For many companies, the 2020 health crisis was a boon. Businesses like Amazon, Zoom, and Apple saw their revenue and share prices soar.
But on the flipside, many companies saw their fortunes dwindle. Restaurants were closed. Movie theaters shuttered. Perhaps no industry was as hard hit, however, as cruising.
Not only did stories of cases on cruise ships dominate headlines in the early days, but then cruising was halted in March 2020. While other industries may have shut down, only to slowly reopen weeks or months later, cruise lines were halted in the United States — the world’s largest cruise market — for over an entire year.
Even after vaccines were introduced and some cruise lines said they would require the shot and also test every passenger before boarding, ships were still stuck at the dock due to CDC rules.
Cruise lines lost out on billions of revenue during the suspension. Carnival Cruise Line alone said it cancelled more than 2,600 cruises, impacting 4 million passengers. That’s a lot of tickets that had to be refunded.
It’s not just the lost revenue, however. Cruise lines also had to keep the lights on. That includes everything from paying the CEO to keeping ships in good repair and supplied while they waited at sea to return.
The end result of near-zero revenue combined with still high expenses? Massive business losses that in many cases added up to well above combined profits from the last several years. In other words, the long-term net profits made by cruise companies added up to a negative figure going all the way back to at least 2017… and sometimes even earlier.
Here’s a closer look at each of the three major cruise companies and the amount of money they lost due to the cruise suspension and health crisis.
Of course, Carnival Corporation is well known as the parent company of perhaps the most famous brand in the industry — Carnival Cruise Line. But the company is much more than just the Carnival brand. Lines like Princess, Costa, and Cunard are part of the company’s operations. Before the pandemic the company operated more than 100 ships across its nine different cruise lines.
Following the stoppage, the cruise company took the opportunity to pare down its fleets, with more than a dozen vessels leaving. Even so, the costs to keep the ships sailing combined with no revenue were a double whammy. After a record 2019, and a promising start to 2020, the company saw its fortunes change dramatically.
For all of 2020, Carnival Corporation earned total revenue of $5.6 billion, with 85% of that coming in the first quarter. That money was offset by the massive expenses in dealing with the pandemic. All told the company experienced a loss in every quarter of 2020 and the first quarter of 2021, combining to a total loss of -$12.2 billion so far.
By comparison, the combined net income for 2017-2019 added up to $8.75 billion.
Royal Caribbean Group
Its namesake cruise line — Royal Caribbean International — is among the largest and most popular lines on the planet. But Royal Caribbean Group is more than just a single line. It’s also the owner of Celebrity, Azamara, and Silversea Cruises.
All told, the fleet under the Royal Caribbean Group totals roughly 50 ships. That means huge expenses even when no passengers are sailing. It also boasts the largest ships in the world with its Oasis-class vessels, which have sat idle since March 2020.
With cruises cancelled, Royal Caribbean Group saw revenue for 2020 come in at just $2.2 billion. Compare that to 2019, when revenue was nearly $11 billion, and you start to get a feel for the impact this pause had.
Due to the costs related to the pandemic and the impact on the business, Royal Caribbean Group had net income of -$6.9 billion during the health crisis that continues to hamper the industry still.
This marked a dramatic reversal in fortunes for the company. For 2017 through 2019, Royal Caribbean Group earned $5.3 billion in net income. In other words, the pandemic year was equivalent to wiping out about the three previous years of profits… and then some.
Norwegian Cruise Line Holdings Ltd.
The last of the “big three” cruise companies, NCLH may be the smallest, but it is far from a slouch. In 2019, the year before the pandemic, Norwegian brought in $6.5 billion in revenue and saw net income of $930 million.
It’s lineup includes Norwegian Cruise Lines, but also luxury brands Oceania Cruises and Regent Seven Seas. Unlike its rivals, NCLH hasn’t shrunk its fleet by getting rid of older ships during the pandemic. That’s because the company’s primary line — Norwegian Cruise Line — has one of the youngest fleets around.
That means the business has had to support the full fleet throughout the cruise suspension while bringing in limited revenue.
In all of 2020, Norwegian saw revenue totaling just $1.3 billion. That led to a net income loss of -$4.0 billion for the year and -$5.4 billion since the cruise suspension began.
For comparison, NCLH saw total net income of $3.3 billion for the four years between 2016-2019, showing just how massive a blow the downturn was for the company.
Losses Continue to Mount in 2021
While 2020 was a difficult year for cruise lines, the trouble isn’t over yet. There are some positive developments as some lines slowly get back to sailing around the world. Trips are returning in Asia, Europe, and even the Caribbean.
The United States, however, is the largest cruise market. Without trips leaving Florida or Texas, for instance, then a major loss of revenue continues to impact the industry. Even when trips do return, it’s likely to be a staggered return. It’s possible that U.S. cruises won’t see a full return until 2022.
That means losses continue to pile up in 2021. Combined, the three major cruise companies lost a total of -$4.5 billion in the first quarter of the year.
In other words, we won’t know the full extent of the financial impact on the cruise industry for months — or possibly years — to come. Even so, we already know that the impact measures will into the billions and gets larger every day.