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RCL during COVID-19


Otis B.
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Be careful booking a future cruise... Why? 

The cruise lines are hemorrhaging cash. RCL has 61 ships floating around ports.   Cruise lines and cruise ships are in survival mode. 

  1. The CDC can extend the ban on cruise departures from US ports indefinitely (beyond) the end of July 2020.
  2. All Business Interruption and Liability coverage on the ships (including reinsurance) have broader carve outs for infectious diseases beyond the current exclusions.
  3. Countries outside of the US may not permit cruise ships to dock, which is currently the situation in the Caribbean and Latin America.
    1. Carnival, with its ships flagged in the Bahamas, was barred from unloading passengers in the Bahamas when the pandemic hit and had to bring those passengers to the US.
    2. Even if countries permit ports of call, if a ship has sick passengers, that ship may be barred.
  4. In order for the cruise industry to operate, the airlines have to be flying aircraft, currently parked in Tulsa, Arizona, Raleigh-Durham, and anywhere else.
    1. Passengers will need to feel comfortable flying in middle seats in coach and adjacent seats in business for the airlines to return to profitability.
  5. To date, no therapeutic program currently under trials has, in Dr. Fauci's recent comments,  shown enough promise to stop trials and begin using immediately.   The biologics showing some possible use are expensive, IV-administered in a hospital, and used when patients appear to be in need of ventilation.  There is no oral antiviral for prophylactic purposes like Tamiflu for influenza.
  6. A vaccine is at least a year to 18 months away for general use, at best.
    1. Many drug companies make announcements, but until a stage 3 trial is complete and the vaccine is proven effective and safe, it's just words.  Scaling up several billion doses of vaccine will take months.
  7. Most large gatherings (arenas, stadiums, amusement parks, cruise ships) will be the last to return to activities, and will likely require a vaccination card to enter or attend.
    1. This is not a call-to-arms for anti-vaxxers.  It will be a requirement for cruise lines' insurance coverages.
  8. Corporation events (sales meetings, division recognitions, etc.), a substantial portion of cruise revenues, will not return for several years despite heavy discounting and promotions.  Financially-crippled hotels and resorts, will have a built-in advantage for open spaces, proximity to hospitals, and immediate access to airports in the event of an outbreak.

When a cruise line says "We're Sailing in July," it means they are taking reservations and accepting payments.  It's the current policy of the cruise lines to apply a 100% credit for future cruises if you cancel prior to their canceling the cruise.  (How to travel to a departure port via an airline is another issue.)     It's only when the cruise line actually cancels the sailing you may try to obtain a cash refund.  Usually, the cruise line will credit the passenger with a 125% voucher for the cruise value on future cruises. 

A problem shows up if a cruise line were to file for reorganization under bankruptcy law, the voucher would be worthless since it's an unsecured liability against the cruise line.

When a cruise line announces "We have strong bookings for the first quarter of 2021," it means that the cruise line has rolled all those unreimbursed/vouchered passengers to Q1 2021 sailings -- subject to further delays.

There is no cavalry, no Fed, no US Treasury coming to the Cruise industry's rescue.  For decades cruise revenues were treated by the IRS as offshore (tax-free) revenues.  The taxes paid in the US are payroll and property taxes for land-based operations. .  Because of these minimal tax payments along with subsidies by European governments for building ships, there is little interest in Congress to throw the cruise industry a financial lifeline.  Likewise, financial help from Europe is unlikely.    Anytime a Congressperson or Senator suggests reflagging in the US, the cruise model becomes completely broken as most shipboard crew are low-cost contract workers from less-developed nations, harder working than most Americans, but subject to termination at will.

If you book and pay, even partially, for a cruise before a vaccine is available, you may not be able to obtain a cash refund unless Congress creates laws to protect passenger payments. 

Word to the wise -- be careful...that's all.

 

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7 hours ago, Otis B. said:

Word to the wise -- be careful...that's all.

 

Your words of caution certainly make sense about buying stock in cruise lines (at this time), and many Wall Street analysts point to other ways of investing $$.  But I don't think your concerns are limited to the cruise industry, as all travel-related industries face similar issues.  They all play "financial chess games", and any vacation $$ you plunk down with any company could be lost after bankruptcy or related financial distress.  So I think it is wise for all of us to be cautious with our finances and our health..  But most members are cautious and simply prefer to take their risks on a cruise rather than on some other travel activity. 

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I have stated before on this forum: Those of us booking in the UK/EU directly with RCI or through a legitimate travel agent are (ABTA and ATOL protected) fully insured against cancellations and bankruptcy. I would be disappointing for sure if my cruise is cancelled a second time, but not worried about receiving a refund or a future cruise. I believe this is one of the reasons we pay a premium over here and cannot reprice like the US (just my opinion).

All package holidays and “flight plus” holidays sold to you in the European Economic Area by ABTA members are financially protected by the ABTA scheme. So if your company goes bankrupt, you'll be able to continue your holiday as planned or get a refund.

 

 

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2 hours ago, Spang1974 said:

I have stated before on this forum: Those of us booking in the UK/EU directly with RCI or through a legitimate travel agent are (ABTA and ATOL protected) fully insured against cancellations and bankruptcy. I would be disappointing for sure if my cruise is cancelled a second time, but not worried about receiving a refund or a future cruise. I believe this is one of the reasons we pay a premium over here and cannot reprice like the US (just my opinion).

All package holidays and “flight plus” holidays sold to you in the European Economic Area by ABTA members are financially protected by the ABTA scheme. So if your company goes bankrupt, you'll be able to continue your holiday as planned or get a refund.

 

 

One of the few advantages we have here in the UK/Europe when booking a holiday or cruise, and in the current environment it could come in handy?

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