Cruise lines have been greatly impacted by the coronavirus pandemic since the beginning of the global outbreak. The question remains: when will they finally catch a break and start recovering?
In the beginning of the pandemic, ships were left at sea because countries were afraid of allowing coronavirus infections that were onboard into their countries, and many cruise plans were cancelled because of the high amount of health risks involved with the virus.
In particular, now infamous Diamond Princess--owned and operated by Carnival Corporation (NYSE: CCL)--case remains an unfortunate circumstance to the public eye. On January 20, the Diamond Princess left Yokohama, Japan with 3,711 passengers and crew members. Eventually the ship was quarantined because one of the passengers tested positive for COVID-19. The passengers were encouraged to social distance and to have a close inspection of their symptoms after this occurrence. From February 16-23, about 1,000 individuals were forced to return to their home countries to prevent further spread of the virus. Out of the 3,711 passengers and crew, about 712 were tested positive for COVID-19.
Since then, Carnival and other major competitors like Royal Caribbean (NYSE: RCL) and Norwegian Cruise Lines (NYSE: NCLH) have suffered from the pandemic's impact on the travel industry and consumer fears.
In terms of recovery, cruise lines are still sailing towards an uncertain future. Travel industry stocks are considered cyclical in nature, meaning that they are affected by economic conditions and consumer trends. Cyclicals have been strongly affected by the pandemic, but that does not mean these stocks should be ignored by the investor.
While Carnival's stock can be a bit unpredictable, the company is expected to grow post-pandemic. The stock increased in income overall from $1 billion to $3 billion in the past five years point to a thriving industry pre-and-hopefully-post-pandemic as long as the global economy recovers.
As far as the future of other cruise line stocks, Norwegian Cruise Line is also expected to have high volatility amid the extended pandemic. There may be a bit of uncertainty due to the virus, but nevertheless, this particular cruise line has their hopes up when it comes to investment and trade.
Norwegian, as well as Carnival and Royal Caribbean, have taken many extra steps to reassure the public that cruise travel is safe. While all are following public guidelines outlined by regulators like the U.S. Centers for Disease Control and Prevention, cruise lines have partnered with air filtering companies and issued enhanced cleaning methods to ensure their operations are meeting all health and domestic safety standards. Standard public health protocols such as hand washing, sanitizing, and social distancing has been put into place.
While cruise ships may not be leaving domestic and global ports anytime in the near-term, the long-term future forecasts a vibrant industry post-pandemic.