“It will absolutely survive”: Cruising’s future promising, forward bookings up

This story originally ran in the April 23, 2020 issue of Travelweek magazine. To get Travelweek delivered to your agency for free, subscribe here.

TORONTO — The US$45 billion cruising industry was among the first to be hit hard by the COVID-19 pandemic.

Following outbreaks on Princess Cruises’ Diamond Princess and Grand Princess ships in early February and March, respectively, the Canadian government announced a ban on cruise ships carrying more than 500 passengers from Canadian ports on March 13, while the Centers for Disease Control and Prevention in the U.S. issued a No Sail Order for all cruise ships the following day, a mandate that was recently extended.

In response, CLIA voluntarily suspended cruise ship operations in March for 30 days, with many of its member cruise lines now extending their suspensions in light of the CDC’s most recent update.

In all, more than 50 cruise lines have paused operations to and from U.S. ports, with losses from January to March amounting to nearly US$750 million.

With ships being unable to sail and travel restrictions implemented around the world, cruise bookings dried up virtually overnight for travel agents. But as one of the first sectors to be impacted by the pandemic, so too is cruising one of the first to bounce back.

According to investment analysts at UBS, a global firm that provides financial services in over 50 countries, cruise bookings for 2021 actually increased 9% in March versus the same period last year. Though forward cruises to the Mediterranean are still underperforming, those to Asia and Alaska are up more than usual, with the Caribbean also performing well.

While some of the uptick can be attributed to travellers applying future cruise credits from cancelled cruises this year, the unexpected increase speaks volumes to the resiliency of the cruise industry and its faithful customers.

“This is a resilient community and we plan to do our part to contribute to and fuel the global economic and societal recovery,” says Laziza Lambert, Manager, Strategic Communications at CLIA. “The reality of this has been painful for our entire community – we cannot sugarcoat it. But we have been amazed at the level of support and compassion we have seen from every corner of the industry. It is truly special and it is one of the reasons we believe so powerfully in our collective ability to overcome this situation and emerge stronger on the other side.”

The industry’s response

With very little notice given about travel restrictions, CLIA cruise lines have had to alter course, cancel cruises, pause operations, rejig their entire seasons and disembark passengers from over 97% of their fleet, all while updating travel agents of policy changes and maintaining customer loyalty. It was an insurmountable task, but Lambert says cruise lines rose to the challenge, with several also donating excess food to local charities and even volunteering their ships as temporary hospitals.

“CLIA cruise lines continue to be singularly focused on putting people first because people are at the heart of the cruise community,” she says. “The cruise industry has always prioritized the health and safety of passengers and crew above all. We pride ourselves on the fact that we have taken responsibility for public health for over 50 years.”

Vanessa Lee, President of Cruise Strategies Ltd., tells Travelweek that though there were certainly a few missteps in the early days of pandemic, the response from cruise lines has overall been “quite good.” Among the shining examples are Carnival confirming the protection of agent commissions into 2021 at the levels earned for 2020 sales, Royal Caribbean expanding its new RCL Cares program, and AmaWaterways launching its ‘Marketing Suitcase’ to help agents market river cruising.

“I have heard very few concerns about their management of cancellations and rebookings, and many lines are paying double commissions, offering valuable Future Cruise Credits at perhaps 115% or 125% of the original fare paid,” she says. “The relationship between the travel advisor and the cruise line is invariably a good one, and many cruise lines are taking very good care of their preferred agency partners by offering commission on both the cancelled booking and the future cruise booking. This assists with cash flow for every agency and I know it’s much appreciated.”

What will recover first?

As the world followed the news of outbreaks on big ocean liners, industry experts predict that river cruising will be among the first segments to recover, with passengers opting for smaller ships with fewer passengers, sailing to less populated destinations.

Stéphanie Bishop, managing director for the Globus family of brands in Canada, which includes Avalon Waterways, tells Travelweek that the company is seeing a combination of passengers move their bookings from this year to next, along with a small number of new bookings.

“When our BDMs initiated their call-out campaign to agencies to reinforce the advantages of our Peace of Mind policy, we noticed we got new business as well. We’re also seeing some take-up on our groups since we require only eight passengers to qualify for a group, and a lot of family travel and friends’ groups fit that parameter,” she says.

Bishop adds that she is “hopeful” that the company can salvage as much of the year as possible, and that its exotic/long-haul itineraries to Asia, India, Galapagos and South America, which normally have a very long booking window and much smaller capacities, will remain in demand.

These exotic destinations are also why experts think expedition cruising will fare well in COVID-19’s aftermath. Typically sailing on smaller ships to remote places like Antarctica where the virus may not have had as much of a stranglehold as in other destinations, expedition lines such as those by Silversea, Windstar, Seabourn and Crystal Cruises are well positioned to recover at a faster rate than other cruise segments.

“Smaller ships may have an initial advantage due to their size and their ongoing ability and service levels and more space ratio per guest overall,” says Lee.

At TravelBrands, its cruise division is also seeing a rise in 2021 cruise bookings, particularly for river cruises as well as World cruises, Caribbean and some Europe voyages. Nathalie Tanious, Chief Operating Officer, tells Travelweek that cruise lines have been “very generous” with their future travel vouchers and refund options.

“It will be a slow start but it will pick up,” she says. “The cruise lines will have a plethora of offers and deals and value adds – clients will be blown away! We will work closely with travel agents and cruise lines to ensure cruisers past and present will be as enamoured as ever with cruising.”

Who will cruise first?

Known for their joie de vivre, millennials are expected to be among the first group of travellers to start booking again once the pandemic subsides. Boomers, who typically have the time and resources to travel, are also expected to spur forward cruise bookings. But as pent-up demand for travel builds as lockdown measures continue, industry experts say most target markets will rebound well.

“I do feel that just about every type of audience will cruise again. Younger people are certainly likely to return to every kind of vacation activity soon, and Boomers, of which I am one, will be champing at the bit to keep travelling and working on their bucket lists,” says Lee.

Families who’ve had to undergo forced separation due to the pandemic may also feel the need to come together on a cruise as a way to reconnect, she adds.

The future of cruising

Across the board, the consensus among the industry is that cruising will resume slowly but surely. It may, however, look a bit different when it does.

“There are several key learnings from this unprecedented situation that we will all benefit from as we prepare to sail again, including enhanced protocols and practices that the industry put in place as the global crisis emerged,” says Laziza of CLIA member cruise lines.

As a veteran in the cruise industry, Lee also predicts ramped up procedures onboard ships that will address passenger concerns. Changes to food preparation, self-serve buffets and group excursion sizes are just a few examples that could change the way people cruise in the future.

“A more bespoke way of travel, in a variety of ways, will become more of the norm,” says Lee. This may inspire some guests who have been flirting with trying out smaller, more luxurious ships to actually do this now.”

And in terms of investment and development, Lee says the industry will continue to grow.

“The industry is resilient and nimble and is financially well structured for the most part. Investment in the industry will continue, as some companies and countries like Saudi Arabia will see the industry as a positive financial opportunity,” she adds. “As the cruise business has evolved over these last years, with a record number of ships being built, it will absolutely survive.”