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Royal Caribbean thinks a lot of people want to go on a cruise next year

In:
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10Aug2020

If there was an over-arching theme to Royal Caribbean Group's earnings call on Monday, it was the notion that its customers want to cruise as soon as it becomes available again.  

The phrase "pent up demand" was used a number of times throughout the call to characterize what Royal Caribbean sees as a public that wants to make up for lost vacation time in 2020 due to the current global health crisis.  

Over the course of the hour-long call, the phrase "pent up demand" was used five times.

Royal Caribbean International CEO Michael Bayley was the first to bring it up, saying it was a combination of a reflection of bookings and personal belief.

"I'm kind of hopeful that we're going to see a lot of pent up demand. And certainly when you look at our bookings by quarter in '21, there's a lot of activity as we move into the summer."

"And I think a lot of people have written off this summer. They've decided that there's not going to be a big summer vacation for all of the reasons that we know. But people certainly want to have a vacation next year."

 

The notion of this built-in demand has made up for a lack of direct advertising that has been cut out since the start of the shutdown.

Royal Caribbean Group Chief Financial Officer Jason Liberty saw an upward trend into mid-2021 of increased bookings.

"You see this kind of line as you kind of get into the early to mid part of the second quarter, where there's just strong demand for for the season and beyond. It's almost as if the consumer has somewhat kind of focus on that's when it will be. It will be time for them to to deal with this pent up demand that Michael had had talked about."

Willingness to pay more

Not only are consumers eager to cruise again, they are willing to pay more.

Cruise line executives talked how pricing for 2021 cruises is averaging higher than 2020, and people are still paying it.

"There's strength in the Caribbean, European products, Alaskan products and so forth," Mr. Liberty said,  "So it's not just one thing, but it's it's really clear as we get kind of mid to two and beyond that, there is there's high demand and our consumers are willing to pay at or above the historical level."

"The patterns that we're seeing is with strength and our guests are willing to to pay more than what they paid for same time last year in 2019."

This phenomena is also in part because guests have an extra 25% future cruise credit to spend, and Mr. Liberty believes this may slow down once the FCCs start being used up.

How many people have used their FCCs?

There was an interesting breakdown at the end of the call about how guests are using their future cruise credits, and the breakdown of customer deposits on hand.

Royal Caribbean indicated they have $1.8 billion in customer deposits. Mr. Liberty said about $900 million of that is in FCCs, and about 40-45% are non-refundable FCCs.

"And so far there's been about a third of those [125% non-refundable credits] FCCs that have been applied, " Mr. Liberty noted, "there's been about about 20 percent [Cruise with Confidence credits] that has been applied to date."

Are Royal Caribbean cruises cancelled because of COVID-19?

In:
Category: 
08Aug2020

The global health crisis has forced Royal Caribbean to cancel most of its cruises through November 30, 2020.

Like all cruise lines operating in North America, Royal Caribbean is working with the U.S. Centers for Disease Control (CDC) to come up with a strategy to start cruises again.

Cancelled sailings

Here is a summary of the cancelled cruises:

  • All sailings through November 30, 2020.
  • European & Transatlantic sailings through the end of November.
  • Australia sailings through December 31st, 2020.
  • Odyssey of the Seas sailings from November 5th, 2020 through April 17th, 2021 are cancelled due to issues at the shipyard and in the supply chain.
  • February 14, 2021 Jewel of the Seas cruise.
  • Quantum of the Seas sailings departing December 2nd, 2020 – March 22nd, 2021

Guests on any of these cancelled sailings were given the option of getting a 100% refund, 125% future cruise credit, or even moving the reservation to next year at the same price.

Royal Caribbean has a goal to resume cruises on December 1, 2020 (although that date may change).

Will my cruise be cancelled?

If you still have a cruise booked and wondering what are the chances it will sail, the short answer is no one really knows.

While there are still many 2020 and 2021 cruises scheduled to sail, Royal Caribbean is still evaluating ways to make those cruises occur.

At this point, there is not nearly enough information available to have insight into what Royal Caribbean (or any cruise line) is looking for in order to resume sailings.

