Skip to content

Where cruising could return as early as July, says Royal Caribbean CEO

May 21, 2020
8 min read
Where cruising could return as early as July, says Royal Caribbean CEO
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

Eager to be on the very first Royal Caribbean ship back in operation? You might be looking at a trip to Asia or Europe.

Royal Caribbean CEO Michael Bayley on Wednesday said the two regions are likely to be the first to see the line's vessels back in action with paying passengers.

"It's a very different story by region and by country," Bayley said Wednesday of the prospects for a resumption of cruising. "I think it's highly likely that either the Asian markets in China, for example, or the European region, could come back earlier."

Visit TPG’s guide to all coronavirus news and updates

Like all cruise companies, Royal Caribbean hasn't operated cruise departures anywhere in the world since mid-March, when the novel coronavirus began spreading widely.

Bayley noted that Asia and Europe were ahead of other regions in experiencing the rise and fall of coronavirus cases. He cited feedback from a call he had Tuesday with European tourism leaders and recent talks with the company's China office that pointed to the two regions being ready for cruising earlier than others.

"They went through this experience earlier, and that's particularly true of China," he said. "We're very aware of these different landscapes."

Bayley made the comments during a conference call with Wall Street analysts to discuss the latest quarterly earnings for Royal Caribbean's parent company, Royal Caribbean Cruises. In addition to Royal Caribbean, the company owns Celebrity Cruises, Azamara and part of Silversea.

Related: When will cruising resume? Here's our (new) best guess

Sign up for our daily newsletter

In advance of the call, Royal Caribbean Cruises on Wednesday reported an adjusted loss of $310.4 million, or $1.48 a share, for the quarter that ended on March 31. That compares to a profit of $275.8 million, or $1.31 a share, in the same quarter a year ago. The quarter included just the first few weeks of the company's fleetwide halt to operations. Second-quarter earnings are expected to be far worse.

Royal Caribbean Cruises in recent weeks has raised money through bond sales; cut costs through layoffs and furloughs; and taken other measures to ensure it can survive a shutdown of cruising lasting many months.

The conference call was the first time Bayley and other top executives at Royal Caribbean Cruises had talked publicly about the company's financial situation and plans for a resumption of service since its brands halted cruise operations.

Bayley hinted during the conference call that cruises out of Chinese ports could resume as early as July.

As of early Wednesday, Royal Caribbean had canceled sailings fleetwide through June 11. But Bayley said the line was about to announce an extension of the cancellations to July 31 for most regions. The one place where cancellations wouldn't be extended into July, he said, would be China.

Royal Caribbean's Spectrum of the Seas is among ships the line regularly deploys to China for cruises aimed at the Chinese market. (Photo courtesy of Royal Caribbean).

Should cruises out of China be the first to resume at Royal Caribbean, it's possible they only would be bookable by the local Chinese market. Royal Caribbean executives didn't address the topic during the conference call, but Royal Caribbean sailings out of China in general only are marketed to local travelers. Royal Caribbean has built a big China cruise operation in recent years that's specifically geared toward the local Chinese market.

A July comeback for Royal Caribbean cruises out of China is no sure thing. In starting off the conference call, Bayley's boss -- the head of parent company Royal Caribbean Cruises -- suggested there was no clear answer to when cruising would resume.

For more TPG news delivered each morning to your inbox, sign up for our daily newsletter.

"Obviously, the most immediate question that you would all like to know is when cruising will restart, and we'd like to know, too," Royal Caribbean Cruises chairman and CEO Richard Fain said. "The world is clearly embarking on a program of gradually opening up. That process is just beginning, and it varies widely between geographical areas. It's also highly dependent on many different factors, including the availability of testing, contact tracing, therapeutics and, ultimately, vaccines."

Moments earlier, Fain had noted just how fast the situation was evolving.

"Things we were told were right one week became unthinkable nearly a week later," Fain said. "The flow of information has been so fast, it's been hard to assimilate."

Still, Fain said he saw "auspicious" signs that an environment that would allow for the comeback of cruising was on the way.

"Fortunately, our level of understanding and that of governments around the world is beginning to stabilize, or at least seem to be. We're all beginning to understand the do's and don'ts, and the tight strictures are beginning to loosen."

When Royal Caribbean and its sister brands do begin bringing back ships, it'll be at a measured pace, Fain suggested.

"We don't expect that someday somebody blows a horn and all the ships start operating right away," he said. "We think it'll be a gradual start, a little bit like society is opening up gradually."

Echoing comments that Norwegian Cruise Line Holdings CEO Frank Del Rio made to TPG earlier this month in a one-on-one interview, Fain said the company likely would resume operations with just a few ships initially.

Norwegian Cruise Line Holdings is the parent company of Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises.

Fain also suggested the first cruises to start would be aimed at drive markets, "and then [the schedule] would evolve and grow from there."

Related: Could cruising resume in August? That's the plan at Carnival

That suggests any cruises that start up early in Asia or Europe wouldn't necessarily be meant for U.S. travelers.

During the conference call, Royal Caribbean CFO Jason Liberty said bookings for the coming year remain suppressed but are better now than they were a month ago. Bookings for later this year remain well behind where they normally would be for this time of year, Liberty suggested. Bookings for 2021 also are down, albeit less sharply, he said.

"It is still very early in the booking cycle for 2021, but at this point, load factors are below [the] same time last year but are within historical ranges," Liberty said.

Later in the call, Bayley said the Royal Caribbean brand had seen upbeat signs about cruise demand from targeted promotions it did as a test. The company targeted the promotions at its roughly 20 million loyalty program members.

"We've really seen surprising demand from our loyalty members," Bayley said. 'Their response to various promotions that we've put into the market just to understand what the demand looks like has been surprisingly positive."

Among other insights from the call, Liberty said that younger cruisers had been asking for refunds more often than older cruises when cruises are canceled.

Royal Caribbean and its sister brands have been offering customers on canceled cruises a choice of a full refund or a future cruise credit worth 125% of the amount they paid.

"Younger cruisers, and I'm really talking [about] the millennials, are typically looking more for their cash back, while families and baby boomers are likely to take the [credit]," Liberty said.

In all, about 45% of customers on canceled cruises have requested a refund, Liberty said. The rest have asked for a credit.

Related: Why you shouldn't take a voucher if your cruise is canceled

Liberty said about 20% of customers who have gotten a credit so far have rebooked on future voyages, with the company's most loyal customers being the fastest to rebook.

Of those who have rebooked, "most rebooked on similar itineraries, and many are actually using the 125% value [of the credit] to upgrade to a higher stateroom category," Liberty said.

As of early Wednesday, the company had canceled 621 voyages.

Additional resources for cruisers during the coronavirus outbreak:

Featured image by ©2016 Michel Verdure - www.verd

Top offers from our partners

How we chose these cards

Our points-obsessed staff uses a plethora of credit cards on a daily basis. If anyone on our team wouldn’t recommend it to a friend or a family member, we wouldn’t recommend it on The Points Guy either. Our opinions are our own, and have not been reviewed, approved, or endorsed by our advertising partners.
See all best card offers

TPG featured card

Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards

2 - 10X points
10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
5X5X miles on flights booked through Capital One Travel.
2X2 Miles per dollar on every purchase, every day

Intro offer

75,000 bonus miles
Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

Annual Fee

$395

Recommended Credit

740-850
Excellent
Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023
Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
5X5X miles on flights booked through Capital One Travel.
2X2 Miles per dollar on every purchase, every day
  • Intro Offer
    Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

    75,000 bonus miles
  • Annual Fee

    $395
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    740-850
    Excellent

Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023