Even cruise executives are surprised by how many people are booking cruises
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You’re not alone if you’re booking a cruise for the coming year.
Despite a seemingly endless barrage of negative news about cruising in recent months, and the fact that most ships aren’t operating due to the coronavirus pandemic, cruise fans continue to book future cruises with abandon — so much so that it has taken even cruise line executives off guard.
“We have been both humbled and surprised with the amount of bookings we are seeing for 2021, with literally no marketing efforts and frankly very little good news”, Royal Caribbean Group chairman and CEO Richard Fain told Wall Street analysts Monday during a conference call to discuss second-quarter earnings.
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The comments came just four days after the top executive at Norwegian Cruise Line Holdings said almost the exact same thing in a conference call with Wall Street analysts.
“I’m astonished how well bookings are coming in, given the fact that the industry is suspended”, Norwegian Cruise Line Holdings president and CEO Frank Del Rio said on Thursday. “There is not a lot of positive news flow”.
Both companies said bookings for 2021 are “within historical ranges”. That is, their ships are about as booked up for the coming year as they normally would be at this time of year.
The companies also noted they haven’t had to slash pricing to get the bookings.
“Pricing for 2021 bookings is about flat”, Royal Caribbean Group CFO Jason Liberty said during Monday’s conference call. But Liberty also noted the flat pricing includes a negative impact from passengers using future cruise credits to book some of the trips. Strip out the effect of future cruise credits, and pricing actually is up for 2021, he said.
Like many cruise companies, Royal Caribbean Group has been offering passengers on recently cancelled sailings the choice of a full refund or a credit for a future cruise in the amount of 125% of what they paid. About half of customers are choosing the credit.
Liberty noted some new cruise bookings for 2021 are coming from people using the credits to rebook cancelled trips. But it’s not as big a factor as some people might think. More than 60% of bookings since mid-May have been new bookings, he said.
Royal Caribbean Group is the parent company of Royal Caribbean, Celebrity Cruises, Azamara and Silversea.
Royal Caribbean’s executives did say the pace of bookings has been affected by the news cycle in recent months, with bookings declining after stories about surges in COVID-19 cases. But, overall, bookings are up significantly versus the early days of the COVID crisis.
“Since our last earnings call (in May), bookings have averaged more than double the levels seen during the first eight weeks of the global cruise suspension”, Liberty said.
In a sign that cruisers remain cautious, bookings are notably stronger for the second half of 2021 than the first few months of the year.
“You see this kind of line as you kind of get into the early to mid-part of the second quarter where there’s just strong demand for the (summer) season and beyond”, Liberty said.
The strong demand is for all sorts of cruises, he added.
“It really is across all of our core products. So there’s strength in the Caribbean, our European products, Alaskan products and so forth”, Liberty said. “It’s not just one thing, but it’s really clear as we get (into the second quarter) and beyond that there’s high demand, and our consumers are willing to pay at or above these historical levels”.
Executives at both of the companies suggested that pent-up demand for travel is a big part of the strength in bookings. The rabid loyalty of cruising fans also is a big factor. Even during a worldwide pandemic, cruising regulars still are itching to get back out on ships.
“I do believe that we, in the cruise industry, enjoy a very loyal customer base”, Norwegian Cruise Line Holdings’ Del Rio noted. “Across our three brands, over 50% of our guests on any given cruise are repeaters”.
Norwegian Cruise Line Holdings is the parent company of Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises.
Del Rio said repeat cruisers would be at the core of the company’s comeback in the coming year.
“We’re going to lean on them heavily, (and) they’re going to lean on us. They want to cruise again”, he said. “Depending on when you think the restart is, there’s going to be 15 million, 20 million people who were not allowed to cruise this year. And there’s a lot of pent-up demand there”.
Royal Caribbean Group’s Fain echoed such comments.
“Our guests want to come back”, he said.
Featured image courtesy of Royal Caribbean
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