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Carnival, Royal Caribbean, and Norwegian Cruise Line Face a Big Hiring Challenge


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Interesting story from Motley Fool about crewmembers:

The leading cruise line operators aren't doing right by their current crews, and that could cost them in the future.
A lot of the questions surrounding the turnaround for cruise lines are based on the passenger perspective. Will Carnival (NYSE:CCL) (NYSE:CUK), Royal Caribbean (NYSE:RCL), and Norwegian Cruise Line Holdings (NYSE:NCLH) be able to fill their ships again at the other end of this pandemic crisis? How will the experience change? How deep will the discounts be to woo new and former customers as the negative fallout plays out?

But a side of the story that really isn't being discussed is the crew issue. Did you know that there are roughly 100,000 crew members stuck on cruise ships that are still sailing just outside of U.S. ports? They remain largely confined to their small cabins as the cruise lines negotiate the terms of returning the largely international workforce to their respective homes.

It's been that way since the industry shut down in mid-March. They are stuck, and in a handful of cases dying from COVID-19. Your bullish turnaround thesis has likely centered on how long it will take for cruise lines to get back to full ships with passengers paying full fares. It's time to start asking who will be working these ships and how much will they cost. 

A couple enjoying breakfast on the upper deck of a Royal Caribbean ship.
Will future cruise passengers have to be their own waiters? Image source: Royal Caribbean.

Uncharted waters
Carnival, Royal Caribbean, and Norwegian are in a standoff with the U.S. Centers for Disease Control and Prevention (CDC) to repatriate the 100,000 crew members who can't leave their ships. The CDC is requiring costly private transportation to return the trapped hires to their respective countries, and cruise lines have refused to be accountable for the process, according to Thursday's Miami Herald.

The matter will be resolved one way or another. The cruise lines eventually need to get these ships cleared out, cleaned up, and put back into service at some point later this year. But how many of these crew members do you think will be eager to get back on these floating petri dishes? If you think the horror stories and percolating class-action lawsuits were bad among the passengers who disembarked more than a month ago, can you imagine what the fallout will be for the crew members still stuck at sea? 

The turnover is going to be pretty colossal, and then the question becomes who will take their place. Carnival, Royal Caribbean, and Norwegian basically operate out of Miami, but they are registered in different countries for the kinder taxation rates. Roughly 95% of the crew members are not U.S. citizens, since the industry relies on the cheaper labor it can score in countries with weak economic opportunities.

The recruiting narrative is pretty consistent. Foreigners sign at least a six-month contract to provide for their families better than they could back home. Traveling and meeting people from all over the world make it an adventure with a paycheck. Crew members have been through weather disruptions and short-lived illness outbreaks, but they have never been through a situation as prolonged as this, where the cruise lines themselves have mishandled the outcome.

Working on a cruise ship is not going to have the same opportunistic appeal that it had before the industry shut down seven weeks ago, and the horror stories will trickle back to the countries that the cruise lines lean on for crew members. One can argue that the industry is trying to do right by its displaced passengers, but it's a lot harder to justify the situation with 100,000 hires on what are essentially floating prisons at this point.

Shares of Carnival, Royal Caribbean, and Norwegian have started to come back, and eventually some passengers (if not most) will do the same once the recessionary concerns and negative headlines subside. Staffing future cruises will be the real challenge, and it may prove to be more challenging and expensive after everything that the industry is going through right now. If you're only looking at the top line of the industry's turnaround, you may want to be more vigilant on the turmoil taking place on the lower decks of this story.  

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Not directed at you op but I don't know what the writer expected the cruise lines to do with the crew members.

I mean a global emergency hits all over while these crew were working. At the same time almost immediately countries  began closing their respective borders to include ports. Southeast Florida for instance Miami Dade, Broward and Palm Beach counties were hit with high covid 19 numbers so the Governor said that the cruise ships could not return due to local hospitals being overwhelmed. The cruise lines begged to be able to dock however due to the numbers and uncertainty of the Pandemic that just was not going to happen.

Basically the crew were victims of The Perfect Storm.

