Cruise industry 'betting on summer' for post-pandemic rebounds

Yahoo Finance's Dani Romero discusses the Cruise industry recovery and the outlook for bookings this summer.

Video transcript

KARINA MITCHELL: And welcome back to Yahoo Finance, where we're going to shift gears a little bit and talk about the cruise industry. It's betting on a big comeback over the summer despite an uptick in COVID cases both felt at sea and on land. With more on this, let's bring in Yahoo Finance's Dani Romero. Dani, the cruise industry has been hit hard, including recently the CDC saying people shouldn't go on cruises even if they're vaccinated.

DANI ROMERO: Yeah, Karina, you nailed it. I mean, the cruise industry is really betting on the summer for that rebound. Industry experts say that bookings are looking strong for this summer and the next despite that some cruise companies have canceled their sailings for this year as well, and all due to the variant. But they're still remaining bullish for their outlook.

Let's take a look at Carnival, the largest cruise company. Since September, 2020, they've carried 1.2 million guests on their ships. And by late November, 61% of the company's capacity of operating with guests onboard expects-- excuse me-- and expects to have a full staff by the spring. However, the variant has caused people to test positive, but again, not resulting in drastic medical outcomes.

Royal Caribbean reported that they have carried over a million guests onboard, and over 1,700 people have tested positive, a positivity rate of 0.02%. But only 41 people were hospitalized. But again, to get onboard, passengers have to be fully vaccinated and show that test before boarding the ship. And even though the CDC still advises people to avoid cruising, industry experts say that right now, bookings are taking a little bit of a dip, but they are expecting that that will quickly turn around. Take a listen.

ALEX SHARPE: Booking activity-- not when someone travels, but when they book. So booking activity leading into omicron was crazy good. November, December-- off the charts, better than 2019 booking trends, lots of pent-up demand, lots of stuff. Little different in terms of what they were booking. They were booking a little further out in some cases, booking summer of '22 and into '23 and '24, as I explained. We've had about a two-week dip, two, three-week dip due to omicron. And it hasn't been nearly as bad as it was with Delta variant.

DANI ROMERO: And like you hear right there, there is really that strong optimism that people will return to cruising by this summer or the late half of the year. Alexis, Karina.

ALEXIS CHRISTOPHOROUS: Dani, I know that some of those large cruise companies-- we were just looking at their stocks-- Carnival, Royal, Caribbean, Norwegian-- they didn't get federal relief from the government. So how were they able to stay afloat with all the uncertainty?

DANI ROMERO: Yeah, you're right. Some of those companies really didn't benefit from the federal aid. Carnival, for example, lost $9.5 billion in the year end in November and $10.2 billion in the year before that. The company has roughly $33 billion of debt and $9.4 billion in liquidity. The company said that in December, that it expects to return to full profitability in the second half of this year.

Carnival now operates around 50 ships from its 94-vessel fleet after selling or recycling 19 of its vessels at the start of the pandemic. So it expects all of its ships to be operational by early summer, but other operators aren't doing so well. For example, Genting Hong Kong expects to run out of cash by this month and have requested liquidity help. So a lot of these companies are really looking at how they're going to deal with this variant and also restructure their business if they need to. Alexis.

KARINA MITCHELL: OK, Dani Romero. We will have to leave it there. Thank you so much.