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Royal Caribbean says Omicron variant fears have only had a short-term effect on bookings

In:
30 Dec 2021
By: 
Matt Hochberg

Royal Caribbean Group told investors on Thursday that Omicron variant fears have seen an increase in cancellations and reduced bookings lately, but it has thus far only had a short-term impact.

The business update was issued by Royal Caribbean International's parent company as a way to explain what they are seeing as it relates to the bottom line.

Here's a look at the important takeaways from the update.

Omicron

Royal Caribbean adding mandatory temperature screenings to screen for Coronavirus in guests | Royal Caribbean Blog

Across the brands of Royal Caribbean Group, the Royal Caribbean Group has carried since June 2021 1.1 million guests with 1,745 people testing positive – a positivity rate of 0.02%. 

As it relates to Omicron, none of the Omicron cases on its ships have been severe or needed to be taken to a hospital. The company believes this is a result of almost everyone onboard having been vaccinated and having a negative test before boarding.

When looking at all variants of Covid-19, Royal Caribbean Group has carried 1.1 million guests with 1,745 people testing positive – a positivity rate of 0.02%.

A look at the protocols Royal Caribbean has in place to combat Omicron variant | Royal Caribbean Blog

"Omicron is having a big short-term impact on everyone, but many observers see this as a major step towards COVID-19 becoming endemic rather than epidemic," said Richard Fain, Chairman & CEO.

"We don’t like to see even one case, but our experience is a fraction of the comparable statistics of virtually any other comparable location or industry. Few businesses are subject to such intense scrutiny, regulation, and disclosure requirements by so many authorities, and we welcome that scrutiny because of our commitment to safety. We intend to maintain our goal of delivering the safest vacation on land or sea and will constantly adjust our procedures to accomplish this even in the face of Omicron’s amazing transmissibility."

Impact on reservations

Royal Caribbean now accepts cruise ship passengers with mixed series of mRNA vaccines | Royal Caribbean Blog

While Omicron has been front page news, so far its impact on bookings has only had a short-term impact.

Right after Black Friday and Cyber Monday, Royal Caribbean Group, "experienced a decline in bookings and increased cancellations for near-term sailings but to a lesser degree than that experienced with the Delta variant. "

Load factors for sailings in the first half of 2022 remain below historical levels, as expected. However, sailings for the second half of 2022 continue to be booked within historical ranges, at higher prices with and without Future Cruise Credits (FCCs), with strong demand from the critical U.S. market.

Onboard experience

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Royal Caribbean also addressed the impact Omicron has had on passengers and crew.

Just like all aspects of travel, the labor supply is being hit hard by Omicron because of the increase in workers testing positive, which means less employees to work.

Similar issues are impacting the company’s onboard service capabilities.  

No changes to Royal Caribbean cruises following Puerto Rico earthquake | Royal Caribbean Blog

In addition, the company is experiencing service disruptions at selected destinations and to date has cancelled or significantly modified 16 destination calls out of 331. The company expects these disruptions to continue in the near term and then decline as the world adjusts to the current trends. 

Fain concluded, “We are constantly learning and adjusting as Omicron appears to be ushering in a new phase in the fight against COVID-19."

"We expect these factors to have a negative impact in the short term but are optimistic they will lead us to a more pervasive but less severe health environment. Taken together, this should enable us to produce a strong transitional year in 2022 and a very strong 2023.”