Someone keeps pushing out the starting line for the cruise line industry, and it’s getting old. Norwegian Cruise Line (NASDAQ:NCLH) became the latest to flinch in this seemingly endless game of sea chicken, announcing on Wednesday that it’s canceling all upcoming sailings through the end of October.
Larger rivals Carnival (NYSE:CCL) (NYSE:CUK) and Royal Caribbean (NYSE:RCL) are currently on hiatus through the end of September — matching the Centers for Disease Control and Prevention’s latest No-Sail Order. COVID-19 is serious business, and while the three stocks tend to bump higher whenever there’s positive vaccine news, the near-term prospects remain dim.
Image source: Getty Images.
It’s easy to see why Carnival, Royal Caribbean, and Norwegian Cruise Line keep canceling upcoming sailings every few weeks instead of just calling off all of 2020 in a single move. You don’t want to cancel any more booked voyages than you have to, especially since roughly half of those passengers are asking for their money back. The rub here is that the other half of the folks on nixed sailings — the ones opting for enhanced future credit — can’t be happy either.
Norwegian Cruise Line, for example, is offering customers on canceled voyages 125% of what they already paid in future cruise credit. It’s a great deal on paper, but we’re now starting to bump up against people across the major cruise lines who have now had more than a single booked sailing get disrupted. Eventually, burned passengers are going to tire of opting for future booking credit.
To be fair, the timeline for when the cruise lines get back to business isn’t exactly up to them. Carnival, Royal Caribbean, and Norwegian Cruise Line are all working to establish safety protocols so they can hit the ground running when higher powers give the green light, but the industry itself and consumer appetite for sea voyages may not be the same when paying customers are trekking to the ports again. Norwegian Cruise Line won’t be sailing again until after Halloween, and that may feel more like a trick than a treat.
It’s not just the safety measures that may diminish the experience until we get a viable vaccine on the market. We’re already knee deep into a recession that may be worse by the time ships are sailing again with passengers. Between money tightening and the negative hits that the industry has taken in recent months it may not matter if ships hit the open waters again later this year or in 2021.
Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool recommends Carnival. The Motley Fool has a disclosure policy.