March 13 marked the one-year anniversary of the first voluntary cruise suspension of CLIA lines.
Since then, with the exception of a handful of sailings in parts of Europe and Asia, the industry and its hundreds of cruise ships have been at anchor, waiting for the pandemic to subside and, in the U.S., for the CDC to clear a regulatory path for cruising to resume.
In the second of this two-part series, we talked to people at the cruise lines and asked them to share what a year of the near-global cruise shutdown has been like on a personal and professional level, and how they kept up morale among their colleagues and travel partners.
Frank Del Rio, CEO, Norwegian Cruise Line Holdings
This year has gone by faster than any other. It’s been a whirlwind. Days turn into weeks and weeks into months and months into quarters. It’s just a blink of an eye.
The first thing that came to my mind when we first had to suspend — and at that instant, no one really knew how long it was going to be — the general consensus was: It’s a cold, it’s a flu, it will be over. I thought, we’re having such a great year, we’re marching toward record earnings, and this is going to shave maybe 10 cents off our earnings per share.
Of course, it certainly was a much greater issue than that. We had a senior leadership meeting, as we do at the end of every quarter; it was the last time we were together in our boardroom. I remember saying, “We are at war.” We’d suspended or canceled sailings in Asia, and I remember saying, “Boy, am I glad I pulled [the Norwegian] Joy out of China,” because that was the first place that got hit. But by the time we had this meeting, I knew we were at war, and I told my team, “You have to prepare for war, and you don’t ever know how long it’s going to last.”
The cruise industry is very predictable: We book cruises so far in advance, you have great visibility as to when cash is coming in and what your expenses are. It becomes a machine. When the receipts stop, that’s a big issue, because for a company our size, we hold very little cash, because we don’t have to — we know more cash is coming tomorrow and the next day, down to the penny. So when the cash stops coming in and your expenses continue, it’s a shock to the system. Especially when the money also starts going out in the form of refunds. So the whole business model was turned upside down.
The concern was always liquidity, and the cruise industry has done a great job of bolstering their balance sheets through capital raises. We are well positioned to survive longer if we have to — and we hope we don’t have to. Because what a way to waste good money. We’ve raised over $7 billion, and we’ve got nothing to show for it. Imagine what we would do with $7 billion in cash in the good old days? The islands would be developed to the hilt, the ships would be completely refurbished. We would be doing all sorts of things with this capital that, today, we just use to survive until we’re allowed to cruise. It’s sad that we’ve had to raise so much capital to merely survive and that we don’t have anything tangible to show for it at the end of the day.
But that’s what you do in a war. Your whole life is disrupted. You leave your family behind, your job behind, your future behind, and you have this one goal: survive and get back home. And that’s the way we approached it.
I’d like to see what happens to any other industry — the auto industry, technology, banking, healthcare, retail — to have zero revenue after one year. It’d be massive casualties. Our whole industry has survived. I’m proud of the work that my team has done, proud to stand alongside my peers. We’ve demonstrated that even something as dramatic as a 1-in-a-100-year event didn’t knock us out of the box.
The demand for cruise is unbelievable. We’ve seen pricing strength continue from before the pandemic, without marketing stimulus, without a full complement of travel agents working, with the whole world shut down, uncertain when it opens again. For 2022, we are substantially better booked at this point of the booking cycle than we were at the same time for 2019, and 2019 was a record year. To have that kind of demand shows the loyalty and resiliency of our customers. They love cruising, what cruising offers, the value, the variety. They want to cruise, and we’ve been shut down for a year. That means 30 million-plus people have not been able to cruise.
I see boom times, the golden era of cruising all over again, once we’re allowed to cruise. So we just have to grin and bear it and know that, after every major war, good times come. We’re going to come back better, stronger, more efficient, more focused on the customer than ever. We owe the customer for their loyalty, and I can’t wait to pay them back.
‘I see boom times, the golden era of cruising all over again, once we’re allowed to cruise. … after every major war, good times come.’
We never give up, that’s our motto and corporate culture. We knew that as long as we could raise the capital, which we have, we were going to win this.
