BA’s last bulletin was released just after every major cruise line returned to service, in some capacity, since the start of the pandemic. Two weeks later, the restart continues to dramatically progress thanks to stringent protocols and strong pent-up demand. At this rate, cruising as we knew it should emerge by mid-2022, based on several factors.
RCG and NCLH both reported Q2 2021 earnings. While both companies had yet another painful quarter financially, both estimated – based on ramp-up plans and booking trends – that they will return to a cash flow positive position by Q1 2022 (or ~6 months from now). RCG and NCLH will have 80% and 75%, respectively, of their fleets in service by year’s end.
Looking at the global cruise fleet, by December 2021, based on BA’s ongoing tracking of the industry’s resumption, 75% of all lower berths will be in operation around the world. By June 2022, 82% of lower berths have been announced to resume. This, however, does not include some lower berths of the largest operators, as RCG and Carnival have not announced restart dates for 100% of their ships. NCLH and MSC will have all ships in service by April 2022.
Assuming both RCG and Carnival announce that 100% of their ships will be sailing by June 2022, 97% of all lower berths in the global cruise fleet will be in operation at this time.
The graph below shows announced lower berths in service by month (grey) and anticipated lower berths in service should RCG and Carnival launch 100% of their fleets by June 2022 (yellow).
Lower Berth Resumption by Month – Announced and Anticipated
Regarding capacity levels, Royal confirmed that they are increasing capacity each month, with many ships in operation now sailing at more than 50% capacity. NCLH plans to start vessel capacity in the 60% to 70% range. After 30 days of sailing, capacity will increase to 80%, and after 60 days of sailing, capacity is anticipated to reach “pre-pandemic levels”, or 100% plus.
Frank Del Rio stated that “Q1 is going to look very normal so to speak. Certainly, by Q2 all vessels should be back at normal load factor levels… and maybe sooner if we are lucky.” Additionally, while RCG indicated that 2022 will not be a normal year, they are making steady progress towards normalcy by the spring/summer 2022 due to certain factors of the restart, such as a shorter booking window, the capacity ramp-up of ships, and an overall cautious outlook for the Asia-Pacific markets (Asia, Australia, New Zealand).
The Future, Including Delta Variant Concerns
It does not appear that the resumption will be significantly derailed by the Delta variant. Both RCG and NCLH are confident the protocols in place will continue to be effective against any COVID infection. Both have seen only small variations in July bookings due to the Delta variant impacting 2021 sailings. Overall, they are still seeing positive growth in demand in the last 2 weeks, with no material impact from the Delta variant when looking at 2022 bookings.
In general, current cruises are receiving very high guest satisfaction scores. The successful restart is increasing guest confidence in cruising amongst both experienced cruisers and new to cruise. Onboard spending is also extremely high across all itineraries, further indicating a high level of demand and thirst for experiences. Like Del Rio stated, “We are not seeing an issue with demand or consumer confidence… Our ships are one of the safest places on earth.”
With all things considered, the resumption of cruising has a new level of optimism, one with a contagion we are very much looking forward to seeing how it spreads.
How BA Can Help
The purpose of BA’s cruise bulletins are to provide insights, guidance, and assistance during the cruise recovery. Since the start of COVID, BA has tracked the cruise industry’s latest resumption plans in terms of ships and lower berths scheduled to resume sailing by month, protocol requirements by brand, and CDC regulations and approvals, to name a few. BA is well-positioned to assist with any of your cruise resumption needs, so please do not hesitate to reach out, simply by replying to this email. We look forward to hearing from you.