Norwegian CEO sees lower 2021 bookings, hopes for an ‘OK’ year, as cruises try to resume despite coronavirus
Cruise bookings for 2021 are down, CEO of Norwegian Cruise Lines Frank Del Rio told CNBC on Tuesday, acknowledging the sustained impact the coronavirus pandemic is having on global travel and the industry.
Cruise executives have previously painted a rosier picture of future bookings, touting pent-up demand as the pandemic has left ships stationed in ports and brought the industry to a trickle for most of 2020. Del Rio said future bookings are “truly remarkable,” considering what’s happened to the industry this year, but he added that the company doesn’t expect 2021 bookings to be in line with past years.
“We’re behind last year. There’s no question, but not as far behind as you would think given what’s been going on,” he told CNBC’s Seema Mody on “Power Lunch.” “Pricing has held up well. No one is discounting the product, rightfully so. And so we’re hopeful that 2021 can be an OK year. It won’t be a record year by any means, but it certainly won’t be the disaster that 2020 has been.”
The three major cruise companies that are traded in the U.S., Norwegian, Royal Caribbean and Carnival Corp., have been hammered by the coronavirus pandemic as health officials asked people not to book trips over fears of spreading the virus.
Shares of the three companies are down at least 50% from Jan. 1. However, all three have outpaced broader market gains since their lows in mid-March. Shares of Norwegian are down over 73% since Jan. 1, but have clawed back some gains since hitting a 52-week low on March 18. The stock is up over 100% since then.
Shares of Royal are down over 53% from Jan.1. But the stock has climbed more than 200% from its March low of $19.25 per share. It finished trading Tuesday up nearly 3% for the day, at $62.37 per share.
On March 13, the Cruise Lines International Association, a trade group representing all three companies as well as other major cruise lines, said they were temporarily halting operations. The companies, for the most part, have not resumed operations since then while continuing to bleed cash.
The Centers for Disease Control and Prevention issued a no-sail order for cruise ships in U.S. waters on March 14, saying “that cruise ship travel exacerbates the global spread of Covid-19.” The order is currently due to expire on Sept. 30.
On Monday, a panel of public health specialists hired by Royal Caribbean and Norwegian submitted a 60-plus-page report of recommendations to the CDC for the industry to safely resume sailing, including entry testing for all passengers and crew, daily temperature checks, mask recommendations and more. The panel is made up of 11 public health specialists, including former top U.S. health officials.
“A key part of it is to create a bubble, where we test every single person going on board, the guests and the crew and protect them so that their likelihood of entering with coronavirus is very low. And then we have processes on boards, so that if somehow somebody slips through, there’s still protection so it doesn’t spread,” Royal CEO Richard Fain told CNBC of the panel’s recommendations. “We look forward to working with the CDC.”
Fain echoed Del Rio’s sentiment that 2021 bookings are higher than expected, but he did not compare them to a typical year’s bookings at this point in the ticket cycle. He added that cruising has already resumed in some parts of Europe, including Germany, Italy and Greece, where the company is using safety protocols to keep the virus off ships.
“Bookings in general have been much better than I think anybody expected, particularly as we get into the year, and people feel more and more confident that we’ll be able to be putting the coronavirus more and more into the rear-view mirror,” he said. “The key thing to remember is how much more we know about the disease and how much better our technology is for dealing with it.”
—CNBC’s Seema Mody contributed to this report.