Coronavirus hits cruising industry where it hurts most — new business

Anne Sagebiel had been pondering what to do for a birthday this year, and the notion of taking a cruise for the first time appealed to her. Maybe something in Europe; Norway sounded enticing.

But then she started hearing about “the cruise ship from hell” — the Diamond Princess, which was quarantined off the coast of Japan with thousands aboard on Feb. 5.

As of early Tuesday, authorities said 542 of the 2,404 passengers and crew whose test results were known had been infected; more than 1,000 additional people were still awaiting their results. Forty-four Americans onboard have tested positive for coronavirus, according to U.S. health officials.

"I don't want to be involved in a worst-case scenario," said Sagebiel, a nature photographer in Colorado. "Cruises are off the table until they figure this out."

That sentiment is bad news for the growing cruise industry, which has taken a multimillion-dollar financial hit as the situation unfolds. Bookings are down, according to some major players, and the nonstop attention has been damaging.

"We're always covering these things in terms of the ability to move ships out of harm's way," said Mike Driscoll, editor in chief of the trade publication Cruise Week. "The industry is known for its resiliency, etc., etc. But this one's just so different."

Four days before the Diamond Princess quarantine was set to end on Wednesday, U.S. officials said they would evacuate American citizens from the ship, so long as they showed no symptoms, and fly them to the United States — where they would be placed into another quarantine, of 14 days.

The Diamond Princess is the only cruise ship where coronavirus was believed to have been spreading, but it was not the only one affected by the outbreak, which has sickened more than 73,000 people and killed more than 1,870.

Another ship, the World Dream, with more than 3,800 people aboard, was stuck in quarantine in Hong Kong for four days after authorities learned that passengers on a previous cruise had tested positive for the virus. Everyone was allowed to disembark after crew members tested negative and passengers passed health screenings.

No one on Holland America Line's Westerdam was known to be ill during a voyage that started in Hong Kong, but that ship and the more than 2,200 people onboard spent days at sea when port after port denied it permission to dock before Cambodia accepted it, and passengers began to disembark on Friday.

But that decision was called into question the next day when officials announced that one woman who was on the ship tested positive in Malaysia after flying there from Cambodia. Since then, Malaysia, Thailand, and Singapore have said they will not allow passengers from the ship to travel through their airports, according to Bloomberg News.

Several other ships have been told that they cannot stop at ports because of coronavirus fears, and earlier this month, Royal Caribbean International's Anthem of the Seas delayed departure by two days while passengers who had been in China previously were tested. None had the illness.

Similar ordeals have played out across the world, with headlines referring to the "coronavirus cruise ship nightmare," the "pariah cruise ship," and "floating petri dishes." The attention comes at an inopportune time, during the busy "wave season," when many travelers book cruises.

And although Asia still makes up a fraction of the market for global cruising -- the Caribbean and Mediterranean, for example, attract far more people — it has been a focus for cruise operators looking to expand their global footprint. In 2018, according to the Cruise Lines International Association, 28.5 million people took a cruise on one of its member lines. Approximately 2.5 million of them were from China.

In a financial update on Feb. 12, industry leader Carnival Corp. — which counts Carnival, Cunard, Princess, and Holland America among its cruise lines — said the company expects to take a hit higher than initially expected as a result of trip cancellations in China and other parts of Asia. Carnival also expects global bookings to be affected, but it could not yet quantify how that would impact the bottom line.

"Since the situation continues to evolve, the company is currently unable to determine the full financial impact on its fiscal year 2020," the update said. If Carnival had to suspend all operations in Asia through the end of April, the operator said, the financial blow would amount to $385 million to $445 million, a total that does not include the hit from softer bookings. Carnival reported a $3 billion profit last year.

Royal Caribbean Cruises, the world's second-largest cruise company, said in its update on Feb. 13 that it has had to cancel 18 trips in Southeast Asia and modify several other itineraries. Those changes have already cost the company $136 million. Canceling remaining trips in Asia through the end of April, which is not the current plan, would cost another $115 million.

"While the early impact due to concerns about the coronavirus is mainly related to Asia, recent bookings for our broader business have also been softer," the update said.

The company said Friday that it was sending Spectrum of the Seas, one of its ships that previously sailed in China, to Australia to give free trips to first responders who have been fighting bush fires. Celebrity Millennium is leaving Asia early and offering free cruises from Los Angeles for firefighters, emergency workers, and veterans.

Like Carnival, Royal Caribbean said there was still too much unknown to make a reasonable forecast for 2020.

"I think this is a very confusing situation for a lot of people," Richard Fain, Royal Caribbean's chief executive, said in an interview. "And governments around the world are taking pretty strong action. But it is front-page news every day, every way. And so I think that just makes people sometimes be a bit more cautious about planning a vacation. I think for many people, it's a big distraction."

January was a stellar month for travel agents who specialize in cruises, but some report that February has been a different story entirely.

Alex Sharpe, president and chief executive of Signature Travel Network, a cooperative of travel agencies that includes more than 7,000 advisers, said in a statement that demand for cruises overall was down 10% to 15% year-over-year so far in February. Although Asia cruises make up only about 5% of sales, he said they have dominated the attention of agents who are trying to help customers whose plans have been changing.

"My hope is now that much of the logistical crunch is over, we can all focus on selling cruises for all destinations and driving demand back up," Sharpe said.

Travel Leaders Network, which includes more than 55,000 travel advisers, said a survey of its members found that about 30% of respondents had seen a high to moderate number of cancellations for China and elsewhere in Asia. Sixty-four percent said they didn't have any cancellations as a result of the virus.

Erika Richter, a spokesperson for the American Society of Travel Advisors, said some agents are helping clients rebook for other areas or times of the year. One reported an increase in business for all-inclusive resorts in the Caribbean.

"Ultimately what we want to make sure that we're conveying is, we don't want travelers to give up traveling," she said. "If they're hesitant, travel advisers are suggesting alternate parts of the world to travel to."

Industry observers expect people who already like cruising to keep coming back, regardless of the coronavirus scare. But newcomers such as Sagebiel — who are key to helping the industry grow as cruise lines add more ships — are less of a sure bet.

"It's going to affect the new-to-cruise business," said Driscoll. "How much it is, we don't know."

Of course, cruising has had plenty of experience overcoming disasters and bad publicity. The Costa Concordia wreck in 2012 killed 32 people, and the ship stayed on its side off the coast of Italy for more than two years, a visible reminder of the catastrophe. The infamous Carnival Triumph "poop cruise" in 2013 also garnered significant coverage as the powerless ship was slowly tugged to shore. More recently, a norovirus outbreak that sickened more than 350 people onboard a Princess Cruises vessel made headlines.

Still, the number of cruise passengers continues to rise every year, and operators have seen their profits increase. Jaime Katz, an analyst for Morningstar who covers the cruise industry, said she expects some short-term bumps but an eventual recovery.

"I think most people feel that this will pass," she said.

For some non-cruisers, though, the past couple of weeks have reinforced their decision never to step onboard a ship.

At 38, Jimmie Whisman, a comedian and podcast host from Phoenix, is a prime target for cruise companies, which want millennials to start a cruise habit that will carry them into retirement.

But he said he would “never, ever, ever” go on a cruise — and can’t understand why anyone else would want to. “To take a chance of getting on a cruise ship where everybody getting on appears healthy, and then throughout the trip they all get sick — that’s my nightmare,” he said.