A cruise industry crisis: No one wants to be stuck on the next coronavirus-hit ship

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Edgar Chan, a 28-year-old software engineer from Hong Kong, was among the thousands quarantined on the World Dream cruise ship off the city this month after passengers on an earlier cruise tested positive for the lethal new coronavirus.

He won’t be taking another vacation at sea any time soon. Being stuck on what local media called the “zombie ship” was annoying, and worrying about getting sick was frightening. “Getting a cold on a cruise is normal, but getting a virus, a highly infectious disease, is horrible.”

The cruise industry’s fear is that Chan is far, far from alone.

Asia — Chinese travelers in particular — was supposed to be a great growth market. But across the region, cruise line operators have had to cancel departures and in some cases keep guests on board, often without ports willing to let them disembark. Coverage of passengers being quarantined on ships such as the World Dream, run by Genting Hong Kong Ltd., and Carnival Corp.’s Diamond Princess have been broadcast around the globe, creating a public relations disaster. Another Carnival boat, the Westerdam, was rejected by multiple ports before being accepted by Cambodia on suspicion there could be a virus case on board.

“This is terrible for the cruise industry,” said Christopher Muller, a professor at Boston University’s School of Hospitality Administration. “In the new markets of Asia, the rebound will take longer since the overall market is not as mature and built up.”

Royal Caribbean Cruises Ltd., the industry’s second-biggest player, said on Thursday that it had canceled 18 sailings in Southeast Asia, and if it’s forced to eliminate all its excursions there through April, it could cost the company $1.20 per share in earnings this year.

The comments echoed those of Carnival, its bigger rival, which said on Wednesday that its earnings this year could fall as much as 65 cents per share, under similar circumstances. Carnival had about 4% of its capacity in China in 2019 — and was hoping that would grow to 5% in 2020, according to a public filing.

On Sunday, Hong Kong authorities allowed the 3,600 passengers to disembark the World Dream, while on the Diamond Princess, which is idling in Yokohama harbor, Japanese authorities have diagnosed 218 cases of the virus, including 44 new cases on Thursday. About 3,500 people are being kept in quarantine aboard the cruise liner, and health authorities are set to let high-risk passengers who test negative off the ship.

Estimating the potential impact to company earnings at this point is nearly impossible and that won’t change until the coronavirus outbreak is over and media coverage of the industry’s troubles ends, Instinet analyst Harry Curtis told his clients this week.

Making matters worse for the industry, the crisis is coming during the “wave” season, which is when cruise lines see most of their bookings for the coming year.

“It is a bit early to prophesize about long-term impacts,” said Ross Klein, a professor who has done extensive research on crime, viruses and other bad things that happen …read more

Source:: Fortune


      

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