The low point of the last year was, after the No Sail Order was lifted, it got replaced at the end of October with a Conditional Sail Order (CSO). And the word conditional is really conditional. But the vaccine is changing everything. The [CSO] was issued when the vaccine did not exist and the main defensive line was testing and masking. The Healthy Sail Panel that we [formed] in conjunction with Royal came up with 74 recommendations above and beyond that. We were disappointed the CDC didn’t pay more attention to it. But the vaccine is making great progress. We are hopeful that the CDC will begin to see that the vaccine is effective and that travel is just part of life. We can’t continue to be under a rock. There’s been great damage done to this world, to our country and to our travel industry, whether it’s airlines, hotels, cruise lines. But among all of those, the only one shut down by the CDC is the cruise industry. I can’t begin to tell how disappointing and frustrating that is. It’s easy to point the finger at the CDC, but we’re a global industry. We visit over 500 ports around the world, and you can count on one hand the number of ports that are open to cruising today. So it’s not all about the CDC.
I’m very pleased to see Singapore is open, Israel is going to open, Greece will open soon, the U.K. will open soon. Italy and Germany have already opened. You’ve got momentum. The more countries that open up around the world, that bodes very well for the industry. To truly be back to normal, we need to be visiting those 500 ports that we used to visit. And it’s going to take some time.
My team makes it a lot easier for all of us to get through this. I’ve got the best team in the industry. The culture we have at [Norwegian] is one of partnership, brotherhood, sisterhood, cooperation. We’re all in this together. There are days when they pick me up, and there are days when I pick them up. It really is a team effort. But at the end of the day, I’m the head of the company, and to some degree, everybody marches to my tune. And I remain optimistic that not only will we survive this war, we’re going to emerge, roaring ’20s-style, ’50s and ’60s expansion-style, ’80s and ’90s technology-rules-the-world-style. You never really know what you have until you don’t have it.
Arnold Donald, CEO, Carnival Corp.
The industry’s decision to voluntarily pause was enormously consequential, and we knew it would be difficult to manage. It seems unlikely anyone could have anticipated the reality of the situation or predicted how long it would last. But we did what we thought was the right thing to do to mitigate the spread of this virus and serve the best interest of public health.
From the time we paused, we felt it was wise to hope for the best but prepare for the worst and put things in motion to allow us to withstand an extended pause with zero revenue. We acted quickly to give ourselves a financial runway, raising over $23 billion — with no one in the office! That was an incredible feat and learning experience for getting work done in new ways. I’m extremely proud of how our team came together under difficult circumstances to make that happen.
In the beginning, we did everything possible to minimize the impact on each of our employees and protect our employee base, while also acting to give the company the best chance of survival going forward. We had to make a lot of tough decisions, including some extremely difficult employee actions involving our highly dedicated workforce as we moved to conserve cash across the company. We care deeply about all our valuable and talented team members; they are the foundation of our company, so it was very difficult, knowing the impact it would have on them.
Our highest responsibility and top priorities are always compliance, environmental protection and the health, safety and well-being of our guests, the people in the communities we touch and serve and our shipboard and shore- side employees. Those principles remained extremely important during that chaotic period at the beginning of the pandemic when very little was known and the entire world was trying to understand what it was facing.
As we shifted to managing the pause, the general mindset was to keep clear on our priorities and encourage and reinforce our learnings around frequent communication, listening and working together.
The team worked for several months to repatriate 90,000 crew members under the most difficult circumstances, with closed borders and airlines being shut down. The amount of dedication on our people’s part — those who were being repatriated and those supporting the repatriation efforts — has been one of the most gratifying experiences.
We are fortunate to have strong, pent-up demand and the support of millions of loyal guests who are eager to cruise. We’re encouraged to see demand from new guests, as well. Guests have expressed their love of cruising in so many different ways, and that has been extremely rewarding and encouraging during this tough period.
‘We are fortunate to have strong, pent-up demand and the support of millions of loyal guests who are eager to cruise.’
So, concerns around demand do not keep me up at night. What does? Before the pandemic, I used to say that people being afraid or unable to travel was the only real risk to our business. The pandemic has produced both at the same time. So from now on, in response to the question of what keeps me up at night, expect me only to say positive things!
