Financial help for cruise lines in question, but new technology could help recovery
South Florida is home to the world’s three largest cruise companies and the industry is arguably the worst hit sector in the nation’s economy.
A graphic in the Wall Street Journal on Monday says the drop in stock market capitalization among the big three during the past year is $13.2 billion—$6.3 billion for No. 1 Carnival Corp. & PLC, $5.0 billion for No. 2 Royal Caribbean Cruises and $1.9 billion for No. 3 Norwegian Cruise Line, according to FactSet, a business analytics firm. Stock market capitalization is derived by multiplying the number of shares outstanding by the per share price of stocks. The shares of cruise lines have plummeted since the COVID-19 outbreak.
Cruise lines suspended cruises for 30 days starting on March 14, an announcement from the Cruise Lines International Association. The association estimates cruise lines support 421,000 American jobs and contribute nearly $53 billion to the U.S. economy. Before the outbreak, over 50,000 guests and crew descended to South Florida daily, according to OZ, a technology company that has conceived a new system to combat future outbreaks.
“It’s mind boggling how many millions of people around the world, are involved in cruise ship operations in one way or another. The numbers are staggering,” said Stewart Chiron, a Miami travel company operator known as “The Cruise Guy.”
Prospects of federal help
There has been discussion in Washington about whether the industry should be given federal assistance, but that whether that will happen was unclear amid some backlash and potential negotiations about attaching strings.
The major cruise companies have a lot of financial resources to help ride through the crisis regardless of whether there is government assistance.
Carnival Corp. & plc issued a statement March 13 that the company had drawn down a $3 billion credit facility for six months to give it financial flexibility. Royal Caribbean has secured a $2.2 billion credit line, Barron’s reported on Monday.
Royal Caribbean and Carnival also could cut their dividend payments to investors to conserve cash. Norwegian doesn’t pay a dividend.
While airlines are widely expected to get some government help, some critics complain that the cruise companies are registered overseas and exempt from federal income taxes. Why should federal taxpayers bail them out?
Then there are those who bring up health concerns regarding cruise ships. A Washington Post headline proclaims, “Cruise ships kept sailing as coronavirus spread. Travelers and health experts question why.”
Carnival Corp. CEO Arnold Donald in an “Axios on HBO” interview said a cruise ship is not a more risky environment than being on shore and in some ways is less risky because cruise lines have protocols to identify and isolate infected people.
“The thought of being quarantined is right now one of the biggest obstacles the cruise industry needs to overcome,” Chiron said. “Hopefully, from recent experiences, the CDC and the cruise lines have learned and can engage best practices to avoid unnecessary quarantines, disruptions and delays once sailings resume.”
New technology could help
OZ, an innovation and digital technology company based in Fort Lauderdale, has just announced Salus, which will help cruise lines and authorities tackle COVID-19, the company said in a press release. As cruise lines implement digital technology such as infrared cameras, thermometers, and smart watches to detect COVID-19 symptoms in guests and crews, Salus can collect and integrate the data with the ship’s passenger manifest system, IoT sensors, ship containment facilities and diagnostics, all via a mobile crew application.
OZ expects this to provide a full picture of guest and crew health throughout the cruise journey. If symptoms of COVID-19 are detected onboard via digital thermometers readings and infrared cameras, Salus will analyze prior person interactions, coordinate patient quarantine, treatment and testing and capture patients’ hour-by-hour containment, diagnostic and treatment details, the company says.
The Salus app will then provide full patient case details to health authorities in Miami-Dade and Broward counties when docking back at port.
Salus also helps prevent anyone suspected of being ill from boarding the ship in the first place, through integration with digital thermometers and infrared cameras that analyze guest and crew temperatures and stop anyone boarding with a body temperature above 100.4 degrees, OZ says. Those cases are then immediately transmitted to the local health authority so people showing symptoms are quickly contained and receive treatment.
OZ says Carnival, Royal Caribbean and NCL are all current clients and it is discussion with them about Salus.
Amid all the uncertainty, cruise ships will eventually sail again.
“Once the U.S. government gives the OK, cruise lines will be able to immediately take action. Plans are already being made to return ships to their home ports to prepare for passengers booked once sailings are allowed to resume,” Chiron said.
In the midst of the Great Recession cruise companies offered steep discounts to entice passengers, but Chiron said that might not be the case this time.
“I don’t foresee fire sales, but there will always be deals. Nothing reminiscent of offers after 9/11 or the financial crisis,” Chiron said. “I know people are very excited to go on vacation. Cruises will be more meaningful and beneficial considering what we’re all going through right now. I’m sure first passengers will feel quite triumphant and jubilant.”