 

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3 hours ago, 12thman said:

The turnover is going to be pretty colossal, and then the question becomes who will take their place

I disagree

 

3 hours ago, 12thman said:

. Roughly 95% of the crew members are not U.S. citizens, since the industry relies on the cheaper labor it can score in countries with weak economic opportunities.

You just proved why I disagree.

These crew members fight to get on ships like RCL.  They are able to give their families a much better life.  I can't recall the name of the crew member that died on Symphony, however if you read what family members said about him, you will easily see he was the bread earner to the point he was paying for family members homes, buying atvs, etc.   

I remember when I was on Adventure last summer and our waiter in the MDR said it took him 5 yrs to just get hired on by RCL (he started with smaller cruise lines).  It than took him 5 more yrs to work his way up to waiter.   His cousin just got recently hired on and was an assistant waiter, and it took him the same amount of time.

They will be back and the fact is for big cruise lines like RCL if they have fewer coming back, they have a pool of smaller cruise lines that they can take them from.

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@TXcruzer  You and I are on the same page.

I just don't understand how people think that they will stay away.  

Look at many of the countries that these crew members come from.  If I said to you:

  • You can make 5-10X the amount your peers make in your state/country if you sign on the dotted line for 6-9 months at sea.  Wouldn't you do it, especially if the unemployment rate is 20%+ ?  I know I would risk the chance.  OBTW, in the US we have many military members that do this, and not at a 5-10X larger salary.  Look at the Navy, those ships are also floating petri dishes too and  have been for forever.  Yet, they are still meeting recruitment numbers.
  •  I would add, as I stated before, they too have financial obligations at home.  Due to the fact that they have made a nice penny compared to their peers in their nation that do not work for cruise lines, they now have higher bills.  They have become accustomed to a certain life style.  That lifestyle, whatever it is, is going to cost $$$.  They may not want to return, but sure as the sun rises in the east, they will need to make money to keep paying their bills.  They will return and for those that don't there will be 50 people applying for that 1 slot..
  •  We also did a Galley tour during one of our cruises.  Again, just like our head waiter, it was true for the galley.  It takes them yrs to rise through the ranks.  I can't recall the colors they wore, but each color represented basically their rank.  JMPO, but if you were at the bottom, and the top person opts not to return, why wouldn't you sign on?  Chances are you now will be promoted to a higher position faster than it was before CoVID.  That means ==== more money.

I am not a risk taker, but I will do everything I can within reason to give the best life for my family.  Anyone that sails knows you are safer on a cruise ship than in an airport or your local mall.  

I think getting 1st time cruisers on a ship will be much harder.  Think of the couple booking their honeymoon.  They can go to Sandals all inclusive for 7 days on a cruise for the same price.  Think of families with young children, they can go to Disney.  Think of the families that do family reunions, they can rent an Air B & B in Key West on the beach for the same price as multiple cabins. 

ALL of them will go on vacation if their finances allow it.  However, they may say let's book a beach house where we can drive to and limited contact over that cruise.  That to me is going to be the cruise lines biggest hurdle.  I can drive to the Outer Banks and spend that  same amount of money, and it is maybe a 5 hr drive.  I can drive to Boston late summer and do a mini-vacay.  I am fortunate due to where I live, but I am also a customer that RCL needs to keep, along with getting new customers.  I have been furloughed, my husband has not.  My paycheck was gravy.  This summer I will be RCL's fears.  I will be renting a beach house in NC for a week.  Not bc I fear sailing, but because we have on the books a sailing May 2021, and we are just not going to play the book/re-book, just take the FCC and move on with a new vacation.  That impo is going to be the biggest problem. 

 

 

 

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34 minutes ago, Pima1988 said:

I think what will happen is that prices will stay about where they are for the next 6 months to a year in order to burn off all the rescheduled cruises.  Then, I think there will be a steep drop off in bookings which will cause prices to plummet.  However, I expect the extras (drink packages, dining packages, excursions and such) to maintain their prices or even go up.  I also think we will see a continued emphasis on health and cleanliness but probably a drop off in things like food quality in the mdr and available included items like entertainment and the like.  I think the net result will be a little negative overall.

