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Coronavirus: How will it impact the cruise industry?

Coronavirus Celebrity Cruises, Celebrity Constellation

The coronavirus is expected to impact multiple cruise companies’ financial results for 2020.

Carnival Corporation, which owns a number of cruise lines that have been directly affected by the coronavirus, has stated that it believes that the impact on bookings will result in a drop in its 2020 results and share prices by up to $0.55 a share.

One of its lines, Princess Cruises, has been forced to pull every departure on Diamond Princess, which is currently quarantined in Yokohama, Japan, due to an outbreak of coronavirus on board.

Meanwhile, Cunard, also owned by Carnival, has had to alter Queen Mary 2’s current world cruise itinerary. The ship will miss several ports in southeast Asia and will instead sail directly to Fremantle, Australia.

Guests due to join Queen Mary 2 in Singapore have the option to join in Fremantle. Shorter voyages from Singapore on 12/13 February will be automatically cancelled at no charge.

Carnival Corporation’s first-quarter earnings are due to be released in late March and will give an overview on its finances and the impact of coronavirus.

In a statement, the company said: “Travel restrictions as a result of Coronavirus necessitated the suspension of cruise operations from ports in China, as was previously announced, and are now resulting in the cancellation of voyages in other parts of Asia.

“Significant events affecting travel typically have an impact on booking patterns, with the full extent of the impact generally determined by the length of time the event influences travel decisions.

“As a result of the coronavirus, the company believes the impact on its global bookings and cancelled voyages will have a material impact on its financial results which was not anticipated in the company’s previous 2020 earnings guidance.

“Since the situation continues to evolve, the company is currently unable to determine the full financial impact on its fiscal year 2020.

“However, while not currently planned, if the company had to suspend all of its operations in Asia through the end of April, this would impact its fiscal 2020 financial performance by $0.55 to $0.65 per share, which includes guest compensation.

“In addition, the impact on global bookings will further affect the company’s financial performance.”

Royal Caribbean International, which has now cancelled a total of 18 sailings in Southeast Asia and modified several itineraries, is another cruise line to warn of the impact the coronavirus will have on its yearly profit as it reveals that recent bookings across the business have been “softer”.

Taken together, it revealed that the measures will have an estimated impact on the financial performance for 2020 of approximately $0.65 per share, and if it cancels all of its remaining sailings in Asia through the end of April, it would impact 2020 financial performance by an additional $0.55 per share.

Celebrity Cruises, which is owned by Royal Caribbean, has cancelled Celebrity Millennium’s departure from Hong Kong and changed Celebrity Constellation’s current itinerary and the next sailing on 16 February.

Norwegian Cruise Line Holdings has also felt the impact of the coronavirus on its end of year financial results.

As a result of the virus, it has so far cancelled a total of 40 voyages, modified or redeployed and as a result will not have any vessels deployed in Asia through the end of the third quarter of 2020.

Norwegian Cruise Line Holdings president and chief executive Frank Del Rio said: “As a result of the strong global demand for cruises witnessed throughout 2019, we entered 2020 in the best booked position and at prices higher than last year’s record levels. This trend continued through late January until the COVID-19 outbreak began having an adverse impact on our business.

“We have taken several proactive measures to protect the health and safety of our guests and crew throughout our fleet, including implementing strict protocols regarding passenger embarkation, and in an abundance of caution have cancelled or modified several voyages in the Asia region through the third quarter of this year. 

“While the effect of these impacts cannot be fully quantified at this time, our Company has an exemplary track record of demonstrating its resilience in challenging environments and we remain confident in our ability to deliver strong financial performance over the long-term.”

 

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