What will happen to the cruise lines?

[disneysteve]

This is partially an investing question but I decided to put it in the General category because it's broader than that.

What will happen to the cruise lines going forward? They own billions of dollars of hard assets in the form of their ships but right now they are all sitting idle in ports around the world. The stock prices have been decimated.

Eventually, people will start cruising again but how much will the companies lose until then? How long will it take to get back to profitability? What are the chances that some of the companies, even the big players, won't survive? And then what?

Carnival's stock is teetering around $10 as I write this post. A year ago it was close to $60. Royal Caribbean is around $25. A year ago it was $135. They've lost over 80% of their value. Is that sustainable?

Part of me wants to invest. Part of me wonders if the companies are going to make it through.

[ua_guy]

I would not be surprised if the travel and hospitality industry at large receives a huge bailout. If I were looking to invest, I wouldn't feel comfortable doing so until that's been confirmed yes or no. If yes, I'd wait for the volatility and/or any bankruptcy to pass before trying to catch it on the upswing.

[~bs]

Some will go bankrupt, then reorganize under new ownership/leadership. Much less push for a bailout for this industry. Not seen as necessary as airlines/banking.

[disneysteve]

Some will go bankrupt, then reorganize under new ownership/leadership. Much less push for a bailout for this industry. Not seen as necessary as airlines/banking.

Exactly my thought. Air travel is, for better or worse, a necessity in today's world. Cruises are a total luxury. That's why thus far, I've been putting money into JETS, the airline ETF. I think that will bounce back once this all settles down and especially if there is a bailout. Cruises I'm not so sure about.

[TexasHusker]

I bought some Carnival last week as a long term play. I only spent $2K on it though. It's sunk some more.

[kork13]

Best bet would be to expect some consolidation within the industry. There's literally dozens of cruise lines of varying sizes... The ones with the strongest capital positions will be well-placed to buy up some of the smaller or financially weaker ones.

[Like2Plan]

I don't know. A few years ago, I would have thought the norovirus outbreaks would have done them in--but, they seem to keep going. People seem to enjoy cruising.
I have been following this British couple who were on the Diamond Princess--quarantined and then they both had a case of covid-19 (he is diabetic, they were celebrating their 50th wedding anniversary on the cruise)--so, they just recently returned home. https://www.bbc.com/news/uk-england-...shire-51895968 Anyway, despite all they went through they still had plans for several more cruises!
But, I agree with Kork--there will most likely be some consolidation.

[~bs]

Actually, i might be wrong about the bailout. I think all of the cruises fly under foreign flags, if anyone does the bailout, it might be their country of origin, and not the US. Although I'm not sure how motivated they would be to bailout the cruise industry since most of the employees are probably low paid south east asian workers.

[disneysteve]

Actually, i might be wrong about the bailout. I think all of the cruises fly under foreign flags, if anyone does the bailout, it might be their country of origin, and not the US. Although I'm not sure how motivated they would be to bailout the cruise industry since most of the employees are probably low paid south east asian workers.

I think there is huge motivation to bail out the cruise lines. Even though it's a luxury business, the ports that they visit, especially in the islands, are hugely dependent on those tourists for their livelihood. Poverty in the Caribbean, for example, will be epic if cruises stop bringing in thousands of tourists every day.

You are correct about ships being foreign flagged. The only ocean cruise that is US-flagged is one Norwegian Ship Pride of America that sails the Hawaiian islands. There are US-based river cruises though.

[~bs]

^^^

Good point about the impact on the destinations. "generally" everyone wants cruise ships to park their boat in their harbor because of the revenues it brings in.