TTHE LAST In addition to the fleet of Carnival, the world’s largest cruise line, is the Mardi Gras. This oceanic playground for 5,300 passengers has six different areas, including a “French Quarter”, two dozen restaurants and a roller coaster. He is expected to arrive at his base in Florida in early June. It’s a year overdue – but maybe just in time for a revival in the industry, which has been hit harder than any by the pandemic.
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Afloat vacations have given a first clue of the damage caused by covid-19 to international travel. Images of passengers stranded aboard modern-day plague ships foreshadowed lockdowns ashore. Most experts believe that cross-border tourism will not fully rebound until 2023. Still, the cruise could get ahead before then. “Where can you go to sleep at night and wake up every morning in a different, new and exciting place?” adventures Arnold Donald, the boss of Carnival.
A break at sea is a small niche in the global tourism industry. Of the 800m or so of foreign holidaymakers in 2019, only around 30m climbed a footbridge. However, it was growing rapidly, adding more than 10 million more tourists to the sea in a decade. And before the pandemic submerged the business in red ink, it was lucrative. The three companies that carry three-quarters of all passengers – Carnival, Royal Caribbean and Norwegian Cruise Line – made combined operating profits of $ 6.6 billion on revenues of $ 38 billion in 2019.
With fleets mostly unused in the past year, cruise lines have spent money. Only a few of the world’s 270 major cruise ships are at sea with paying passengers. Luckily for Donald, investors seem to share his belief that the industry is going to get off to a great start. Carnival has had little trouble raising $ 24 billion in debt and equity in the past 12 months to catch up; its rivals were also able to exploit the market.
Now the demand is coming back. Carnival’s bookings for 2022 are back at the high end of historical trends, his boss reports. The industry continues to build capacity over the long term. More than 100 ships are on order; none were canceled during the pandemic. Perhaps the biggest headwind is the rapidly changing rules in countries when it comes to international travel, especially America. Half of all tourist sailors are North American, double the number of Europeans, the second largest group, with China and other emerging markets lagging far behind so far. Since the pandemic, no ship has been allowed to leave a US port.
Mr. Donald hopes that will change soon. Big cruise companies are trying to get things done by lobbying governments to allow vaccinated passengers who test negative for covid-19 to board. This makes recent efforts by Florida lawmakers to ban companies from using vaccine passports rather unnecessary. The Sunshine State is not only home to the Mardi Gras but also to the largest cruise ports in America. ■
Listen to our interview with the CEO of Carnival Corporation
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This article appeared in the Business section of the print edition under the title “Cabin fervor”