May 29, 2021
T.The latest addition to the fleet of Carnival, the world’s largest cruise line, is the Mardi Gras. This ocean-going playground for 5,300 passengers has six different zones, including a French Quarter, two dozen restaurants and a roller coaster. It is scheduled to arrive at its base in Florida in early June. That’s a year behind schedule – but possibly just in time for a revival in the industry, which has been hit harder than any other by the pandemic.
Vacations over water provided an early indication of the harm from covid-19 in international travel. Pictures of passengers stranded on board modern plague ships showed lockdowns on land. Most experts assume that cross-border tourism will not fully recover until 2023. “Where else can you go to bed at night and wake up in a different, new, exciting place every morning?” dares Arnold Donald, the chief of the carnival.
Taking a break at sea is a small niche in the global tourism industry. Of the around 800 m foreign holidaymakers in 2019, only around 30 m climbed a gangway. However, it grew rapidly, adding more than 10 million more seafarers in a decade. And before the pandemic drowned business in red ink, it was lucrative. The three companies that carry three-quarters of all passengers – Carnival, Royal Caribbean and Norwegian Cruise Line – generated combined operating income of $ 6.6 billion on sales of $ 38 billion in 2019.
With fleets largely idle over the past year, cruise lines have burned cash. Few of the world’s 270 major cruise lines are at sea with paying passengers. Fortunately for Donald, investors seem to share his belief that the industry will return in full force. Carnival has had little trouble raising $ 24 billion in debt and equity in the past 12 months to solve the problem. The competitors were also able to open up the market.
Now the demand is returning. Carnival’s bookings for 2022 are again at the upper end of historical trends, reports the boss. The industry is further expanding its long-term capacities. Over 100 ships have been ordered; None were canceled during the pandemic. Perhaps the biggest headwind is the rapidly changing rules of countries for international travel, especially in America. Half of all tourist seafarers are North Americans, twice as many Europeans as the next largest group. China and other emerging markets are far behind for the time being. Since the pandemic, no ship has been allowed to set sail from an American port.
Mr Donald hopes that will soon change. Large cruise lines are trying to move things forward by lobbying governments to get vaccinated passengers who tested negative for Covid-19 on board. That makes recent efforts by Florida lawmakers to ban companies from using vaccination records, but little help. In addition to the Carnival, the Sunshine State is also home to America’s largest cruise ports. ■
Listen to ours Interview with the CEO of Carnival Corporation
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This article appeared in the business section of the print edition under the heading “Cabin Fervor”