Vaccinations are Leading the Rise in Future Cruise Bookings

With fewer new cases of VIDOC infection in many states and more than 1.5 million Americans vaccinated every day, the Royal Caribbean Group is optimistic that the company – and the cruise industry worldwide – is moving closer to the other side of the equation.

Polar deck on Explorer of the Seas (Photo courtesy of Royal Caribbean).

Michael Bayley, president and chief executive officer of Royal Caribbean International, says the combination of fewer new cases and increased vaccination efforts inspires confidence both internally and among the general population.

I go on the internet every day and look at the number of infections in America. They’re just coming down. I feel like we’re on the verge of good news, Bailey told financial analysts during a conference call to discuss fourth-quarter and full-year 2020 results.

The most difficult year in our history

Jason Liberty, chief financial officer of Royal Caribbean Group, spoke of the most difficult year in the company’s history and announced an adjusted net loss of $3.9 billion for 2020. It continues to burn between $250 and $290 million. The Board also received a monthly cash payment of $13.3 million, which resulted in the termination of most activities.

With most departures cancelled at least until early May, investors can expect the company to remain in the red for both the first quarter and the full year 2021.

Despite these poor results, the Royal Caribbean Group had a total of EUR 1.5 billion in liquid assets as of December 31, 2020. Exceptions are unforeseen events that are also expected to result in a lengthy process of restarting the business.

Vaccines are becoming the ultimate weapon

Along with Norwegian Cruise Line, Royal Caribbean was a founding member of the Healthy Sail Panel, a group of leading doctors, scientists and specialists in the field of ship operations. It was charged with developing a scientific plan for a safe expedition and came back with a report containing 74 recommendations.

According to Richard Fain, CEO of the Royal Caribbean Group, the 74 recommendations have been translated into more than 2,000 different protocols that cover all aspects of operations on board and ashore, with the aim of making a cruise holiday on one of its ships safer than a walk down Main Street.

These protocols were developed in what Fain calls the pre-vaccine environment. He now describes vaccines as the ultimate weapon to revitalize the industry.

A lot has happened in the last four months since [the sailing health report] was submitted, including the fact that we routinely vaccinate more than 1.5 million people a day here in the United States, and many people in other countries as well.

Is proof of vaccination required for the cruise?

Many questions remain about how vaccines will change the approach to cruise ship readmission and whether proof of vaccination will indeed be required for future cruise ship passengers.

According to Fain, it is too early to answer questions, and much depends on the effectiveness of vaccines.

But if we look at Israel (which has vaccinated over 50% of its population), we see very significant statistical correlations. Efficacy is as high or higher than in the studies conducted and in a larger group of people. These are exciting levels that give us hope.

With a lull in November and December 2020 when COVID-19 cases hit the United States, there was a 30% increase in new bookings for Royal Caribbean brands in January and February.

Immunized Americans are more confident about booking a trip

Since the beginning of the year, Royal Caribbean has seen an increase in bookings from customers aged 65 and over. Officials believe this is due to the fact that more people in this group are getting vaccinated and are more confident about their future travels.

Another benefit for Royal Caribbean is the importance of lessons learned from a series of three and four-night cruises aboard Quantum of the Seas departing from Singapore. More than 35,000 Singaporeans have already made the trip.

Quantum of the Seas at the Marina Bay Cruise Centre in Singapore in 2015. (Photo courtesy of Royal Caribbean)

This is the power of a positive example, Fain said during the conference call. It has been an incredible learning experience for our company; sales have exceeded expectations and satisfaction scores are very high. We have really started to understand how we can work with the health authorities to operate the ship safely.

The success of the program in Singapore has prompted the company and local authorities to discuss the relaxation of certain protocols. Fine says the quantum power is capped at 50%, but that discussions are underway to increase it to 65% in the coming weeks.

Barbados, major port of call for big things isHot Ticket

On a more optimistic note, the Splendor of the Seas will operate a series of seven- and 14-night Southern Caribbean cruises in Barbados from November. Officials say 25% of the supplies were sold in the first few days they were available.

Looking ahead, Royal Caribbean reports that bookings for the first half of 2022 – the number of customers who have booked – are in historical range, with higher average fares.

Barbados (Photo courtesy of the Royal Caribbean Organization)

There are still uncertain waters ahead. Liberty’s CFO says it’s too early to talk about ships on the move, and Fain warns that new variants of the COVID virus are a problem.

But despite these concerns, the pace of new bookings is encouraging for the future of the Royal Caribbean Group and the industry as a whole.

What we are seeing is strong pent-up demand for vacations, Liberty said. You save more money. They spent much of their vacation trying to figure out when we could be back in service.

READ MORE: Royal Caribbean is optimistic for the 2021 season in Alaska.

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