CORNELL UNIVERSITY MEDIA RELATIONS OFFICE
Feb. 27, 2020
‘Stuck’ at sea: Coronavirus challenges cruise industry
Leisure cruises have found themselves in the middle of the coronavirus outbreak. The disease-stricken Diamond Princess, still docked in the Japanese port of Yokohama, was the first cruise ship put under quarantine because of concerns its passengers would infect people if they disembarked. Another cruise ship, the MSC Meraviglia, was denied entry to a Jamaican port this week, after one of its crewmembers was diagnosed with the common seasonal flu.
Robert Kwortnik, associate professor at Cornell University’s Hotel School, studies tourism and hospitality with a focus on the leisure cruise industry. He says that the industry is already feeling the economic impacts from the coronavirus crisis and adds that 2020 may be the most difficult year for leisure cruises in decades.
“The coronavirus has already had a significant impact on the cruise industry, with the big three companies – Carnival Corp, Royal Caribbean Cruises Ltd and Norwegian Cruise Line Holding – canceling dozens of sailings and warning Wall Street of a financial hit.
“Cruise stock prices pounded as a result. Although cruise lines benefit from a moveable asset in the ships themselves, moving ships out of China isn’t the problem. Filling them quickly with new customers is, as cruises are typically booked three to six months in advance of a sailing. Moreover, relocating ships to core North America and European source markets will increase supply in these already competitive areas. We can expect downward pressure on pricing for months, if not longer – good for the consumer, but not for the cruise lines.
“The bigger concern is the longer-term psychological impact of the coronavirus on potential cruisers – especially the critical new-to-cruise customer. The cruise industry has worked hard for decades to overcome the perception that cruising involves being ‘stuck’ on a ship. Recent media stories of exactly that, due to quarantines or ships being unable to disembark guests at ports, will only exacerbate this concern.
“Cruise lines go to extraordinary lengths to sanitize ships and to encourage hand washing by travelers that no doubt far exceeds personal hygiene efforts at home. Nevertheless, if we see new cases of coronavirus outbreaks onboard cruise ships, we can expect the public to question onboard health conditions.
“Ultimately, this will come down to how serious and extensive this virus becomes. Fortunately, when events that affect the travel industry do occur, the impact tends to be moderate, as travelers have a short memory. For example, immediately following the Costa Concordia disaster in early 2012, cruise lines reported lower than expected ticket yields, though pricing had largely rebounded by the end of the year. If coronavirus is contained worldwide or does not spread to the main North American market, the cruise industry may have most of the bad news behind it; otherwise, 2020 could be one of the most difficult years for the industry in the past couple of decades.”
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