Coronavirus Is Hitting the Cruise Line Industry Hard
SHA’s Christopher Muller on what steps companies need to take to win back vacationers
During the current coronavirus epidemic, cruise ships have become the perfect petri dish that allows the virus to thrive and spread quickly. Why? The vessels’ tight, close-knit quarters and population of international passengers and crew, all with different levels of immunity, are key factors, the BBC reports.
Earlier this month, more than 690 passengers on Carnival Cruise Line’s Diamond Princess were quarantined for two weeks in Yokohama, Japan, after testing positive for the virus, and 4 of them died. The Westerdam, operated by Holland America, which is owned by Carnival, was denied entry at ports in five different countries after a female passenger was misdiagnosed with the virus. The World Dream (a Genting Hong Kong Ltd. cruise ship), was held in Hong Kong for four days when passengers who had already disembarked from a previous cruise were found to be infected; no one on that ship ultimately was diagnosed with coronavirus.
These outbreaks have placed the $45 billion cruise line industry in peril, as the virus is forcing companies like Royal Caribbean and Carnival to cancel trips and adjust itineraries. The travel industry isn’t the only one affected—on Monday, stocks tumbled globally after reports that coronavirus outbreaks were increasing outside China, reaching South Korea and Italy, among other countries.
The same day, the US State Department urged cruise ship travelers with itineraries to or within Asia to consider canceling their trips. “This is a dynamic situation and US citizens traveling by ship may be impacted by travel restrictions affecting their itineraries or ability to disembark, or may be subject to quarantine procedures implemented by the local authorities,” the State Department statement reads.
Christopher Muller, a School of Hospitality Administration professor of the practice, is a travel industry expert whose research focuses on corporate and chain restaurant management. He was dean of SHA from 2010 through 2012 and has done training and development work with Costa Cruises and has worked as well as a consultant to the cruise industry.
BU Today spoke to Muller for insights into how cruise lines are dealing with the coronavirus and whether or not he believes they can recover from the financial damage and loss of public trust.
With Christopher Muller
BU Today: Before coronavirus, the cruise industry was increasingly targeting the Chinese market. Can you talk about the direction the cruise industry in Asia was taking before this crisis?
Muller: They expanded their inventory, meaning the number of ships and cabins available. They increased the number of cabins from about four million to five million, thinking business would expand 20 to 30 percent. That’s mostly the Chinese market, using Hong Kong and Macau as bases. Coronavirus has led to a 15 percent decline in business. Part of it is that people are canceling and just not booking. This is a big setback for the plans to grow.
Outside Asia, last week Richard Branson launched a brand-new cruise line with the ship the Scarlet Lady. It will start its Caribbean cruises in late March, and two more ships are on the way.
Have the cruise lines learned anything from previous outbreaks—norovirus, for instance? How will the coronavirus affect their business in the next year or so?
In 2013, when Carnival and other lines were affected with norovirus and Legionnaires disease, they learned something. The fastest way to change public opinion was to go to the next nearest port as soon as there was an infection, with 10 or 12 cases, and pull everyone off the ship and make a big public showing of disinfecting the ship. If you don’t keep people locked up, you keep people from getting infected. This time around, though, the government did keep people on the ship. In the case of the Diamond Princess, more than 600 people got sick because they were kept on the ship.
There’s a six- to nine-month lag time [following a wide-spread contamination], and then people tend to forget about it. The industry is selling luxury; a cruise ship is a hotel that floats to different cities safely. Problems can be overcome, and the cruise line usually offers deep discounts and focuses on the fun side of it.
If ships are trying to steer clear of infected areas, how easy is it for cruise lines to rejigger itineraries, vessels, crew, etc., to move to another part of the world?
That’s the joy of those things versus a hotel: if you spend $150 million on a hotel, it’s stuck in one place. A boat can be moved. The ships do move around to broad regions, some will be in the Caribbean, the Mediterranean, Alaska, the West Coast. They can change their ports of call very quickly. In the Caribbean, many are starting to use their own island as one of the stops.
Are passengers now hesitant to book a cruise?
The more news [of the coronavirus] continues, and the more we aren’t sure of the spread as it moves into Europe, it will have an effect. People are skittish, they don’t want to be in a zombie prison, in close, confined conditions on these ships. Even on luxurious ships, with large, grand public spaces, the cabins are very small, maybe 200 to 230 square feet. The staterooms aren’t even as big as a room at a Hampton Inn, because they don’t expect you to spend a lot of time in your cabin.
What are best practices in communicating with travelers during times like these?
For the people who are prebooked, cruise lines should be sending them lots of information and emails, trying to get them to continue the booking. They should be releasing a lot more ads, TV commercials advertising their ships. This is the time of the year in the Northeast that cruise lines appeal to people who want a last-minute getaway for a good price. Add to that the fact that we have had a mild winter, so people aren’t feeling the urge to go to a warm climate as much as in years past, and it’s having an economic impact.
What do the cruise lines need to do to convince people not to cancel and to continue booking? What should they be doing better?
Unfortunately, cruise lines are facing government regulations and restrictions that are counter to everything they have learned about controlling infectious agents. Until the unfolding pandemic appears to be fully under control, the cruise industry will have a hard story to tell. Not to be alarmist, but expect this to start hurting air traffic next. If ships seem unsafe, it isn’t a big leap for people to see planes as even more confining.