NCL cruise bookings slowdown coronavirus

The coronavirus Covid-19 outbreak has caused a slowdown in
new bookings and increased cancellations worldwide, Norwegian Cruise Line
Holdings reported to investors today. 

NCLH CEO Frank Del Rio said that the impact of the virus
extends beyond Asia, threatening what in early January looked to be the start
of a record year for the company. 

“The resiliency of our business model will be tested once
again by a noncontrollable external factor,” he said. “The effect of the
coronavirus outbreak on our business has been swift and severe and the
continuous global headline news coverage has been substantial and relentless.”  

NCLH said in an earnings release that it has canceled 40
cruises across its three brands due to the outbreak: 10 on Oceania, six on
Regent Seven Seas, and 24 on Norwegian Cruise Line (21 were on the Norwegian
Spirit, which was redeployed to the Eastern Mediterranean from Asia earlier
this month. 

NCLH CFO Mark Kempa called the outright cancellation of
cruises on Oceania and Regent Seven Seas “a significant impact for us.”

“Those are very long lead-booking itineraries with very high
per diems,” he said. “Those voyages were completely sold out.”

Despite the Spirit’s extremely condensed booking window, Del
Rio said the relocation of the ship provides the best opportunity to maximize
its earnings and revenue potential and “demonstrates our nimbleness and ability
to redeploy our assets as necessary.”

Looking ahead, Del Rio said that “given the unknown duration
and severity of the outbreak, there may additional impacts that are not yet
quantifiable. It is affecting the broader consumer demand environment that extends
to our global deployment outside of Asia, which cannot be quantified at this
time.

“The cruise industry was at the forefront of headline news
for reasons that we know and that has caused near panic in the traveling
public,” he added. “So, we’ve seen a meaningful decrease in new bookings. A
meaningful increase in cancellations. Not just for our Asia sailings but
throughout the deployment.”

Del Rio said he’s heard from travel partners and business
partners that they are seeing similar trends across their portfolios. 

“Business is soft, people are scared to travel,” he said. “Until
we see the leveling off of new cases and the cruise industry not being the
poster child for the virus, this may continue for some time.” 

But he also said that “nothing is permanent.”

“Consumers do have a relatively short memory, thank god. We
have seen other major events affecting the cruise industry that were quickly
overcome,” Del Rio said.

Silver linings 

Del Rio also pointed to “silver linings,” including what he
called the “underlying resilience of our business and potential for a
reasonably timed recovery.”

The strong booked position prior to the outbreak, he said, “demonstrates
the strong demand fundamentals of our business.”

He also said that in the past five days, NCLH has seen an
improvement in week-over-week booking volumes and a decrease in cancelations
compared witj the prior three weeks. 

“I don’t want to call it a turnaround trend just yet, but it
is at least one data point of a possible positive change,” he said. 

“We are no longer seeing a week-over-week acceleration in
the declines in bookings and increases in cancellations. We’re seeing a
moderation.”

Del Rio said the bookings decrease is similar to what the
company experienced during similar geopolitical events and the financial crisis
a decade ago. The difference with this crisis, he said, is the increase in
cancellations. 

“As an industry and company, we have faced and overcome
challenges similar to Covid-19,” Del Rio said. 
“I am confident this challenge will not be different. It usually takes
eight-plus weeks from the time the news cycle peaks to when we can expect a
return to normal booking patterns. It’s not a question of if, but when.”

Source: Read Full Article