there’s not really availability of vaccines for all the crew, we wouldn’t do that. And in some places, it would be illegal to mandate that. We gotta let it all play out."
He stressed, “I wouldn’t rule it out, but I wouldn’t today say for certain that we’re going to do that, because it may not even be necessary or it may not even be possible. What we will do, regardless, is do what we’re doing now,” making sure there are protocols and measures in place to reduce the risk of spreading the virus.
The Ability to Manage COVID-19
But "what I will share is that you do see the light here,” Donald told listeners. “The conversations are changing. The knowledge about COVID has changed. The ability to manage COVID has changed,” moving things in a more positive direction.
“So, it’s a bad storm the world finds itself in, but we will weather this storm and that’s the trick, as we just have to survive it,” he said. “I know it’s difficult for people out there, and it’s certainly been difficult for us… Coming out on the other end, they’ll be those bright, cheery days that we’re all looking forward to.”
Lovell talked about how his organization and the various brands and trade business models they represent have all made “drastic changes in our business model, our financial model, done everything we can to conserve cash, whatever it might be.”
That hasn’t been easy, he said: “It’s a lot of work, and it’s been very difficult.” But he thanked and congratulated the advisors on the call who have worked so hard to build their businesses and are hanging in there. “It feels so unfair, but I definitely have empathy."
Last year, Carnival Corporation took steps to honor advisors’ commissions for refunds and allow the commission to be earned on future cruise credits. While there are different nuances brand-to-brand, “we’ve been trying to do what we can," Donald said. "If full payment is made, then we’ll try to get the commission out—payments made whether the cruise is happening or not.”
Beyond that, he said each brand has been working with its partners to possibly see what could be done. “Unfortunately, we’re in the same, similar bind,” he said, noting that although Carnival Corporation has raised sizable cash since the pandemic began, “unfortunately for us, we have a huge burn rate—$600 million a month in outflow."
So, he said the cruise company was limited in what it can do outside of the things formerly mentioned, but “we’re in it together. We want to listen. There are ideas out there that we can possibly want to do,” given that travel advisors are critical to the company’s business…We truly value that and we want to work with everyone, but it is a tough situation.”
In concluding his remarks, Donald talked about how travel brings people together and how cruising, in particular does that. “We have crew members from 145 countries. We have guests from over 190 countries,” he said. They’re different, from different walks of life and different belief systems, but “they discover what they have in common together and then when they do that they learn to celebrate the differences rather than fear them.”