Solvency of Cruise Lines

[npcl]

7 minutes ago, UPNYGuy said:

guess only time will tell for sure. I think you will see fewer cruises operated, but on the larger, newer ships. If a vista is roughly as ‘efficient’ so to speak as an R-class, the rest of the pax carried are all profit. 
 

hence my density comment. more density = more profit 

If passengers agree, which for the near future I doubt that they will.

 

Now the cruise lines have no revenue.  As much as they want I do not think that it will be business as usual even once they are free to sail.

 

The big ships are only more efficient, money wise, if they can fill them.  A full small ship, is more efficient that an 80% filled large ship.  We are now training an entire population to fear large crowds, and to want space.  That will not go away immediately.

 

Also we have seen several cases of how when you are on a cruise ship, you can lose any control over the situation. Giving passengers far less control than vacationing on land.  I think that will impact the willingness of people to cruise.

 

Here on CC we have an audience of pretty hard core cruisers.  People that have done many.  Yet you see a fair number of posts from people that are getting turned off on cruising for various reasons.  Consider the impact on the not yet cruised to date public, the very people that cruise lines have depended upon to fill their ships.

 

 

[Wonderingabout]

It would seem that a way to help the cruise lines which are foreign corporations is to have a win win situation by having various countries lease the cruise ships to use as hospital ships.  Infuse the ship with medical staff from the host country while much of the regular staff would continue to cook, clean and deliver food to the patients.  A different protocol for the staff but not different in its essentials.

 

 

[UPNYGuy]

7 minutes ago, npcl said:

If passengers agree, which for the near future I doubt that they will.

 

Now the cruise lines have no revenue.  As much as they want I do not think that it will be business as usual even once they are free to sail.

 

The big ships are only more efficient, money wise, if they can fill them.  A full small ship, is more efficient that an 80% filled large ship.  We are now training an entire population to fear large crowds, and to want space.  That will not go away immediately.

 

Also we have seen several cases of how when you are on a cruise ship, you can lose any control over the situation. Giving passengers far less control than vacationing on land.  I think that will impact the willingness of people to cruise.

 

Here on CC we have an audience of pretty hard core cruisers.  People that have done many.  Yet you see a fair number of posts from people that are getting turned off on cruising for various reasons.  Consider the impact on the not yet cruised to date public, the very people that cruise lines have depended upon to fill their ships.

 

 

 newer ships are more hydronamically designed, and use more efficient electronics, power plants, propulsion, etc... this is where I was going. And most of the newer ships are larger (with some exceptions). 

[iancal]

It could also be that litigation may impact certain business decisions.

Edited March 27, 2020 by iancal

[npcl]

1 hour ago, UPNYGuy said:

 newer ships are more hydronamically designed, and use more efficient electronics, power plants, propulsion, etc... this is where I was going. And most of the newer ships are larger (with some exceptions). 

If they can actually fill them   3000 passenger maybe 5000+  not so much  with what I expect will happen even once they start sailing again.  Things will not go back to as they were in January immediately.  I would be very surprised if the majors show a profit even in 2021 with a lot of those cruising using FCCs earned during the cancellation period and a lot of cash paying customers stay away. They will need to go issue free for at least 6 months once they start cruising before confidence even starts to build.  If they start too soon and have cases pop up then the brands will be damaged far longer.

[Jim9310]

Today's news is going to make it even harder for CCL to obtain a bailout------

Four dead on Carnival-owned cruise ship (Zaandam) amid new coronavirus outbreak aboard

https://www.cnbc.com/2020/03/27/four-dead-on-carnival-cruise-ship-amid-new-coronavirus-outbreak-aboard.html

[npcl]

https://www.bloomberg.com/news/articles/2020-03-27/carnival-seeks-up-to-7-billion-in-debt-amid-global-travel-halt

 

News on Bloomberg that CCL is trying to raise 7 billion.  It appears that just about everything is on the table including convertible notes, equity offering, and will as senior notes.

 

dilution seems to be in the future of equity holders.

[Ride-The-Waves]

1 hour ago, npcl said:

https://www.bloomberg.com/news/articles/2020-03-27/carnival-seeks-up-to-7-billion-in-debt-amid-global-travel-halt

 

News on Bloomberg that CCL is trying to raise 7 billion.  It appears that just about everything is on the table including convertible notes, equity offering, and will as senior notes.

