Sink or swim? The future of the cruise industry

COVID- 19 has become an existential crisis for the cruise line industry. Described as “perfect petri dishes” or “floating incubators”, vessels’ close-knit sleeping arrangements and large population of international travellers are key factors behind onboard outbreaks.

These outbreaks have placed the US $45 billion cruise line industry in peril, forcing companies like Royal Caribbean and Carnival to cancel trips and adjust itineraries.

Global stock prices remain near all-time lows. Shares of Carnival, Norwegian, and Royal Caribbean are down 65%, 73%, and 70%, respectively, since the beginning of the year.

Closer to home, a blame game is still taking place after passengers showing COVID- 19 symptoms disembarked the Ruby Princess cruise ship in Sydney Harbour. Many have condemned the company for its poor handling of the situation.

It’s fair to say the public is unlikely to sympathise with cruise company CEO’s looking aghast at tumbling share prices. But with tourism accounting for roughly 10 per cent of global gross-domestic product and employment, it's worth acknowledging. If the world's economy is to recover quickly from coronavirus, tourism will need to recover, too – the question is, what does the road to recovery look like for the cruise industry?

Images of passengers being stuck at sea, on coronavirus-infected ships, confined to tiny cabins will take time to fade. There’s no doubt the industry’s reputation, at least in the short to medium term, has been damaged by recent events. No doubt, future passengers have reason for pause before setting out on the high seas. Not to mention, the longer that ships are unable to embark on voyages, the greater the chance that some companies will not have the capability to bounce back.

Even amid a pandemic, the next holiday is just on the horizon. Despite the grim outlook, for those companies that can survive financially, travel experts say that when the world recovers from the rampant spread of COVID-19, the industry will come back stronger than ever. There are several reasons why.

1. Frank Del Rio, chief executive of Norwegian Cruise Line, said in a recent interview, "Customers do have a relatively short memory, thank God.” And history is on the industry’s side, given it has both recovered and boomed in the years since multiple public relations disasters.

2. The sector’s main clientele are a “recession-proof” demographic (in 2018, 51 per cent of passengers were over age 50).

3. Only 10 per cent of Chinese citizens have travelled internationally, and yet the country is already the world's biggest source of outbound travellers. Undeterred by the pandemic, Chinese travel bookings are already rebounding.

Perhaps the most pertinent question then, is what consumers will demand from the cruise industry once it stays afloat? Reconnecting with people, local travel, mindfulness and appreciation for the environment and cultures are all likely to be sought out by tourists post COVID- 19. The cruise industry may need to rethink the mega tourism it’s become known for.

Molly Bruce