Cruise line CEOs: Challenges for industry remain, but ‘future is bright’ for cruising

Sep 28, 2021

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The cruise industry already is well on its way to recovery after a year that saw almost no cruising, and the next few months will bring even more of a rebound.

That was the word Tuesday from the leaders of the world’s biggest cruise companies, who spoke at Seatrade Cruise Global (the cruise industry’s annual meetup) in Miami.

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“The future is bright for all of us here,” Pierfrancesco Vago, executive chairman of MSC Cruises, told an audience of hundreds of cruise line, port and destination executives assembled in the Grand Ballroom of the Miami Beach Convention Center for the event.

Vago, who also currently is serving as global chairman of the Cruise Lines International Association (CLIA), the main trade group for the cruise industry, noted that 56% of the world’s cruise ship capacity is now back in operation, up from just 16% as recently as June.

By the end of the year, 80% of the world’s cruise capacity will be back in operation, said Vago.

In all, Vago said there would be about 220 ocean-going ships back in service before the end of 2021.

The comeback comes 18 months after the cruise industry became the only segment of the travel industry to completely shut down worldwide due to the COVID-19 pandemic. Many cruise lines did not restart operations for more than a year.

Vago spoke at the start of Seatrade Cruise Global’s State of the Industry panel, a keynote event for the four-day conference that traditionally serves as its official kickoff. It typically features the leaders of the world’s four biggest cruise companies discussing the state of the industry on stage.

In addition to Vago, Carnival Corp. CEO and chairman Arnold Donald and Royal Caribbean Group CEO and chairman Richard Fain were present on stage for this year’s panel. Missing was Norwegian Cruise Line Holdings president and CEO Frank Del Rio.

Norwegian Cruise Line Holdings executives have been shying away from in-person events this year due to the COVID-19 pandemic.

“We know where the road is headed, and the road is headed to a very bright future for the cruise industry and travel and leisure in general,” Carnival Corp.’s Donald echoed Vago a few minutes later. “We’re coming back.”

Donald said ships representing about 35% of Carnival Corp.’s worldwide capacity were now back in operation, and these vessels were operating at about 68% occupancy, on average.

Carnival Corp. is the parent company of nine brands including Carnival Cruise Line, Princess Cruises, Holland America and Costa Cruises, and is the world’s largest cruise company. MSC Cruises is the world’s fourth-largest cruise company.

Despite such upbeat talk, all of the executives on stage acknowledged the industry still faces some major hurdles to returning to something close to normal operations.

“The complexity of how to bring the [new health] protocols and to actually offer this sterile holiday to our customer is incredible,” Vago said. “And the [health] formula is changing all the time.”

Like all major lines, MSC Cruises has instituted a long list of new health protocols for its ships that include new cleaning regimens, social distancing and mask-wearing requirements, and COVID-19 testing requirements. The cruise industry also was the first segment of the travel industry to widely vaccinate all of its consumer-facing employees for COVID-19, including all crew members on ships, and many lines require all passengers to be vaccinated for COVID-19, too.

Vago also noted that cruise lines continue to struggle with complex and changing rules at various ports around the world, and also the continued closures of ports.

“Sometimes I cannot even confirm what the itinerary will be (for a given cruise) because things are changing all the time,” he said.

“With the [growing uptake of the] vaccine, hopefully, some of these problems will go away. But that’s where we are today,” Vago added.

“We’re not through this yet. We’re still constrained in a lot of ways,” Carnival Corp.’s Donald chimed in. “There still are destinations that have extreme restrictions.”

In response to a question about the industry’s interaction with the Trump and Biden administrations over the past year from the panel’s moderator, CNBC’s Seema Mody, Royal Caribbean Group’s Richard Fain noted that the U.S. government was just one of an amazingly long list of governments and agencies with which the company has had to coordinate since the pandemic began as it tried to map out a return to service.

Such coordinating is a daunting task, but one tempered by the fact that these governments and agencies all have the same basic interests at heart, Fain suggested.

“We’re dealing with hundreds, maybe thousands of administrations,” Fain noted. “The unifying theme is, on the one hand, nobody knows the right answer to every question, and everybody has a different point of view. But everybody is working to a common goal.”

These government entities “all see how important the cruise industry is to the economies of all of these places around the world, whether it is a state, a city, a nation,” Fain said.

Fain said his company’s focus has been on “creating an environment where people can feel safe, can feel more normal and carry on with their cruise vacation, and we think that we have done that … what you’re seeing is that every week, more and more ships are starting up, more and more people are taking their cruises, and we’re providing the data that shows just how safe that is.”

Fain said Royal Caribbean Group hoped to have nearly all its vessels operating by the end of the year, in time for the traditionally strong “Wave Season” booking period that starts in January.

Royal Caribbean Group is the parent company of Royal Caribbean, Celebrity Cruises and Silversea Cruises. It’s the world’s second-biggest cruise company.

“It’s very important to get the flywheel going,” he said, suggesting that the sight of a large number of ships back in operation by year’s end will give consumers the confidence to book cruise vacations during Wave Season for 2022 and beyond.

“The Wave period every year is the key booking period, and what we really want … is that when we start that key booking period, our ships [are] operating, [consumers] can see they are operating, they can see the protocols are working [and] they can see people are taking cruises,” he said. “We really need to get back to a period of stability, and getting our ships back to operating is a way to do that.”

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Featured image courtesy of Royal Caribbean.

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