DIGITAL MARKETING NEWS
Carnival Cruise Line to launch first voyage from U.S. port since last year
The Carnival Vista is set to sail on Saturday afternoon out of Galveston, Texas, marking Carnival Cruise Line’s first U.S. cruise since the pandemic halted its operations. The week-long cruise is set to travel to Roatan, Belize, and Cozumel. Passengers aboard must show proof of vaccination, or be pre-approved for an exemption by Carnival, which is following strict guidelines.The next day, its Carnival Horizon ship will leave Miami. The cruise industry is among one of the last sectors to return to pre-pandemic operations. The Centers for Disease Control and Prevention recently allowed it to begin sailing again with strict safety protocols, aimed at preventing Covid-19 from spreading onboard. When the pandemic began, there had been several high profile outbreaks on ships.Royal Caribbean Cruises was the first cruise operator to sail a ship from a U.S. port since the beginning of the pandemic when its Celebrity Edge ship left Miami last Saturday.Carnival’s next cruise from a U.S. port is the Carnival Breeze, which is scheduled to leave from Galveston on July 15.But the industry is still on guard. The highly infectious delta variant is prompting new lockdowns in other countries where vaccination rates are still low. Even in the U.S., where more than half of the population is vaccinated, delta is quickly becoming the most prominent coronavirus strain. For weeks, new Covid cases were on the decline, but this highly infectious variant is beginning to reverse the trend. Australia offers another example. It had kept Covid cases under control for months, but the country is now seeing new cases flaring up in several regions. To tamp down the spread, new restrictions are being put in place. As a result, Carnival has canceled its Princess Cruises in and out of Australia through Dec.19, citing continued uncertainty about the resumption of cruises in the region for its decision.Royal Caribbean earlier this week changed its vaccination policy for all cruises except those leaving from Florida. The company had two unvaccinated guests under the age of 16 test positive for Covid. Now, it wants any unvaccinated guests leaving from Florida ports to have travel insurance.Industry analysts anticipate a slow road to recovery for cruise lines, and several difficulties ahead due to the international nature of cruises.Carnival’s stock has risen more than 20% this year putting its market cap at just over $30 billion. However, the stock has been losing ground in recent trading. It closed Friday at $26.06, which is about 17% lower than its 52-week high of $31.52, which it hit on June 8. “We think the cruise industry will be one of the slowest sub-sectors to recover from Covid-19. Cruising needs not just international travel to return, but ports to reopen, authorities to permit cruising, and the return of customer confidence,” said Morgan Stanley analysts Jamie Rollo in a research note Thursday. “Risks are rising that further travel restrictions are imposed as the delta variant spreads and we approach the winter flu season.”Rollo reiterated his underweight rating on the stock, and cut his forecasts for this year and next due to a slower-than-expected resumption of cruises and expectations of higher cash burn and higher fuel costs, net of refinancing and stock swap benefits.As for future cruise bookings, despite Carnival describing pricing as strong in its second-quarter results only a portion, which Rollo predicts is about 25%, of 2022 is currently sold. The analysts also estimate that about half of 2022 bookings are from guests rebooking canceled cruises and using their credits. “There is therefore a fair amount of 2022 left to sell, and it could be misleading to extrapolate from the small amount of cash bookings made to date,” Rollo said. “Additionally, initial cruise deployment is mostly domestic and short duration, which are lower yielding itineraries than the more exotic/international cruises which will take longer to recover.”Because of the slower-than-expected pace of return, Carnival could be burning cash until the third-quarter of 2022, he said. Rollo, therefore, estimates that Carnival will only be operating at 18% capacity in its third-quarter and 45% capacity in its fourth-quarter of this year.Argus, on the other hand, is maintaining a buy rating for the stock due to the company’s plans to resume operations in July. Narrowed losses and increases in bookings that reflect strong pent-up demand for cruise vacations are also contributing factors to the rating, analyst John Staszak said in a note released on Tuesday.Staszak said the pace of bookings are ahead of 2019 bookings, despite limited advertising and marketing.”Consistent with its plans to resume cruises, Carnival expects to have all of its ships deployed by the spring of 2022. With the number of COVID cases continuing to drop, we are optimistic that management’s targets are achievable,” Staszak said.