As an industry, we have a long history of collaborating on health and safety, but clearly this virus has special challenges. We have been working with world-leading public health, epidemiological and policy experts around the world to develop new and enhanced protocols based on the best available science. As we have demonstrated with our early sailings in Europe with our Costa and Aida brands, initially we are going to have limited guest occupancy and sailings with a small percentage of the fleet. [The Europe sailings] have received high guest-satisfaction scores and enabled us to gain valuable experience with our enhanced safety protocols. We’ll continue to apply those key learnings as we gradually resume guest operations around the world, always in the best interests of each region and overall public health.
And as long as we continue to work together, there will be brighter days ahead. Perhaps most importantly, we have continued our focus on actively listening to everyone we can, including employees, guests, trade partners, destination officials, shareholders and anyone with a vested interest in our future. Everyone has a role to play, and our collective diversity of thinking produces ideas that can help overcome challenging times like these.
As for the future, we’ll continue to evaluate every aspect of our operations to come back better and stronger and position ourselves for growth over time. The cruise industry is extremely resilient and supported by millions of enthusiastic guests. We look forward to getting back to doing what we do best: providing the best vacation experiences, and one of the best vacation values, in the world.
Vicki Freed, Royal Caribbean International’s senior vice president of sales, trade support and service
After the first cruise pause, there was a lot of shock. But none of us could have predicted that, a year later, we’d still not be cruising in a major way. All of us thought this was a temporary pause and that in a couple weeks, maybe 30 days, we’d all be back.
Royal Caribbean International CEO Michael Bayley and I take walks outside. The two of us have been in this industry for decades, and last week, we just looked at each other and said, “What happened?” Never in our wildest dreams could we have predicted or imagined that this would be the way we are.
In the beginning, we were all more hopeful: OK, we’ll pause for another 30 days and then we’ll be back. As time went on and things have happened, like recently with Alaska, we realized this isn’t going to be quick.
We need travel agents to be there, strong, when we are back sailing. We thought, what is it that the trade needs now? Money, to bridge the gap until we get back into service.
We kicked around bonus commissions, but those are paid at the time of sailing. We’d have Zoom meetings, and Royal Caribbean Group CEO Richard Fain would say, “Come back with suggestions.” And under his leadership, [we came up] with the $40 million RCL Cares loan program. Fain, Bayley and Lisa Lutoff-Perlo were all very involved.
If you look at the story of Royal Caribbean, it is in our DNA to help people. You’ve seen it with the hurricanes — we set up kitchens in Freeport, Bahamas; we used our ships to bring generators, food, hospital supplies to ports around the Caribbean.
The reason we’re so concerned about the trade is because the majority of our business still comes from the trade. We need to make sure that they’re going to be around to help us recover. We respect the success they’ve given us over the years. You can’t forget that. You can’t be a fair-weather friend. A lot of agency groups are really pushing their members to apply for the loans. Why would you not take advantage of it? It’s interest-free.
‘We need to make sure the trade is going to be around to help us recover. We respect the success they’ve given us over the years.’
I’ve always maintained a very strong relationship with the trade. They know I’m sincere, they know I care about them, and I think it’s a mutual respect. I started the Coffee Talks a year ago to stay engaged with them. It’s amazing to me that the numbers [of participants] have not gone down. It’s thousands. When I had the Royal gift giveaway, I maxed out at 5,500. That was probably the most fun I’ve had in all of 2020. I’ve transitioned from giving away free cruises to giving away gift cards. I will go back to free cruises at some point, but right now, I feel like the trade needs money.
I never thought I’d be doing it this long. I’m not trying to promote and sell as much as educate and inspire, help advisors stay connected with clients. I’m big on the FCCs [future cruise credits] — if you’re the travel advisor of record and you were the one that canceled a sailing on behalf of a client that got an FCC, I want you to get the future business.
This year has been an emotional roller coaster, but we have to keep moving forward. That’s the message I try to bring to the Coffee Talks and that I have to bring to my own personal life. Sometimes I sit here and say, what the hell happened? Then I think, OK, it has happened, and we can’t makes sense of it, so, every day, we might as well hit the reset button and start figuring out what we are doing next.
I was so happy when the vaccine came out. That moment made me feel hope and optimism. In 2022, people are going to travel — they are going to say, “I missed my vacation in ’20 and ’21. I just lived through two years of challenging times. I am going on vacation.”
