Cruise Lines Bet on Summer Rebound Against Omicron Obstacles

The cruise industry’s bet on a big summer rebound seems less certain.

Travel agents and industry executives say that while the season, which starts in April and ends in October, still looks strong, bookings have slowed since late last year. Some cruise lines have canceled or postponed departures due to the Omicron variant.

While cruise lines remain optimistic about their prospects, the developments are the latest wrinkle for an industry which, nearly two years after the start of the Covid-19 pandemic, is struggling to recover from a mountain of debts and major losses.

Carnival, which for years has seen steady growth in profits and bookings, lost $9.5 billion in the year ended November


Photo:

Karim Sahib/Agence France-Presse/Getty Images

“Capacity is coming back strongly, primarily with repeat cruisers,” said Carnival spokesman Roger Frizzell. Corp.

CCA -3.89%

, the world’s largest cruise operator by passenger capacity. “There’s pent-up demand, and we don’t discount except with traditional wave season promotions,” he said, referring to sales typically held between January and March. “I don’t see a lot of refund letters in 2022, and I’ve seen a lot in 2020,” he added.

Omicron has not led to the rapid spread of infections among passengers, cruise lines say, adding that operating pressures have eased since the start of the pandemic, when liners were grounded for days or weeks. outside ports as authorities tried to accommodate dozens of sick and frustrated cruisers.

Passengers must now be fully vaccinated, space has been set aside for isolation cabins and port authorities are more responsive to accommodation requests from sick passengers or crew and allow ships to continue their journey.

But this month Royal Caribbean Group RCL -2.57%

and Norwegian Cruise Line Holdings ltd.

NCLH -4.61%

, two of the biggest operators in the industry, have halted some cruises to popular destinations, including the Caribbean, with some cancellations extending into April.

Industry executives said that since the start of the year, cruise ships have been denied entry to island destinations such as Puerto Rico, Curacao, Bonaire and Aruba. Some ocean liners have canceled short cruises to South Africa and South America, saying changes to health protocols in some countries are making travel nearly impossible.

Cruise Lines International Association, an industry trade group, said it was in talks with Caribbean destinations about how ships can allow sick passengers to disembark without issue.

“Vessels that turn around at the last minute have a negative impact on passengers, and that’s difficult to manage,” said Anne Madison, spokeswoman for the association. “We are making progress, but there is still a lot to do.”

At the height of the Covid-19 pandemic, health authorities and passengers wondered if cruise line operators could operate safely. The WSJ’s Carter McCall explains. Photo: Getty Images (Video from June 2020)

The carriers said all passengers booked on canceled cruises will receive a full refund or credit for future travel.

Data from the Centers for Disease Control and Prevention, which is still advising the public to avoid cruises, show that between December 15 and 29, there were 5,013 Covid cases among ship passengers and crew, compared to 162 in the previous two weeks. While operators say infections are only a fraction of the number of cases reported earlier in the pandemic, industry analysts say high numbers of cases could drive demand down again.

“We had strong bookings six months ago for 2022 cruises, well over the same period in 2019 before the pandemic,” said Patrick Scholes, managing director of Atlanta-based Truist Securities, a company from Atlanta. investment and consultancy that follows the cruise industry. “But since Omicron in December, bookings are down by up to 25% and if they don’t reverse soon, cruises will be in for a big sell-off to fill ships.”

KHM Travel Group, a cooperative that includes about 4,000 independent travel agents, earned 40% of its revenue from cruises before the pandemic and 60% from land-based services such as hotels and tours. Now 5% of its revenue comes from cruises, said Geoff Cox, the co-op’s vice president of sales. Mr Cox said repeat customers are not afraid of new travel and account for three-quarters of all tickets for some cruise operators.

Big companies such as Carnival, Royal Caribbean and Norwegian, unlike airlines, did not get federal aid during the pandemic and stayed afloat by refinancing debt and selling some assets.

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Carnival, which for years has seen steady growth in profits and bookings, lost $9.5 billion in the year ended November and $10.2 billion the year before. The company, which has about $33 billion in debt and about $9.4 billion in cash, said in December it expected to return to profitability in the second half of this year.

Carnival now operates about 50 ships from its fleet of 94 ships after selling or recycling 19 ships since the pandemic began. He expects all of his ships to be operational by early summer.

Other operators have not fared as well. Genting Hong Kong ltd.

678 5.06%

said it expects to run out of cash towards the end of the month and has requested liquidation assistance.

Genting Hong Kong, which is majority-owned by Malaysian billionaire Lim Kok Thay and his family and operates cruises under multiple brands, said some businesses would continue, but it expects many operations to cease.

Crystal Cruises, which operates in the United States, has suspended ocean crossings until April 29 and river operations until the end of May. He said the break would allow him to assess the business, consider its options and reimburse existing customers.

Write to Costas Paris at costas.paris@wsj.com and Dave Sebastian at dave.sebastian@wsj.com

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