 

dilution seems to be in the future of equity holders.

Don't feel too bad for them, or their investors.  These companies have been buying back their own equities to raise per share prices and enrich the company and large shareholders.  Some "dilution" is past due.  Some actual reinvestment in their product is past due.

[LMaxwell]

7 minutes ago, Ride-The-Waves said:

  Some actual reinvestment in their product is past due.

 

Dividend is unsustainable at current levels; look for cuts there.  Those cuts should drive the stock lower however 

[Wehwalt]

1 hour ago, LMaxwell said:

 

Dividend is unsustainable at current levels; look for cuts there.  Those cuts should drive the stock lower however 

Probably already priced in. No one thinks they can sustain the dividend.

[kangforpres]

I think the unfolding situation on the Zaandam could do irreparable damage to HAL, even worse than what Princess is suffering from due to the Diamond and Grand fiasco's.

Hundreds could die on that ship, the virus spreads incredible fast and has proven extremely fatal for older people.

It was on a South America Grand Voyage right? like 21 days or something?

 

-Paul

[ABoatNerd]

19 hours ago, npcl said:

If passengers agree, which for the near future I doubt that they will.

 

Now the cruise lines have no revenue.  As much as they want I do not think that it will be business as usual even once they are free to sail.

 

The big ships are only more efficient, money wise, if they can fill them.  A full small ship, is more efficient that an 80% filled large ship.  We are now training an entire population to fear large crowds, and to want space.  That will not go away immediately.

 

Also we have seen several cases of how when you are on a cruise ship, you can lose any control over the situation. Giving passengers far less control than vacationing on land.  I think that will impact the willingness of people to cruise.

 

Here on CC we have an audience of pretty hard core cruisers.  People that have done many.  Yet you see a fair number of posts from people that are getting turned off on cruising for various reasons.  Consider the impact on the not yet cruised to date public, the very people that cruise lines have depended upon to fill their ships.

 

 

 

npcl, correct, your last paragraph in particular.

 

When the hard core cruisers are turning off, like me, I expect many "regular cruisers" or potential new cruisers will think twice before purchasing a cruise.

 

The people I cruise with, from California, to Ontario Canada, to London England - none will consider cruising in the future for many reasons. We are currently teleconferencing regarding new approaches to our travel and certainly high end land tours  with multiple days in a location, and fly to ports and train are in 1st place.

 

I have cruised since 1989, and have not cruised in a year and a half due to the constant downgrading of the product experience, and my last cruise was on Oceania. Moving up to premium changed nothing, the downgrading was there. I have nothing booked and nothing contemplated.

 

What I see is, in my opinion only, developed over a long time, across many brands and many cruises is - cruise lines are the least consumer responsive sub-sector in the consumer world (guest relations staff on cruise ships are The worst), cruise lines have constantly downgraded the product since about 2015 when the cut backs really kicked in, cruise lines constantly hide behind the "contract" when there is a guest issue or when they are trying to hide port changes, they constantly issue FCC's but rarely cash refunds and then there is the flag of convenience item.

 

I retired from marketing and what I have observed is that the marketing used by cruise lines is often uncoupled from the on board experience - some lines are worse than others - I find Oceania to be the worst offender in this regard. It was not always this way. 

 

Further, as a consumer, and due to my career, I am finely attuned to the consistency in delivery of a product. I used to be able to book a cruise from 1989 to 2015 and know that on the next voyage I would receive the same consistently excellent product - meaning I never had to worry about downgrades - changes yes, but not downgrades.

 

On my last 6 cruises, I was always on the "downgrade watch" - I was always able to spot something(s).

 

The incremental "chipping away" of the product is what launched the many threads on CC since about 2015.

 

I am pleased the cruise industry was excluded from the USA virus bill.

 

Now add in the virus and that is that.

 

However, the cruise lines are not interested in me, they are focused on the younger set. 

 

Time will tell.

 

 

 

 

[UPNYGuy]

15 minutes ago, ABoatNerd said:

 

npcl, correct, your last paragraph in particular.

 

When the hard core cruisers are turning off, like me, I expect many "regular cruisers" or potential new cruisers will think twice before purchasing a cruise.

