Cruise Stocks Remain Buoyant Despite 83 Omicron Infected Ships, Crew Quarantines, And Decreasing Customer Spending

by John Konrad (gCaptain) Stock prices of the three largest cruise ship owners – Carnival $CCL, Royal Caribbean International $RCL, and Norwegian Cruise Line $NCLH, have all been rising since late November lows despite decreasing revenue, large amounts of junk debt and increasingly ominous news that the Omicron variant of COVID-19 is now aboard all 83 passenger-laden ships the US Centers for Disease Control (CDC) is tracking (the number of infected cruise ships globally is likely higher).

Despite relative stock strength, a new report from the Bank of America suggests these companies are fighting strong cross currents and headwinds. According to the bank’s credit card division, core monthly spending on cruises dropped 39.8% in December compared to 2019.

And servicing large amounts of debt with decreasing revenue is not the biggest problem. While nearly every cruise ship is currently experiencing cases of COVID-19, operators are scrambling to relocate sick crew members to “Quarantine Ships“.

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Omicron Bypasses Health Protocols

Thanks to strict health protocols, the cruise industry avoided large outbreaks of COVID-19 in 2021. That is no longer the case due to the far more transmissible Omicron variant. The number of passengers and crew testing positive for the omicron variant aboard ships has been rising sharply over the last month.

During the last two weeks of December, the U.S. Centers for Disease Control and Prevention reported 5,013 COVID-19 cases on cruise vessels operating in U.S. waters, up from just 162 cases the first two weeks of the month.

“That’s a 3,094% increase,” says travel journalist Gene Sloan. “Anecdotal reports are that the number of cases on ships is up even more in the first 10 days of the new year.”

Those are December’s numbers. The numbers this month could be much worse. According to the CDC’s COVID-19 cruise ship tracker, which lists every foreign-flag cruise ship visiting US ports, every one of the 83 cruise ships currently carrying passengers, has reported cases of COVID-19 that have met the threshold for CDC investigation.

Crews Are Being Secretly Corralled Aboard Quarantine Ships

What are the cruise lines doing to stop the spread of COVID-19 aboard the 83 infected ships? At least two companies, Carnival Cruise Line and Royal Caribbean International, are secretly offloading crew members who test positive onto ships that are sailing without any passengers.

Yesterday the Washington Post reported that the movement of crews has raised eyebrows among some passengers, who have documented transfers of more than 100 workers. The cruise lines however are keeping the exact number of infected crewmembers a secret. Neither Carnival nor Royal Caribbean would disclose how many employees have been relocated to quarantine ships.

“To keep our crew and ships as healthy as possible,” said Lyan Sierra-Caro, a Royal Caribbean spokeswoman, in an email to the Washington Post. “We have been using out-of-service ships for our crew members who are asymptomatic and mildly symptomatic, and in isolation after testing positive for COVID-19.”

Three other major cruise lines did not immediately respond when The Post asked if they were employing similar practices. One passenger on a P & O Cruises ship in the Caribbean told the paper last week that he and his wife were being moved to a ship operated by Cunard Line after testing positive for the novel coronavirus. Both companies are owned by Carnival.

Consumer Spending On Cruise Ships Falls

According to Bank of America’s senior equity analyst, Andrew Didora, about 75% of the industry’s total fleet was back in operation as of the end of 2021 after a total shutdown of the industry at the height of the pandemic.

Despite more sailings, consumer spending fell. Bank of America’s credit card division reported Wednesday that core monthly spending on cruises dropped 39.8% in December compared to 2019.

“Our cruise pricing survey shows ticket prices in 2023 are steady,” Didora said. “We are seeing some pricing softness in 2022 likely given the continued variant headlines.”

The January numbers could be very important in determining how much the cruise industry will be impacted by the omicron outbreak.

Bank of America says it remains cautious on cruise stocks, given the uncertainty in the space and the debt the companies took on during the shutdowns.

Related News: Costa Concordia Survivors Can Still Hear Screams A Decade Later