Will we ever take cruise holidays again?

The cruise line industry faces a long journey back from the coronavirus pandemic.

David Reece and his wife Carolyn should be sipping cocktails somewhere in the Indian Ocean at the moment.

But their latest cruise line holiday has been cancelled because of the coronavirus outbreak. And they are missing it - as confirmed devotees of cruise vacations they have been on nearly 20 over the past two decades.

For the retired couple from Plymouth it all started by accident. "I was sent to the travel agents to book a cheap holiday in the Canaries, and I came back having booked a cruise in the Red Sea," says David. "Carolyn didn't talk to me for two weeks."

But they loved it, and ever since they have travelled all over the world on cruise ships; from the Baltic to the Caribbean, and from Australia to Brazil.

For them it is the perfect holiday, as David explains: "We had the idea it was all about crossing the Atlantic, sitting on deckchairs with a blanket over your knees. [But in reality], the ships are really mobile hotels, and we wake up somewhere different every day… we use it to go to places we want to see.

But those floating hotels are now all rapidly returning to port, discharging their passengers and being mothballed. The industry has not just been devastated, it has ceased to function altogether. For it, coronavirus has been the perfect storm.

It has gone from being an industry worth $46bn (£37bn) a year, with 26 million passengers per annum, to an almost total standstill overnight.

Ironically, the industry was well prepared for the outbreak of disease on board its ships, as it has happened plenty of times before, most often the norovirus "vomiting bug".

However, this time the plan hit a snag, as Christopher Muller, professor of hospitality at Boston University, explains.

"The worst thing you can do [if passengers start falling ill] is keep people on board," he says. "The plan is to go to the nearest port, get everyone off and then sanitize the ship".

Normally this means the ship is ready to start cruising again within a matter of weeks, but this time "governments forced them to keep people on board", adds Prof Muller. "This was not the industry's fault, they would not normally have done this."

The problem was made worse by the fact that many modern cruise liners have relatively small cabins, as the industry's economic model depends on getting as many passengers as possible spending money in the ship's spas, restaurants, bars and shops.

The resulting bad publicity, as passengers suffered in quarantine on board ships within sight of the shore, will be difficult for the industry to shake off.

So, will this put the industry's rapid expansion in recent years into reverse? The sector certainly has one major problem that means it is likely to suffer more than other parts of the tourism and travel industries such as the airline sector - it has few friends in high places.

Most cruise ships are not registered where they do business, in the USA and Europe, but offshore in places like Panama and the Bahamas.

The industry does that for two reasons - it saves a fortune in tax, and it means that they don't have to follow American or European labour laws. This allow the companies to recruit cheap workers from developing countries, pay them less, and work them harder.

Now, however, avoiding taxes and hiring cheap foreign workers doesn't look so clever - the cruise line industry was specifically not included in the US's business bailout schemes. The industry may be in dire straits, but it is crying in the dark.

And even if governments wanted to help, which they don't appear to, as Prof Muller points out: "It is hard to give a tax break if they pay no taxes".

 

Not only that, but many of the destinations loved by their passengers are not missing the cruise liners very much, if at all. As Prof Sheela Agarwal, from Plymouth University's department of tourism and hospitality, puts it: "No one is willing to bail them out because of their tax avoidance, but also because of the negative impacts they have at their destinations... they contribute very little to the local economy."

Cruise ships are notorious for depositing thousands of tourists in crowded cities who, Prof Agarwal says "spend very little, look around the place for five or six hours with a packed lunch, and then go back on board for dinner".

So, can the industry recover from this crisis? Well there are some good signs amidst all this gloom.

"Tourists have very short memories," says Prof Agarwal. "This is like when a terror attack affects a destination. Look at the attacks in Paris and Brussels - three months maximum [fall in visitor numbers], and they were back to normal."

Also, it is fairly obvious what the industry will do the second that travel restrictions are lifted - they will launch a huge advertising campaign and slash their prices, to get customers back. Although as Prof Muller explains, that won't be painless.

"You have to have these ships pretty full to make a profit, you can discount a lot, but you have to meet your fixed costs," he says.

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Luckily for the industry, oil prices have also collapsed during this downturn, and as fuel prices are one of cruise firms' biggest fixed costs, Prof Muller is certain of one thing: "I can guarantee they are buying fuel futures like crazy".

If David Reece and his wife Carolyn are anything to go by, the cruise line industry may well bounce back better than most.

He says that the ongoing coronavirus outbreak is "not going to put us off at all". He is instead looking forward to rescheduling their trip "in the next 12 months".

David adds that he might also hunt for any special offers. "We might go on a last minute cheapy… being retired we can drop tools and go anytime," he says.

UK-based Cunard, part of Carnival, the world's largest cruise line operator, and owner of luxury ships including the Queen Mary 2, is also confident that the industry will recover.

"We have been sailing for 180 years and we look forward to many more," says Simon Palethorpe, Cunard's president. "We will get through these tough times together and look forward to welcoming our guests back on board again soon, when the time is right."

David adds that even if some smaller companies do go bust, the ships are unlikely to be wasted as they are worth billions. "Someone will buy them up," he says.

The industry, it seems, will carry on cruising.BBC

 
 

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