23 April, 2024

How Can The Largest Cruise Line Company Stay Afloat After Reporting Damaging Post-Lockdown Losses?

The largest cruise line company when measured by sales revenue and the second largest when judged by passenger numbers, Royal Caribbean, has reported a massive net loss $1.64 billion for the second quarter of this year following the global spread of Covid-19. The company has said that this has resulted in it burning through $290 million each month with no revenues in sight.

Royal Caribbean has the four largest passenger cruise ships in the world and it has typically had 5 million passengers a year spending their holidays cruising with them.

Because the covid-19 pandemic is a contagious virus that is spread by people both indirectly through surfaces they’ve touched and also when in direct contact with other people and particularly when spending time in close proximity with them, no-one can predict when the return in popularity of cruises will happen.

What’s interesting is that Royal Caribbean has dropped the word cruise from its branding. Is this an attempt to lose the links with the images during the early days of the pandemic of cruise ships being quarantined and not allowed to dock in ports so that its passengers couldn’t disembark and potentially spread the virus?

The level of this big loss is in comparison with more than $2 billion profit the company reported for the same pre-pandemic period last year. This has resulted in its share price dropping by 60% this year.

Will cruising holidays ever return to pre-pandemic levels? And if this can’t be predicted then how can one of the largest hospitality companies in the world plan the future of their business? Is this just a temporary blip in the history of holidaying or a permanent change? Only time will tell.

Business Talk

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