Specialist
Former SVP at Carnival Cruise Line (Carnival Corp)
Agenda
- Key trends and developments in the cruise industry
- Demand recovery trends and impact of CDC (Centers for Disease Control and Prevention) operating framework for North American sailing
- Medium-term industry outlook
Questions
1.
What are your top-of-mind expectations for the cruise industry in 2021?
2.
You mentioned you expect shorter cruises of 3-5 days, lower capacities and fewer home ports. What do these limitations mean for demand recovery across the larger vs smaller cruise operators?
3.
When do you think cruises will set sail at different points around the world?
4.
What do you think the capacity or social distancing measures might entail when cruises do operate again?
5.
What are the implied costs underlying the limited operation and reduced capacity environments?
6.
How operationally feasible is it to process 1,000-4,000 COVID-19 PCR tests at port before departure?
7.
The cruise industry has repeatedly said it hopes the CDC [Centers for Disease Control and Prevention] will allow operators to use rapid testing as an initial screen, where CDC’s conditional sail order was clear that rapid testing was not recommended and PCR tests would be required. Do you think the cruise lines can prevail here, given that about 180-plus passengers in Europe were infected with COVID-19 in H2 2020?
8.
How costly do you think it would be to build PCR testing labs on ships?
9.
The CDC has made it clear that all crew members should have their own cabins. Do they typically sleep 2-4 per room? How many typically revenue-generating cabins would need to be set aside on a 3,000-4,000 passenger ship for crew members to be in individual cabins and for a quarantine area for potentially sick passengers to be set up?
10.
How likely do you think it is that the cruise industry will wait for widespread vaccinations, as opposed to paying to build labs on board and other costly safety protocols? You mentioned this is the second possible scenario.
11.
What would you estimate is the typical occupancy rate per ship for cruises to sustain break-even levels?
12.
What assumptions are you making about consumer sentiment towards cruising, coming out of the holiday season? Do you think consumer willingness is high enough to meet the potential occupancy break-even rates?
13.
What happens to the amenities that some operators would want to offer, such as spa service providers?
14.
What fleet adjustments would you anticipate for players such as Carnival in the near term vs the longer term?
15.
How realistic is it for operators to push out CAPEX requirements for new builds? It seems that the industry is simply on a 6-12 month delay, but is it possible for the cruise lines to postpone ships for 2-3 years further? Would European governments allow this and float their shipyards for a few years to accommodate this?
16.
Do you think that the summer European or Alaska seasons are at risk?
17.
How do you think industry occupancy rates will trend in 2021 vs 2022 and even 2023?
18.
When do you think net yields will recover for the industry? It took more than six years to recover after the 2007-08 global financial crisis. Do you think it would be more severe now, or is there a lot of pent-up demand to the extent that consumers will quickly forget about the pandemic?
19.
What is your take on the consensus estimates for revenue growth over the next 2-3 years? Bloomberg consensus estimates show Carnival will have 54% revenue growth in FY21, 109% in FY22 and 70% in FY23. Do you find these estimates in line with your observations for an operator such as Carnival?
20.
Are there any key events, metrics or indicators you will follow to inform a positive or negative inflection point for an industry rebound? Do you have any other closing remarks?