While it stands to reason the further out your cruise is, the more time you have for the global health situation to improve, it is impossible to quantify or wager a guess as to which sailings may or may not occur.

Why you should send your comments to the CDC so cruises can restart

In:
Category: 
07Aug2020

The U.S. Centers for Disease Control and Prevention (CDC) has begun looking for comments from the public on cruise lines resuming passenger operations, and cruise fans will want to have their voice heard.

Ever since the CDC opened up the means for the public to comment and submit questions for use in formulating a new policy for cruise ships, many have wondered if it is worth it to fill out the form.

The general public can submit comments until September 21 via the U.S. Federal Register. 

 Charles Sylvia is the Vice President of Industry and Trade Relations for the Cruise Lines International Association (CLIA), and he spoke to travel agents earlier this week about the importance of letting the CDC know your thoughts.

    

 "Anyone with a pulse and an Internet connection can actually comment," Mr. Sylvia emphasized. "It's vitally important for all of you to comment from your point of view on cruise operations, what you think US cruise operations should look like, the resumption of cruise operations."  

 "This is your your only and best opportunity to tell the federal government what you're experiencing."

Ever since the CDC instituted a "No Sail" order to prevent cruise ships from offering passengers cruises from the United States, many cruise fans have lamented the order holding up the option for cruise lines to resume operations.

Mr. Sylvia indicated this Request for Information (RFI) from the CDC will used for cruise ship planning and infrastructure in the future, as well as the resumption of passenger operations.

"All the comments that are gathered will inform future public health guidance and preventative measures and related directly to the travel on cruise ships."

Anyone can comment on this subject, and cruise fans understand the strict measures cruise lines take to ensure the health and safety of their passengers, and the fact that cruise lines operate at a higher standard that imposed by regulators.

How to submit your comments to the CDC

You can submit comments online or via the mail.

To complete it online, visit the Federal Register's E-Rulemaking Portal by going to the U.S. Federal Register's website.

Be sure to use the Document ID to search for this page: CDC-2020-0087-0001.

The CDC will provide a lot of questions for you to consider, but it is up to you if you want to if you want answer all, some or none of the questions. 

You can submit your thoughts, and be sure to keep your answers free of insults or attacks on what has happened. Instead, focus on the future and explain why and how cruising should resume.

"And it's very, very easy...  to succumb to a pitfall of telling them some information, getting emotional, when you're when you're typing into the comments. And then that comment isn't considered," Mr. Sylvia warned.

Alternatively, you can mail comments to: Maritime Unit, Centers for Disease Control and Prevention, 1600 Clifton Road NE, MS V18-2, Atlanta, GA 30329.  Include Docket No. CDC-2020-0087 included with the letter.

Royal Caribbean cancels most cruises until October 31, 2020

In:
Category: 
05Aug2020

Royal Caribbean announced on Wednesday it was once again canceling most of its cruises through October 31, 2020 due to the current health crisis.

Cruise operations had been suspended through the end of September, but will now be extended an additional month, except for Australia sailings.

In addition, the remainder of the 2020 Europe season and the fall Transatlantic sailings have also been cancelled. This includes the planned 2020 President's Cruise on Allure of the Seas.

Royal Caribbean also added an an additional pause to their China itineraries through September 13, 2020.

Royal Caribbean hopes this additional time will allow them to work on their new safety measures.

Compensation

Guests affected by the cancelled cruises between October 1 - 31, 2020 have three options for compensation.

Lift & Shift: Select next year’s sailing with the same itinerary type, sailing length, stateroom category, and within the same 4-week window of the original cruise date, and you can take your existing reservation and move it to next year.Option expires on August 20, 2020.

125% Future Cruise Credit: To account for the inconvenience this has caused, guests are eligible for a 125% Future Cruise Credit (FCC) that is based on the total cruise fare paid at the guest-level and will be automatically issued on-or-before September 14, 2020 — if neither of the other options is selected.

Taxes and fees, as well as any pre-purchased amenities or onboard packages will be automatically refunded to the original form of payment within 45 days from the cancellation date. 

