Royal Caribbean cancels cruises after another COVID-19 crisis


The cruise industry does not appear to be recovering from the disaster of COVID-19. royal caribbean (NYSE:RCL) has announced that its Odyssey of the Seas ship, which was due to begin simulated cruises later this month with a resumption of revenue-generating voyages on July 3, will not resume operations until late July at the earliest.

Eight crew members tested positive for the COVID-19 virus. Royal Caribbean ensures its employees are fully vaccinated, but the eight employees had not yet reached the point where the vaccinations were fully effective.

Image Source: Royal Caribbean.

Sailing into the sea of ​​the unknown

The good news is that six of the crew members who tested positive for the virus are asymptomatic and the other two are showing only mild symptoms. The schedule for administering vaccinations on June 4 would have ensured that all crew members were fully vaccinated by the date of the test drive in two weeks.

However, if partially vaccinated crew members do contract COVID-19, what do you think will happen to Florida cruises when they begin later this summer? Florida’s governor has threatened to fine cruise lines for requiring passengers to have vaccination records and threw a wrench in the restart process. royal caribbean, carnival, and Norwegian Cruise Line holdings have regulatory approval to start again when they have at least 95% of their passengers fully vaccinated, but they cannot sail out of Florida on that scale — the state where all three major cruise lines are headquartered and home to many of the world’s most popular ports cruise industry.

Running a series of simulated cruises is the other way to get around industry restrictions that have suspended stateside voyages for 15 months, but we’ve already seen COVID-19 cases on industry voyages outside of the US market with only a handful showing up from actual cruise lines in action. We’re seeing the same thing as early 2020: Crowded cruise ships with people spending so much time in maskless gatherings are a hotbed for the spread of COVID-19 if people aren’t fully vaccinated.

The cruise industry, which struggled to get back to sea this summer — and at one point the Florida governor asked regulators to approve a return to business — is now locked in a battle between politicians and regulators. We now have one of the larger ships resuming service this summer, postponing its restart to late July as many families are preparing for the return to school in August.

The problem for investors here is that all three stocks are already generating pre-pandemic enterprise values. The recovery is being discounted on Wall Street, but now we’re seeing that easier said than done. Investors are seeing travel and tourism stocks rally, but Royal Caribbean, Carnival, and Norwegian Cruise Line have a lot to prove to deserve their suddenly buoyant valuations. It’s going to be a cruel summer.

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