Cruises gain momentum as Omicron skyrockets


It’s been a difficult two years for the cruise industry, where fortunes have slowed again with the emergence of the Omicron variant of COVID-19, and following a recent recommendation from the Centers for Disease Control and Prevention avoid leisure travel on the high seas.

With new infections showing no signs of abating anytime soon, the CDC said cruises should be avoided, regardless of vaccination status. The CDC has raised the travel warning for ships to Level 4 – the highest risk level – amid a wave of coronavirus outbreaks on seagoing ships.

All of this should spell bad news for various cruise lines like Carnival (CCL), Disney (DIS), Norwegian (NCLH) and Royal Caribbean (RCL), which have ships on CDC cruise ship color status. In a statement released last week, the Cruise Lines International Association (CLIA) criticized the CDC’s decision as “particularly puzzling”, given that the total number of cases on ships was a “slim minority of the total population at edge ”.

Still, shares of all of those companies ended sharply higher on Friday, underscoring how the industry takes a long-term view of Omicron. The mutation is highly transmissible but less disabling, especially in vaccinees. And despite the disturbing call from the CDC, ships continued to sail from the country’s ports.

“Science does not support the CDC. You’re actually safer on a cruise ship, ”Stewart Chiron, a cruise expert, told Yahoo Finance on Monday.

“Everyone gets vaccinated, everyone is tested, frequently. We are seeing an increase, 90% of these recent cases are crew members, not passengers, ”added Chiron.

He argued that cruises are doing what they can to mitigate risk, insisting that it is “safer on a cruise ship than to be at home”.

It’s unclear how long the CDC’s travel advisory will be in place, but the agency has issued a conditional navigation order (CSO) that has been extended until January 15.

Omicron explosion on ships

Cunard Line’s Queen Mary 2 cruise ship owned by Carnival Corporation & plc. is seen docked at the Brooklyn Cruise Terminal as the Omicron coronavirus variant continues to spread in Brooklyn, New York, United States, December 20, 2021. REUTERS / Andrew Kelly

However, the data paints a different picture. In figures provided to Yahoo Finance, the CDC found that between November 30 and December 14, only 162 cases of COVID-19 were reported to the agency by cruise ships operating in U.S. waters.

Yet between December 15 and 29, more than 5,000 cases of COVID-19 were reported from cruise ships, 31 times the number of cases in the comparable two-week period.

“Unfortunately, a lot of people aren’t honest about their health,” Chiron explained. “And some people think, ‘well, I’m symptomatic that I can pretend I can get over it,’ but they don’t realize your symptoms will only get worse.”

Cruise lines constantly test crews three to four times a week and should increase testing as they move forward, he said.

“We must also take into consideration that some of these ships with the number 5,000 [cases] are not even in service yet, and like [they] keep adding more ships, there are a lot of these ships that do short cruises, three, four and five night cruises, you will have a bigger increase, ”Chiron said.

“The CDC color code really doesn’t make sense because one crew, seven passengers, that means you go from green to yellow, so that doesn’t really mean anything,” he added.

Last week, Royal Caribbean reported an increase in the number of people testing positive, but without a corresponding increase in illness – a sign of how less severe the Omicron wave has been in terms of medical results.

People always call the travel agency. They always book their cruises through the travel agency.Stewart Chiron, travel expert

Since the return of cruise ships in June 2021, Royal Caribbean has carried more than one million guests with more than 1,700 people testing positive – a positivity rate of 0.02%, according to the company. The majority of these cases were mild symptoms, with 41 people hospitalized.

Additionally, none of Omicron’s cases were serious or needed to be taken to hospital, indicating how guests were vaccinated and tested negative before boarding the ship.

And since resuming operations in September 2020, Carnival, the world’s largest cruise line, has carried 1.2 million passengers aboard its ships. At the end of November, 61% of the company’s capacity was operating with guests on board; the company expects the full fleet to resume operations in spring 2022.

“It won’t be a problem”

As the travel industry slowly begins to recover from the woes of the pandemic, analysts believe the CDC’s stricter guidelines would not impact business or travel bookings, especially during the months warm where the virus tends to subside.

“People always call the travel agency. They always book their cruises through the travel agent, ”said Chiron. “Reservations for 2022 and 2023 are ahead of what they were in 2019 at record levels and at higher prices. “

And Wall Street is optimistic that the industry will continue to navigate as it tries to overcome the final hurdle of the pandemic.

“The point is that it just won’t be a problem six months from now when people go on summer vacation,” Chris Woronka, senior analyst at Deutsche Bank who covers cruise lines and cruise lines, told Yahoo Finance. ‘other travel sectors.

The impact of Omicron and the latest CDC opinion will likely be less of a factor as the year progresses – and certainly not in 2023, according to Deutsche research.

“The market is just taking a much larger, longer-term view of this and saying that advice may not be available forever and clients are making their own decisions.[s]”said Woronka.

Last week, Royal Caribbean reported a drop in bookings and an increase in cancellations for short-term crossings, but said it was less than they experienced during the summer wave of Delta variants. . Bookings for the first half of 2022 remain below historical levels, but the second half of 2022 continues to be booked with historic ranges at higher prices.

“People couldn’t go on a cruise for about 15 months and again, not all of them are back yet, so there’s still that pent-up demand,” Woronka said, although he said investors were worried about the appearance of a new variant. .

The course of the pandemic has “been unpredictable and no one has it all,” Woronka said.

Meanwhile, Carnival’s short interest has risen 21% since its last report, a sign that some investors are betting the stock will fall. Woronka has a “Hold” rating on Royal Caribbean, Carnival and Norwegian. Despite Friday’s rally, all have sold more than 10% since early November.

“We’re not seeing enough benefit right now,” Woronka said. “There is still uncertainty with the virus there. “

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv

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