If you previously opted to take advantage of our Cruise with Confidence policy, the 100% FCC will stand, and this new option is ineligible.

Additionally, if you redeemed your Cruise with Confidence Future Cruise Credit on a sailing that is now cancelled, their original FCC will be reinstated, plus 125% of any amount paid by the guest on the cancelled reservation.

FCCs for sailings between October 1 – 31, 2020, plus remaining 2020 Europe & Fall Transatlantic season can be expected via email no later than September 14, 2020.

Refund: If you prefer a cash refund, you can do so by requesting this option on-or-before December 31, 2020.

You can expect their refund to the original form of payment within 45 days from the cancellation date. 

If you redeemed a Cruise with Confidence Future Cruise Credit on an impacted sailing and would now prefer a refund instead, Royal Caribbean will process this request in the amount of any new funds paid above the original certificate and, in turn, will reinstate the Cruise with Confidence FCC for future use.

Cruise Planner Purchases: If you had purchased any cruise add-ons, such as shore excursions, drink packages, wifi and more, you could opt to convert your Cruise Planner purchases  to an Onboard Credit valued at 125% of the total amount paid. This offer expires on August 20, 2020.

Cancelled President's Cruise

Among the many sailings impacted by this recent round of cancellations is the annual President's Cruise.

In an email to guests, Royal Caribean International CEO Michael Bayley informed guests booked on the sailing that they had no choice but to cancel.

"This is disappointing news for you and me. The President's Cruise is a wonderful opportunity for all of us to come together and celebrate the cruise line we love, our incredible crew and each other — something we have been doing since 2016."

Mr. Bayley did allude to "new ideas" and other ideas the cruise line is working on for guests that will be announced at a later date.

"Now, we wouldn't be Royal Caribbean if we weren't looking at ways, we can make the best out of every situation. We've been hard at work coming up with new ideas on how we can continue to bring our tradition to life within our current environment. I can't spoil the surprises we are planning, but I would encourage you to keep an eye out for some fun, creative ways we will celebrate together. In fact, I would say I'll meet you on the "virtual seas" soon."

Those sites claiming to list cruise ships for sale aren't legit

In:
Category: 
03Aug2020

The rumor mill has been working overtime when it comes to speculating on what could happen, including websites that list cruise ships for sale.

Have you seen screenshots or links to ship brokerage websites that have unnamed ships that are clearly a Royal Caribbean ship apparently for sale?

Some folks seem to think these are smoking guns of evidence that Royal Caribbean is planning to sell cruise ships, but these sites are not actually based in reality.

Proving the old adage, "don't believe everything you read" (especially on the internet), cruise ships are not bought and sold this way

Even before the current global health crisis, these sites are sales aggregators that list ships with an arbitrary price, hoping to get interest for a perspective buyer.  At that point, the website acts as a middleman to contact the owner to hopefully generate a sale and a significant finder's fee.

These websites are not official listings of cruise ships actually for sale, nor does Royal Caribbean list its ships for sale in such a brazen manner. 

While the cruise industry is struggling with not being able to cruise, as well as some cruise ships actually sold for scrap, sites with unnamed cruise ships for sale are not indicative of anything other than wishful thinking on someone's part.

The big questions for Royal Caribbean's earnings call next week

In:
03Aug2020

We are exactly one week away from Royal Caribbean's second quarter earnings report, and perhaps answers to many questions about the short and long term future of the cruise giant.

Earnings calls are when the executives will provide shareholders with a look at its financial situation and answer questions from analysts. With so much disruption to the entire cruise industry due to the cruise shutdown, there are plenty of ongoing concerns to address.

While we will not know exactly all topics to be covered, here are the top issues cruise fans are curious about (and Wall Street too).

How bad of a loss?

Royal Caribbean Group reported over $1 billion in losses in the first quarter of 2020, and that was just at the beginning of the cruise shutdown and global health crisis, so how bad will things be this time?

On the one hand, there have been no cruises in the second quarter at all, but on the other hand, it sounds like 2021 bookings are surprisingly high.