 

 

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This article is pretty contradictory in itself. It acts as if it's the cruise lines fault that people were sick and possibly died. Hypothesizing that this unprecedented event will somehow meant horrible treatment. Maybe Princess is is at fault but I doubt many other lines will have little problem filling their ranks. This pandemic has decimated many economies, most of the workers will return even at half pay, as they will probably see no income without this opportunity.

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54 minutes ago, Floski said:

Most, if not all of the crew members are staying in balconies and other passenger rooms,  not their cramped cabins.

 

Also, I stopped reading at "floating petri dishes".   So freaking tired of this phrase.

Your point about cabins mirrors everything I've heard so far about shipboard life for the crew right now. I remember somewhere hearing one of the captains making a shipboard announcement, and he was talking about exactly this -- about how they were working to get crew moved into guest cabins as soon as possible -- and this was weeks ago.

And I wish I knew who started the whole "floating petri dish" mantra, especially because every time someone who actually has been on a cruise asks about airplanes, these people hem and haw. Yes, people might be around a greater number of people for a longer period on cruise ships, but what about, say...Disney World, where a greater number of people are around one another from sunup til sundown for days in a row, because you're gonna suffer FOMO if you don't spend every minute in one of the parks! (Please note, this is not a jab against Disney lovers -- I don't blame you for being excited!)

Sadly, cruise ships have been targets for a lot longer than just the last 6 months -- this is just convenient for those who have an "us vs. them" view of cruisers. According to them, we're either all indulging in 24-hour-a-day frat parties at sea or we're living it up in some fancy cabin while a crewmember is squeezed into a sardine can. To hear some of these folks, you'd think that crew members have to actually turn a crank that makes the ship's propellers move. 🙄

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2 hours ago, Chadster said:

And I wish I knew who started the whole "floating petri dish" mantra, especially because every time someone who actually has been on a cruise asks about airplanes, these people hem and haw. Yes, people might be around a greater number of people for a longer period on cruise ships, but what about, say...Disney World, where a greater number of people are around one another from sunup til sundown for days in a row, because you're gonna suffer FOMO if you don't spend every minute in one of the parks! (Please note, this is not a jab against Disney lovers -- I don't blame you for being excited!)

When I hear that mantra, I respond by asking about things much closer to home.  When's the last time you cleaned your car's steering wheel or the bottom of its cup holder?  How about the computer mouse you use 8 hours a day at work or home?  Or other equally filthy things in almost everyone's lives that are never thought about even in the cleanest of houses?  That cruise ship gets cleaned daily and that was before this pandemic!

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4 hours ago, Ogilthorpe said:

Perhaps I am too much of a skeptic, but I see this as a chance for certain agencies  to leverage the situation and coerce the cruise lines into US oversight and taxation. Once they bend, all will suddenly be OK, and these same entities will praise the cruise lines as the ideal vacation.

NEVER HAPPEN 

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1 hour ago, Scrumps said:

Thank you for posting that article. I don't blame the companies, and I don't blame the crew members for anything they are going through. The US government has used the moniker that none of this is their fault, and the CDC appears to be punitive in how they approach this with these companies. I can't help but consider the fact that these poor people have been on board for months in most cases, and absent infection on board, WHAT IS THE FREAKING PROBLEM with traditional transportation considering that almost no one is traveling now? I just don't get it, and when I mix that perception with the flip flopping, inaccurate and sometimes seemingly fraudulent attribution of the virus to death, I am getting to the point where the CDC needs to be overruled on this and other issues. I hope this gets escalated, because I can't help but think that the phrase "keeping people safe" is more of a marketing push than what is reasonable.

This is probably more of a rant than anything, but these governmental organizations are increasingly looking like over-reactors who made the problem worse.

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Can't imagine any of the performers who are stuck on board wanting to do another contract after seeing how cruise companies "take care" of them. Doesn't matter who is to blame for being stuck on board. The level of frustration and anxiety must be difficult. 

Read stories of other performers stuck on other ships and technical their contract is over so are they getting paid or not? 

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Motley Fool has been bashing the cruise industry ever since the Covid crisis began. I don't know what they have against Royal and the others, but the stories are almost uniformly negative, and they always end with "here's 10 stocks we recommend instead" and of course you have to pay to subscribe to their advice service. Sad tactics if you ask me; perfect example of kicking a person when they're down.

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