Cruise industry heading for choppy waters in H2 2022
In an Interview with Third Bridge Forum, the specialist said cruise operators are under “incredible” pressure as fuel and food costs rise. They told us fares are currently low, and promotions to attract customers are reducing spend on board. Cruise operators’ ability to manage fare pricing and inventory has also become more challenging due to consumer booking windows contracting from six to three months. It is something the industry needs to address, they added, but it will only change once booking levels increase.
We heard that during the pandemic cruise ships were operating at 40-70% capacity and that it could be Q1 2023 before ships reach 100%. A number of ships were removed during the pandemic, according to the specialist, meaning any “oversupply” concerns are minimal. However, they added available lower berth days might not return to pre-pandemic levels for another 24-36 months.
The specialist is also concerned that the new-to-cruise segment will be “slow” to return. New-to-cruise is the “underlying foundation for the future growth” of the cruise industry, the specialist said, and they warned it could take another “couple of years” to develop this market and make customers feel “comfortable” cruising again.
Despite these challenges, the specialist revealed there is pent up demand for people to return to cruises. They also said the relaxation of COVID restrictions for international passengers to the US, and the US Centres for Disease Control and Prevention’s decision to drop COVID-19 monitoring on board ships, were a “good thing for the industry”.
But while they expect brands like Viking Cruises, Royal Caribbean and Lindblad Expeditions to weather the storm, the specialist was less optimistic about Carnival Cruise Line and Norwegian Cruise Line Holdings, both of which have debt problems.
Click here to access all the human insights in Third Bridge Forum’s “Cruise Industry – Booking Pattern Shifts & H2 2022 Outlook” Interview.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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