There is no doubt that the Royal Caribbean Group lost money in the second quarter, but was it less than analysts expected or worse?

The nature of their financial situation may be a good indication of the overall health of the company.

Any plans to sell ships?

Rival Carnival Corporation has announced it will sell over a dozen cruise ships by the end of the year, so the question is will Royal Caribbean do the same.

Carnival made announcements in its earnings call of selling ships, so the question is will Royal Caribbean do the same.

Royal Caribbean Group Chairman and CEO Richard Fain said two weeks ago there are no plans to sell ships, but it is a consideration. A swirl of rumors last week that Empress of the Seas was headed to the scrapyard turned out to be incorrect.

As we all know, these plans can change at any time, especially if the losses start adding up.

Will there be any new cost-cutting measures?

Something Royal Caribbean announced in its first quarter earnings call was a series of cost-cutting measures, and many are wondering if more are to come.

At the last earnings call, Royal Caribbean group was considering ways to further reduce the average monthly requirement under a further prolonged out-of-service scenario and during start-up of operations.

Whether that comes in the form of more layoffs, selling ships, taking out more loans, or something else remains to be seen.

Safety protocol update

The blue-ribbon panel dedicated to coming up with new policies and protocols to keep guests safe once cruising does resume is likely to be mentioned, if not talked about at length.

Since the day Royal Caribbean announced the Healthy Sail Panel, everyone has been curious what policies exactly will be put into place.

While Royal Caribbean has said the Healthy Sail Panel's first round of recommendations will not be made until the end of August, perhaps we will get insight into what they are considering or working on.

How well is the cruise line booked next year?

While 2020 has been an absolutely terrible year for Royal Caribbean (and all cruise lines), their booked position in 2021 has been a bright spot for the cruise line.

Essentially, a lot of people opted to defer their cruise vacations to next year instead of outright canceling plans, and the question is if this trend is holding up.

Wall Street has been skeptical of any cruise line's ability to lure customers back once cruises resume, so positive feedback on how 2021 (and beyond) is looking would put a lot of concerns at ease.

MSC Cruises releases new policies to keep guests safe from Coronavirus

In:
Category: 
03Aug2020

MSC Cruises announced its new policies on Monday that it will implement on its first Mediterranean sailings, which provides insight into perhaps what Royal Caribbean and other cruise lines may do as well.

MSC has formed its own health panel, known as the COVID Expert Group, which is made up of  highly qualified and internationally respected experts to inform and review our initiatives and ensure that the actions taken are appropriate, effective and informed by the best available science and health practices.

MSC designed its protocols that it claims goes beyond the actual regional and national guidelines and effectively set a new standard. Additionally, RINA, the independent maritime certification corporation, has verified that the protocol meets the European Maritime Safety Agency (EMSA) Guidance, which incorporates additional health standards including those from the EU Healthy Gateways Joint Action.

These new protocols include universal COVID-19 testing for all guests and crew prior to embarkation, protected ashore visits at each destination only with an MSC Cruises excursion as an added level of protection for guests and the introduction of a COVID Protection Plan for further peace of mind for guests. 

New policies

The COVID Expert Group has come up with a series of new precautionary measures and response planning:

Health Screenings

Before a cruise begins, all guests will undergo a universal health screen that is encompassed in three steps:

  1. Temperature check
  2. Health questionnaire
  3. COVID-19 swab test

Any guest who tests positive, displays symptoms or a temperature will be denied boarding. Following guidelines from the European Centre for Disease Prevention and Control, guests traveling from countries categorized as high risk will be required to take a molecular RT-PCR test, to be done within 72 hours prior to joining the ship.

All crew members will be tested for COVID-19 prior to embarkation as well as regularly during their contract.

Enhanced sanitizing

Elevated sanitation and cleaning measures supported by the introduction of new cleaning methods, the use of hospital-grade disinfectant products and the sanitation of the air on board with UV-C light technology that kills 99.97% of microbes.