 

The people I cruise with, from California, to Ontario Canada, to London England - none will consider cruising in the future for many reasons. We are currently teleconferencing regarding new approaches to our travel and certainly high end land tours  with multiple days in a location, and fly to ports and train are in 1st place.

 

I have cruised since 1989, and have not cruised in a year and a half due to the constant downgrading of the product experience, and my last cruise was on Oceania. Moving up to premium changed nothing, the downgrading was there. I have nothing booked and nothing contemplated.

 

What I see is, in my opinion only, developed over a long time, across many brands and many cruises is - cruise lines are the least consumer responsive sub-sector in the consumer world (guest relations staff on cruise ships are The worst), cruise lines have constantly downgraded the product since about 2015 when the cut backs really kicked in, cruise lines constantly hide behind the "contract" when there is a guest issue or when they are trying to hide port changes, they constantly issue FCC's but rarely cash refunds and then there is the flag of convenience item.

 

I retired from marketing and what I have observed is that the marketing used by cruise lines is often uncoupled from the on board experience - some lines are worse than others - I find Oceania to be the worst offender in this regard. It was not always this way. 

 

Further, as a consumer, and due to my career, I am finely attuned to the consistency in delivery of a product. I used to be able to book a cruise from 1989 to 2015 and know that on the next voyage I would receive the same consistently excellent product - meaning I never had to worry about downgrades - changes yes, but not downgrades.

 

On my last 6 cruises, I was always on the "downgrade watch" - I was always able to spot something(s).

 

The incremental "chipping away" of the product is what launched the many threads on CC since about 2015.

 

I am pleased the cruise industry was excluded from the USA virus bill.

 

Now add in the virus and that is that.

 

However, the cruise lines are not interested in me, they are focused on the younger set. 

 

Time will tell.

 

 

 

 

I go roughly 4 to 5 times per year. I’m not interested in going in April, and I did cancel that one. This will not be over then (by a long shot). But I have others in May, August, and November. Time will tell if we keep these (or even can go)

Edited March 28, 2020 by UPNYGuy

[kcscrapper]

25 minutes ago, ABoatNerd said:

 

However, the cruise lines are not interested in me, they are focused on the younger set. 

 

 

 

 

 

 

And that thought is verified by the new video at the bottom of the above CNBC item - Headline:  "Cruise industry proposes ban on passengers over 70" (without doctor statement that they are fit to travel -- was the rest of the sentence)

[gilboman]

13 hours ago, kangforpres said:

I think the unfolding situation on the Zaandam could do irreparable damage to HAL, even worse than what Princess is suffering from due to the Diamond and Grand fiasco's.

Hundreds could die on that ship, the virus spreads incredible fast and has proven extremely fatal for older people.

It was on a South America Grand Voyage right? like 21 days or something?

 

-Paul

I think they're quite lucky with timing from PR perspective as with so much covid19 news and development domestically, this cruise ship isn't really making headlines like diamond princess was

 

Huge majority are not and will never be aware of what's happening on the zaandam

[iancal]

aBoatNerd.....our sentiments exactly.

 

We not huge cruisers.  We have only done about 20 on various cruise lines, including HAL.   We retired several years ago.  We expected to do more cruising.  We have done less.  It became boring for us but more than that the product was being depreciated while cost was increasing.  Not to mention the expectation gap and the inconsistency of product that seems to be the standard on mass market cruise lines these days.  

 

We do 3-4 months of international travel each year, some years more.  Up until a few years ago we were always avidly looking to find a cruise to complement our other travels.  That activity slowed.  Now, it is at a standstill.    We have been following HAL through this crisis.  Not impressed at all with their decision making process, their reluctance to cancel cruises and refund  when it is obvious that there will be no sailing.  Customers deserve to be treated with respect.  They also deserve a 'duty of care' by their vendor.  My feeling is that once this is over, and it will be, there will be some reflection by the public on this plus a fair amount of ongoing negative press in the various media.  

 

Litigation will serve to keep this in the public eye long after the virus crisis is over.  I have no doubt that law firms that specialize in this area are already busy preparing to capture the business that will in all probability be surfacing very soon.

