A restart to full operations can’t come soon enough for cruise lines, whose financial position has become increasingly precarious given high debt levels incurred from fleet expansions and the fund raising required to survive the current crisis, Maritime Strategies International (MSI) said in a report.
MSI’s latest cruise market report found that net revenue losses for the ‘big three’ lines (Carnival, NCLH and RCI) in 2020 and the first quarter of this year almost matched the accumulated net revenue gains of the preceding five-year period.
The scale of the problem facing the cruise lines – and the entire tourism sector – was laid out by the UN World Tourism Organisation (UNWTO) earlier this year when it pointed out that two-thirds of the world’s destinations were still either completely (32%) or partially (34%) closed to international tourists.
Last year’s collapse in international tourist arrivals (which fell 74% year-on-year) led to estimated tourism revenue losses of $1.3 trill globally, with recovery back to 2019 levels not expected until 2023.
According to MSI’s calculations, the big three cruise groups should have around 45% of their capacity back in operation by the end of this year, equivalent to about 20% on an annual average basis. This forecast drew on data published by JP Morgan in early June, which listed start-up dates and deployment on a vessel-by-vessel basis for the three big cruise groups.
The shape of the recovery in international tourist arrivals projected by UNWTO is largely consistent with MSI cruise passenger forecast. However MSI’s analysis is based on pre-pandemic lower berth capacity and as such, does not factor any negative adjustments to berth capacity as a consequence of COVID-related social distancing requirements.
“Prospective US cruise passenger numbers will only top the 2020 total by 1 mill and so be just a third of the record 2019 total of 15.4 mill out of a global total of 30 mill passengers,” said Niklas Carlen, MSI Director.
“It will be a similar story for the European sector, which will see passenger numbers grow slightly this year for a total also about a third of the 2019 one. On lower base figures, Asia and Oceania will recover more quickly but it is likely that the global total will be just over a third of that achieved in 2019.”
The speed and scale of international tourism’s resumption will depend almost entirely on the decisions and policies of world governments. But, assuming the vaccination roll-outs continue to reduce the impact of the virus and are extended to more countries around the world, there is no reason why cruise recovery should not accelerate through 2022 so that 2019 levels are largely matched in 2023, MSI concluded.
*The MSI Cruise Q2 2021 report, ‘Industry Reboot’ is available from MSI.