Social Distancing

Social distancing will be enabled through the reduction of the overall capacity of guests on board, allowing for more space for guests, approximately 10 m² (about 108 sq. ft) per person based on 70% overall capacity.

Venue capacity will be reduced, activities will be modified to allow for smaller groups and guests will be able to pre-book services and activities to manage guest numbers.

Onboard activities and entertainment have been redesigned to enable smaller group sizes and guests should book in advance. A rich program of activities will be available throughout the cruise including themed events, fun games, talent shows, fitness, dance and more.

Wide choice of live entertainment will continued to be offered around the ship. As the capacity of the theater will be reduced to ensure responsible social distancing, the entertainment schedule will be adapted so all our guests can still enjoy a great variety of award-winning shows.

Face Masks

MSC will ask guests to wear face masks when social distancing is not possible, such as in elevators.

Face masks will be provided daily to guests in their staterooms and will be available around the ship.

Kids

Children's activities and family live game shows will be available each day. 

New spaces on board will be reserved for children and teenagers as the youth areas will operate at a reduced capacity. Parents taking an excursion can still leave children with the youth staff by making a reservation one day in advance.

Lunch and dinner with the youth staff will still take place along with the most popular kids’ activities such as MSC Dance Crew, Cabin 12006 family game show & web series and the LEGO experience.

Dining

Restaurants, bars and lounges, will allow for social distancing and all meals and drinks will be served to guests at their table. The buffet restaurant will offer a new service concept and a new guest flow to ensure social distancing. Instead of self-service, the guests will select what they want and the food will be plated and handed to them to take back to their table to ensure the highest level of health and hygiene measures are followed. For a contactless experience, guests will be able to access restaurant and bar menus from their personal mobile device by scanning a QR code.

Medical facilities

Enhanced medical facilities and services with highly qualified staff trained, the necessary equipment to test, evaluate and treat suspected COVID-19 patients and the availability of free treatment at the onboard Medical Center for any guest with symptoms.

Dedicated isolation staterooms will be available to enable isolation of any suspected cases and close contacts.

Ongoing monitoring

Throughout the cruise, guests and crew will have their temperature checked daily either when they return from ashore or at dedicated stations around the ship to monitor the health status of every guest and crew member.

During this initial phase of operations, as a further enhanced measure of protection and to avoid risks to the health of guests and their fellow cruisers, guests will only go ashore as part of an organized MSC Cruises’ excursion.

Tour guides and drivers will also undergo health screening and will wear appropriate personal protective equipment (PPE).

Response plan

If a case is identified onboard, MSC will work in close cooperation with the national health authorities. The suspected case and close contacts will follow isolation measures and may be disembarked according to local and national regulations.

MSC Cruises has introduced a new MSC COVID-19 Protection Plan to provide guests with additional peace of mind for the summer cruises. This will cover the guest if they become infected prior to their departure if they are not able to travel, during the cruise for medical expenses and after the cruise if the guest falls sick. The MSC COVID-19 Protection Plan is currently available only to guests from Schengen countries. In addition to this, guests should also choose their usual travel and health insurance coverage.

Royal Caribbean has no announcement to make following NCL's new cruise cancellations

In:
Category: 
29Jul2020

Norwegian Cruise Line announced on Wednesday it was extending its global cruise suspension by canceling all of its cruises through the end of October, and that has prompted a lot of Royal Caribbean cruise fans to wonder if their line will do that same.

During a webinar with travel advisors, Royal Caribbean's Senior Vice President, Sales, Trade Support and Service, Vicki Freed, clarified there was no update at this time for Royal Caribbean.

"The announcement that Norwegian Cruise Line came out today extending their pause, or their suspension of sailings, through the end of October, and people are asking, what is Royal Caribbean doing?"

"And at this point, we are suspended through the end of September. We are following the CDC guidelines. The CDC has extended through September. If the CDC extends that and of course, we will as well. But right now through the end of September."

Ms. Freed is referring to the CDC's recently extended "No Sail" Order, which forced all cruise lines to cancel their U.S. sailings through September 30, 2020. As a result, two weeks ago Royal Caribbean extended its cruise suspension through the end of September.

