Although it has been widely expected cruises would begin to resume soon out of U.S. ports, the situation remains fraught as questions surrounding vaccinations swirl.
One big sticking point is an April executive order by
Florida Gov. Ron DeSantis
that blocks “any business or government entity from requiring proof of COVID-19 vaccination” in that state. The cruise operators, however, have seen vaccinations as key to a restart, partly because they believe passengers will feel safer aboard the vessels.
Meanwhile, a federal judge in Tampa, Fla., on Friday sided with the state in an attempt to strike down the Centers for Disease Control and Prevention’s conditional sailing order issued last October. The order outlines a reopening schedule with four phases, including a mandatory test phase unless they attest that 98% of crew members and 95% of passengers are fully vaccinated against Covid-19.
The “CDC is preliminarily enjoined from enforcing against a cruise ship arriving in, within, or departing from a port in Florida the conditional sailing order and the later measures,” according to the decision by U.S. District Judge Steven D. Merryday.
All of this comes as the cruse operators—which have racked up billions of dollars of losses during the pandemic and been forced to raise several rounds of fresh capital to stay afloat—are eager to resume sailings out of the U.S. market that has been closed since March 2020.
Truist lodging and cruise analyst Patrick Scholes calls the vaccination gulf between DeSantis and the cruise lines “definitely a short-term problem.”
“It’s probably not a problem for ’22 or ’23, but for the short term it could weigh on investor sentiment,” he says.
Shares of all three major cruise operators—
Norwegian Cruise Line Holdings
Royal Caribbean Group
(RCL)—were down in the 5%-6% range last week, versus around a 2% drop for the S&P 500.
The vaccination situation is quickly evolving, and the cruise companies have outlined different strategies. The CDC, for its part, says on its website that it “recommends that people who are not fully vaccinated avoid travel on cruise ships, including river cruises, worldwide.”
In a June 7 statement, for example, Norwegian Cruise Line said that “all initial voyages will operate with fully vaccinated guests and crew” along with other Covid-related protocols.
Royal Caribbean International, meanwhile, says that for sailings out of Seattle before Aug. 1, “all Royal Caribbean guests age 16 and older must present proof of COVID-19 vaccination.” After Aug. 1, the minimum age requirement is lowered to 12. The company said will it “continually evaluate these requirements.” Seattle is the port for Alaska sailings, a crucial and profitable summer market for the cruise lines.
However, for sailings out of the Miami area, Royal says that “we strongly recommend all guests 16 and older be fully vaccinated.”
Royal Caribbean’s Royal brand “will not require vaccinations aboard U.S. Caribbean sailings in July and will operate these ships under the ‘non-vax’ path’ ” based on guidance and instructions from the CDC conditional sailing order, according to JPMorgan analyst Brandt Montour.
“That said, [Royal Caribbean] is highly recommending guests vaccinate, and the company thinks 90% of guests will have it based on its own internal consumer research,” he added.
Royal Caribbean’s Celebrity Edge vessel is scheduled to sail out of Fort Lauderdale, Fla., on June 26. The CDC “gave Celebrity the green light to restart cruises with passengers because the ship will have at least 95% of its passengers fully vaccinated, along with 98% of its crew members,” according to a blog post on Royal Caribbean’s website.
Royal Caribbean, however, suffered a setback last week when it came to light that eight crew members of its Odyssey of the Seas vessel had tested positive for Covid. As a result, that ship’s inaugural sailing has been pushed back to July 31 from July 3.
president and CEO of the Royal Caribbean International brand, said six of the eight crew members were asymptomatic and that the other two had mild symptoms.
Bayley described the situation as “two steps forward and one step back!”
Write to Lawrence C. Strauss at email@example.com