 

 

 

 

 

Edited March 28, 2020 by iancal

[Hlitner]

1 hour ago, kcscrapper said:

And that thought is verified by the new video at the bottom of the above CNBC item - Headline:  "Cruise industry proposes ban on passengers over 70" (without doctor statement that they are fit to travel -- was the rest of the sentence)

That piece is somewhat fake news in that it is very misleading.  The issue happened a few weeks ago when NCL, and some other lines, were willing to sell their souls to keep cruising.  The idea of asking older folks to have medical clearance was an attempt at mollifying the White House, CDC and others...and seen as a compromise.  That idea quickly collapsed when the situation worsened and nearly all the world's cruise lines suspended operations.  So, that CNBC item is just old news and may prove to be completely moot....depending on when cruise lines attempt to resume operations.  And speaking of the resumption of cruising, that is going to depend more on the willingness of ports to again welcome cruise ships....which is a very big question mark.  

 

Hank

[cbr663]

1 hour ago, ABoatNerd said:

 

.....

 

The people I cruise with, from California, to Ontario Canada, to London England - none will consider cruising in the future for many reasons. We are currently teleconferencing regarding new approaches to our travel and certainly high end land tours  with multiple days in a location, and fly to ports and train are in 1st place.

 

I have cruised since 1989, and have not cruised in a year and a half due to the constant downgrading of the product experience, and my last cruise was on Oceania. Moving up to premium changed nothing, the downgrading was there. I have nothing booked and nothing contemplated.

.....

My wife and I echo these same sentiments.  Earlier this morning we were discussing our vacations options other than cruising.  Larger ships with more and more passengers with less space overall never did appeal to us and it certainly doesn't now.

 

We went a few years and didn't cruise.  We have also felt the constant downgrading of the experience resulted in lower overall satisfaction.  We also remember that the constant penny pinching was the result of the financial crisis of 2008.  If, and there is little reason to think that cruise lines do anything but, borrow from that same playbook after this crisis then there will be no incentive for us to return.

[FlaMariner]

I'm a crazy fan of cruise vacations.....and a devoted Holland America Line Mariner.....but......

 

we all know that one of the reasons we cruise is because of the value it provides.  Part of that value is from the foreign flag registration and the low wage foreign labor.

 

Those features are what has allowed the business model to flourish but it's hard to ask the USA taxpayer to bail out foreign built ships, foreign registered ships, foreign labor, and partially foreign based Carnival (USA and UK company).......I know I'd have a rough time winning a debate on that.

 

I'm worried.........the loopholes made the business and they may put an end to the business.....

 

I hope not......but looking at the facts.

[ABoatNerd]

The situation with the cruise lines is likely to make people explore other vacation options - that in itself is a problem for the cruise lines.

 

For example. After a very downgraded experience on Oceania Regatta in Oct 2018 (10 negative reviews in the CC review section, unheard of) - our group booked a Globus tour of Austria and Switzerland - in June 2019 - simply Outstanding and better than any cruise I ever took. We saw the land, ate in local restaurants, saw all the local sites, spoke and observed the locals. In most major centers, we stayed 2 days.

 

Cruises are essential if you want to see specific geography (South America, Norway, Greenland, Antarctica, somewhat the Baltic). There are limitations to ground travel in these locations. Cruises are also good if you are time pressed and only want a "drive by" of certain locations.

 

But even doing the Med, I have done it via plane and train and seen sooooo much more than a cruise. Often, it does cost a bit more, but you are immersed in the area, not a "drive by" as I call cruising.

 

I agree that when cruising starts up again, the experience will be significantly downgraded due to expense limitations and all the FCC's booking. No thank you.

 

For our group, it is the recent arrogance of the cruise lines (Celebrity in particular, LLP at the helm, as well as Oceania) that really made us move our vacation $ to land tours etc, where there is really responsive consumer service.

 

In the end, to each their own. I wish each person to get the vacation of their dreams.

 

But the cruise lines better realize long time customers are not necessarily waiting to get back aboard.

[daisy-mae]

1 hour ago, Hlitner said:

That piece is somewhat fake news in that it is very misleading.  The issue happened a few weeks ago when NCL, and some other lines, were willing to sell their souls to keep cruising.  The idea of asking older folks to have medical clearance was an attempt at mollifying the White House, CDC and others...and seen as a compromise.  That idea quickly collapsed when the situation worsened and nearly all the world's cruise lines suspended operations.  So, that CNBC item is just old news and may prove to be completely moot....depending on when cruise lines attempt to resume operations.  