Typically, when one of the big three cruise lines (Carnival, Royal Caribbean and Norwegian) has suspended sailings, the other two lines follow sooner or later.

In recent months, some cruise lines have cancelled cruises ahead of the CDC's guidance, while other times the lines mirror the CDC's action.

Royal Caribbean's current target date to resume operations is October 1, 2020.

Will they or wont they cancel?

While Ms. Freed's comments today provide confirmation no decision has been made yet to cancel more cruises, but the question remains if more will occur.

There is no indication on what to expect in terms of if more cancellations will occur, nor when Royal Caribbean will actually resume sailings.

At the heart of the concern for many is if the cruise they booked will actually sail, and there is no answer, just conjecture.

In short, there is not enough information available and too many variables to know what to expect.

When Royal Caribbean cancelled cruises through September 30, it was matching the CDC guidelines, whereas the cancellation period before that preemptively cancelled sailings through the end of mid-September, even though the CDC had not extended its No Sail order.

Royal Caribbean CEO updates what the cruise line is doing during shutdown

In:
Category: 
29Jul2020

Royal Caribbean International CEO Michael Bayley sent an email to past cruise guests that provided an in-depth update of the cruise line's current status.

In an over 2,600 word email, Mr. Bailey touched on a number of topics that have been frequently asked by guests during Royal Caribbean's global cruise shutdown.

Crew update

Chief among the concerns of guests have been the hard working crew members and where they are now.

Mr. Bailey characterized their main focus on reuniting crew members with their families. Each country has rules and regulations for who can travel home, how and when.    

To date, Royal Caribbean has repatriated more than 43,000 crew members. By the end of this month, Royal Caribbean will have more than 97% of crew members back home.

For crew members still onboard, a great deal of special offerings have been rolled out in order to take care of them. 

"Our F&B team has introduced seafood nights, our culinary teams have been celebrating birthdays and anniversaries with surprise cakes for crew members, and we have also added a variety of activities and entertainment designed with physical distancing in mind. While nothing can beat being home with their family and friends at this time, we want our crew members to be in the best of spirits during this time."

In addition, Royal Caribbean has rolled out a new support program called RCL Cares: Employee Edition, which offers free and confidential counseling, assistance with legal and financial matters, and much more.

In addition, crew members can apply to receive financial assistance if they or their family have been severely impacted by the pandemic with hardships, such as death, hospitalization and the potential loss of their home.

Where are the cruise ships?

During the shutdown, Royal Caribbean's ships have visited more than 40 countries around the world, including Anthem and Ovation of the Seas in India, Voyager of the Seas in Manila, and three ships in Europe.  The remainder of our fleet is in the Caribbean.

In order to keep the ships ready to resume service when the time is ready, each ship has a small number of marine and repair crew members staying on board to prep our ships and keep everything running smoothly.

There was also a link to the videos of the Sovereign class ships being beached at the scrapyard.

New Main Dining Room menu

Mr. Bailey indicated a revamp of the main dining room menu is one activity that is being done during the shutdown.

"Our shoreside teams are also taking this opportunity to think about how we can continue to improve the guest experience. Our F&B team has been revamping the Main Dining Room menu for breakfast, lunch and dinner, as well as adding some unique experiences to our specialty dining venues."

Cruises starting again

Mr. Bailey also touched on the work being done to get cruises back operating again, which falls under the cruise line's Healthy Return to Service program.

This new program will focus on four key aspects:

  • Upgraded screening prior to boarding
  • Enhanced processes on board
  • A special focus on addressing the destinations
  • Procedures for addressing any reports of exceptions

The recently announced Healthy Sail Panel will coordinate efforts to ensure cruise ships are as sanitized and clean for guests and crew.  This group will review all of cruise line health and safety protocols and provide third party validation of their efforts. 

While the Healthy Sail Panel work has not been announced yet, Mr. Bailey also touched on some of the other key efforts being done to keep guests safe, including Muster 2.0.

Read the entire email

If you want to read the entire email from Mr. Bailey, click here to view it at your leisure.

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