The past year has been nothing short of a nightmare for the travel industry, especially when it comes to cruising. With sailings from the United States paused in March 2020 and cruise lines pushing returns until at least June 2021, it will be well over a year that cruises will have been halted before they sail again.
But cruise line executives continue to see encouraging signs, including Norwegian Cruise Line Holdings Ltd. CEO Frank Del Rio going so far as to say he sees a potential “boom time” on the horizon.
That reference came in Norwegian’s latest quarterly investor call. When asked a question about potential future demand as people are vaccinated and more ships return to sailing, Del Rio responded:
“The industry has been shut down at least one year. That means 30 million people that would have cruised in that year haven’t cruised. And this is a finite capacity business. I can’t cruise with 150% occupancy. So there’s going to be a squeeze play here, that demand is going to exceed supply, especially after the withdrawal of some 20-plus ships from the so-called North American fleet.
“So you’ve got less supply. You’ve got pent-up demand. You’ve got people with money in their pocket. I think this is just the making of a boom time for the cruise industry.”
Del Rio went on to explain that his company continues to see strong bookings and at prices that are in line with before the pandemic.
“I’ve never seen such a positive set of circumstances,” he said. “We just need to get back to work.”
Other Updates from Norwegian’s Investor Call
Throughout the call, executives updated investors on a number of aspects of its business, covering everything from updates on the timeline to return, the Alaskan cruise season, and vaccines.
Timeline to ReturnThere’s been hope that the cruise industry could start the path toward a return to sailing after Royal Caribbean Group mentioned days ago that it expects guidance from the CDC any day. When asked about guidance and a potential timeline to return to sailing, Del Rio offered the following:
“The CDC guidance that we as an industry are expecting sometime in the future — and I won’t label it as a few days because I simply don’t know. Could be a few days, could be a few weeks, we simply don’t know. That is the next phase of this multi-phase approach that the CDC is taking. I don’t believe that we are awaiting in the next few days the green light to cruise. That would not be correct.”
The company offered no specific timelines on when it might get back to sailing, but did offer some optimism.
“Today I would tell you that we are in a better place, a more encouraging place than we were even just six weeks ago,” Del Rio said. “At the end of the day, I think the prevalence of the disease, in our own country and around the world will be the greatest indicator of when we can resume cruising. And the prevalence is dropping.”
Norwegian’s CEO also said that once they are given the green light, that the company aims for a “90-day window” to get a ship up and running.
Alaskan Cruises on the Table?Another interesting point in the call was that the company hasn’t given up on the 2021 Alaskan cruise season.
This year’s Alaskan season was largely considered to have ended with Canadian authorities banning cruise ships through February 2022. While the rules are complex, without the ability to stop in Canada, foreign-flagged ships can’t carry passengers from American ports.
“Thankfully the Canadian order allows for the suspension to be rescinded based on improvement in public health,” Del Rio said. “We remain cautiously optimistic that a rescission may be possible. And in the meantime, we await the results of several Alaskan delegation-led initiatives, which we want to acknowledge today and greatly appreciate, that may allow Alaska cruises to operate in 2021.”
When asked later in the call, Del Rio stated it is “difficult to predict” what will happen, but did say the company is “cautiously optimistic” about getting Alaskan trips back on the table.
Optimistic Business UpdatePerhaps the biggest takeaway, however, was that the company is seeing plenty of reasons to be optimistic about the future of cruising. It continues to see strong demand for trips even though it has significantly cut its marketing budget.
This includes Oceania Cruises’ 180-day global cruise that sold out in a single day last month, despite not sailing until 2023.
With the rollout of a vaccine into millions of arms each day (which the company called the “most powerful tool” during the call) while cases continue to plummet, the company executives point to reasons to be hopeful that the industry is on a brighter path than ever.
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