For many companies, the 2020 health crisis was a blessing. Companies such as Amazon, Zoom, and Apple saw sales and share prices soar.
But on the other hand, many companies saw their wealth dwindle. Restaurants were closed. Cinemas closed. However, perhaps no other industry has been as badly affected as cruises.
The ships were idle for more than a year, resulting in huge financial losses for cruise lines.
In the early days, not only stories about cases on cruise ships dominated the headlines, but the cruise was discontinued in March 2020. While other industries may have closed, only to slowly reopen weeks or months later, cruise lines in the US – the world’s largest cruise market – have been halted for over a year.
Even after vaccines were introduced and some cruise lines said they would need the shot and test every passenger before boarding, the ships were still stuck at the dock due to CDC rules.
Cruise ships have lost billions of revenue during the suspension. Carnival Cruise Line alone said it more than canceled 2,600 cruises with 4 million passengers. That’s a lot of tickets that had to be refunded.
It’s not just the loss of sales, however. Cruise ships also had to turn off the lights. This includes everything from paying the CEO to maintaining and delivering ships while they waited at sea for their return.
The bottom line of a turnover close to zero with high expenses at the same time? Massive business losses, in many cases well above the combined profits of recent years. In other words, cruise line long-term net profits added up to a negative figure that goes back to at least 2017 … and sometimes even earlier.
Here’s a closer look at the top three cruise companies and the amount of money they lost due to the cruise suspension and health crisis.
Of course, Carnival Corporation is known as the parent company of perhaps the most iconic brand in the industry – Carnival Cruise Line. However, the company is much more than just the Carnival brand. Lines such as Princess, Costa and Cunard are part of the company’s business operations. Before the pandemic, the company operated more than 100 ships on its nine different cruise lines.
After being hired, the cruise line took the opportunity to reduce its fleets, with more than a dozen ships departing. Even so, the cost of having the ships sail with no income was a double blow. After a record year in 2019 and a promising start to 2020, the company saw a dramatic change in its wealth.
For the full year 2020, Carnival Corporation had total sales of $ 5.6 billion, 85% of which in the first quarter. That money was offset by the massive cost of dealing with the pandemic. Overall, the company posted a loss in each quarter of 2020 and the first quarter of 2021. This equates to a total loss of $ 12.2 billion.
By comparison, combined net income for 2017-2019 was $ 8.75 billion.
Royal Caribbean Group
The cruise line of the same name – Royal Caribbean International – is one of the largest and most popular lines in the world. However, the Royal Caribbean Group is more than just a single line. It is also the owner of Celebrity, Azamara and Silversea Cruises.
The Royal Caribbean Group’s fleet comprises a total of around 50 ships. That means enormous costs, even if no passengers are sailing. With its Oasis-class ships, which have been idle since March 2020, it also has the largest ships in the world.
After the cruises were canceled, the Royal Caribbean Group had 2020 sales of just $ 2.2 billion. Compare that to 2019, when sales were nearly $ 11 billion and you’re getting a feel for the ramifications of that hiatus.
Because of the costs associated with the pandemic and the business impact The Royal Caribbean Group made a net profit of – $ 6.9 billion during the health crisis that continues to hinder the industry.
This meant a dramatic asset reversal for the company. From 2017 to 2019, the Royal Caribbean Group had net profits of $ 5.3 billion. In other words, the pandemic year was tantamount to wiping out the three previous profit years … and a few more.
Norwegian Cruise Line Holdings Ltd.
NCLH, the last of the three major cruise lines, may be the smallest but anything but casual. In 2019, the year before the pandemic, Norwegian had sales of $ 6.5 billion and net income of $ 930 million.
The offer includes Norwegian Cruise Lines, but also the luxury brands Oceania Cruises and Regent Seven Seas. Unlike its rivals, NCLH did not shrink its fleet by getting rid of older ships during the pandemic. That’s because the company’s main route – Norwegian Cruise Line – has one of the youngest fleets.
That means the company had to support the entire fleet throughout the cruise suspension while generating limited revenue.
Throughout 2020, Norwegian had sales of just $ 1.3 billion. This resulted in a net income loss of – $ 4.0 billion for the year and – $ 5.4 billion since the cruise began being suspended.
By comparison, NCLH generated net income totaling $ 3.3 billion in the four years between 2016 and 2019. This shows how massive the downturn has been for the company.
The losses will continue to rise in 2021
While 2020 was a tough year for cruise lines, the trouble isn’t over. There are some positive developments as some lines are slowly sailing around the world again. Travels are returning to Asia, Europe and even the Caribbean.
However, the United States is the largest cruise market. Without trips leaving Florida or Texas, for example, a significant loss of revenue will continue to affect the industry. Even if trips return, it is likely a staggered return. It is possible that U.S. cruises won’t fully return until 2022.
That means the losses will continue to pile up in 2021. The three major cruise lines lost a total of $ 4.5 billion in the first quarter of the year.
In other words, we won’t know the full extent of the financial implications for the cruise industry in the months to come – or possibly years. Nevertheless, we already know that the effects are increasing in the billions and getting bigger every day.
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