Up until 2020, the cruise line industry ranked as the number one fastest growing sector within the tourism industry. Growth year-on-year continued to accelerate over the last half a decade. It’s been recorded that close to 30 million people took cruises in 2019. This was estimated to increase even further in 2020. That was until Covid-19 brought an abrupt end to operations. Since the outbreak of coronavirus, the cruise ship industry has been dealt one blow after another. An industry that has managed to weather the storm of SARS in the early 2000s and more recently swine flu – with a number of diseases in between – may just be on its last legs.
The pandemic has led to countries closing borders across the globe. Not only has travel been restricted, but the cruise industry has been singled out as a super-spreader of Covid-19. This has tarnished the industry’s reputation and it will take a fair share of due diligence to reverse this perception.
Impact of the pandemic
In early February 2020, a cruise liner owned by the world’s biggest cruise ship operator, Carnival, was forced to quarantine off the coast of Japan. The 3,7000 strong passenger ship was the first to announce an outbreak of the novel coronavirus. 700 passengers and staff tested positive. Many believed this would be contained and the industry would bounce back with sheer resilience. However, a second outbreak off the coast of California forced yet another Carnival cruise liner to drop anchor. As it became apparent that cruise liners could not mitigate the effects of the virus, the alarm bells began to ring – or rather blare.
At this point, the cruise line industry was set to halt operations, as many industries were. However, what has made things worse is the fact that government’s have explicitly voiced their concerns over the cruise industry. In many people’s minds, cruise ships are unable to limit or nullify the virus. The very perception of the industry has been changed.
Carnival, the early victim of the pandemic, has lost 70% of its stock value year-to-date. At one point in time, the biggest cruise operator was losing $1 billion a month to maintain the entirety of its fleet. The losses that have been experienced over the last 7 months are unfathomable – especially for an industry on the up-and-up.
What the future holds
As countries grapple with the pandemic and start to implement safety protocols, it remains to be seen if the cruise industry can successfully change its image under heavy scrutiny. Although there will be those individuals that cherish a holiday on a cruise no matter what, convincing newcomers will be tough. What might be even more challenging is reassuring stakeholders and investors that the cruise line industry is still viable under the current climate.