 

Hank

 

Yes, the point may be moot for now. However, now that the issue has been raised, it will be hard to get the genie back into the bottle.

I foresee a time, once things have settled, when travel insurance companies will be hesitant or even unwilling to insure seniors aged 70 and up who wish to undertake cruise travel.

[Ride-The-Waves]

4 hours ago, kcscrapper said:

And that thought is verified by the new video at the bottom of the above CNBC item - Headline:  "Cruise industry proposes ban on passengers over 70" (without doctor statement that they are fit to travel -- was the rest of the sentence)

That was "CLIA" the Cruise Lines Industry Association which represents the interests of cruise lines.

 

Interestingly, Forbes research shows that only 13 percent of "cruisers" are over 70.  So no big loss from their perspective.

[npcl]

6 hours ago, ABoatNerd said:

 

npcl, correct, your last paragraph in particular.

 

When the hard core cruisers are turning off, like me, I expect many "regular cruisers" or potential new cruisers will think twice before purchasing a cruise.

 

The people I cruise with, from California, to Ontario Canada, to London England - none will consider cruising in the future for many reasons. We are currently teleconferencing regarding new approaches to our travel and certainly high end land tours  with multiple days in a location, and fly to ports and train are in 1st place.

 

I have cruised since 1989, and have not cruised in a year and a half due to the constant downgrading of the product experience, and my last cruise was on Oceania. Moving up to premium changed nothing, the downgrading was there. I have nothing booked and nothing contemplated.

 

What I see is, in my opinion only, developed over a long time, across many brands and many cruises is - cruise lines are the least consumer responsive sub-sector in the consumer world (guest relations staff on cruise ships are The worst), cruise lines have constantly downgraded the product since about 2015 when the cut backs really kicked in, cruise lines constantly hide behind the "contract" when there is a guest issue or when they are trying to hide port changes, they constantly issue FCC's but rarely cash refunds and then there is the flag of convenience item.

 

I retired from marketing and what I have observed is that the marketing used by cruise lines is often uncoupled from the on board experience - some lines are worse than others - I find Oceania to be the worst offender in this regard. It was not always this way. 

 

Further, as a consumer, and due to my career, I am finely attuned to the consistency in delivery of a product. I used to be able to book a cruise from 1989 to 2015 and know that on the next voyage I would receive the same consistently excellent product - meaning I never had to worry about downgrades - changes yes, but not downgrades.

 

On my last 6 cruises, I was always on the "downgrade watch" - I was always able to spot something(s).

 

The incremental "chipping away" of the product is what launched the many threads on CC since about 2015.

 

I am pleased the cruise industry was excluded from the USA virus bill.

 

Now add in the virus and that is that.

 

However, the cruise lines are not interested in me, they are focused on the younger set. 

 

Time will tell.

 

 

 

 

I wasn't talking about people that are getting turned off on the product, but people that still like the product, would still be cruising, except now being turned off because of issues related to Covid-19.  The spread on ships, the lack of control of both the passengers and the cruise lines in being able to control where they off load or if they even can, the destination ports rejecting stops, the lack of information being given to passengers when an incident occurs, the failure to cancel cruises promptly, when it is obvious that they are not going to go, the delays to give cash refunds, etc.

 

You have numerous people that still like the product, that are not going to be in a hurry  to jump on a ship for a length of time after the cruise lines restart because of Covid-19 related issues.

[ontheweb]

2 hours ago, Ride-The-Waves said:

That was "CLIA" the Cruise Lines Industry Association which represents the interests of cruise lines.

 

Interestingly, Forbes research shows that only 13 percent of "cruisers" are over 70.  So no big loss from their perspective.

13% represents better than 1 out of every 8 passengers. It would e hard to not see that as significant. And some lines surely have a higher percentage of passengers than that 13%.

[npcl]

22 minutes ago, ontheweb said:

13% represents better than 1 out of every 8 passengers. It would e hard to not see that as significant. And some lines surely have a higher percentage of passengers than that 13%.

Its even higher impact if one considers couples or families where 1 member is over 70 while others are below since the cut off might result in those under 70 not cruising as well.