Ruben Rodriguez, president of MSC Cruises USA
I was in a unique situation last March. I had just rejoined the industry and MSC at the same time the industry announced its voluntary pause. I had prior cruise experience, so I was able to quickly focus, along with the rest of our senior management team in Geneva, on immediate steps we needed to take.
We quickly formed a crisis committee comprised of our senior management team as well as local management, with the immediate priority of getting our guests on ships around the world home safely. We then quickly shifted to getting our crew safely home to rejoin their families.
My aim is to be authentic and transparent with my team about the challenges we’re facing and acknowledge the uncertainties of the situation. At the same time, it’s important to continue to highlight the things we have to be grateful for. We’re encouraged by the rapid progress in vaccinations, and we’re optimistic that it points to a continuing global recovery as the year progresses.
We were the first major cruise line to restart, and nearly 40,000 guests have sailed with us in the Mediterranean since August. We’ve demonstrated that, through the implementation of comprehensive health and safety protocols, a safe and enjoyable return to cruising is possible.
When our teams in Europe started working with the EU last summer on the protocols, the prevalence of Covid-19 and infection rates in Europe was very different from in the U.S., and we were able to work with the various EU institutions to restart cruising. We continued to evolve our protocols as the situations changed.
Given our experience sailing in Europe, there are many lessons learned and we are leveraging those insights in our ongoing dialogue with public health and port authorities in the U.S. and other regions around the world, as we all seek to restart cruise operations when it’s safe and appropriate to do so.
And we continue to invest for the longer term and build for our future. This includes the introduction of two fabulous new ships this year, the MSC Virtuosa and MSC Seashore. The company remains committed to investing in the U.S. market and expanding our presence, evidenced by bringing our newest ships, including MSC Seashore later this year, to the U.S., and proceeding with plans for our new terminal in Miami and expanding our homeports with the introduction of Orlando.
What I have missed most this year is interacting with guests and crew in person. I miss seeing them, learning from them and making the cruise experience better based on those interactions.
‘What I have missed most this year is interacting with guests and crew in person. I miss seeing them, learning from them.’
Looking ahead, I can’t wait to be on our very first U.S. cruise. I’m excited to welcome and sail on the Seashore in November. I visited Ocean Cay MSC Marine Reserve, our private island in the Bahamas, but not yet with guests, so I’m looking forward to visiting, exploring, relaxing and enjoying the natural beauty of the island with guests and team members.
Cory Wallace, national accounts manager, Celebrity Cruises
I was literally on a cruise last March 12. I had just told a friend there was no way her cruise the next month would be canceled. I said, Princess is shutting down because of the negative press they got. There’s no way in this world we’d shut down. Maybe three hours later, we got a notification internally that we would be suspending, as well.
It was crazy. Even after 9/11, we never shut down. We thought it would only be a one-to-two-month pause.
We’d decided on a June restart. As I saw the case numbers rise, that was alarming and [then] thought it would be August. But then August came and we continued to suspend. I’m still in disbelief that we are suspended through April 30. [Editor’s note: After this interview was conducted, Royal Caribbean Group extended its brands’ pause through May 31.]
For the previous several years, we’d been seeing exponential growth. We were on this high and doing well, and then something comes along that was beyond our control.
Princess got so much bad press — unfairly. Cruising became the poster child for this pandemic, and as cases continued to rise everywhere, we were still getting knocked. I’ll be in the cruise industry 20 years come August; it’s near and dear to my heart. I take knocks on cruising personally. The news was not about my cruise line, but it was still very frustrating that they were attacking our industry, [even after] there were 40,000 cases and it was clear this had nothing to do with cruising and was a pandemic. It was hurtful — nobody wants to be targeted or be the face of a problem.
My role evolved in so many ways in the last year. At first, we weren’t selling. We had to be sensitive to what people were going through and nobody was booking cruises. We were updating accounts on programs we put in place for guests to feel comfortable putting down deposits, to know how to get refunds, etc. Then we started getting back into the sales conversation. By May or June, we started marketing a little again.
[Previously, I’d often] go to my accounts’ offices to do training and take them to dinner. The last time I actually saw one of my accounts in person was March 6, 2020. It’s been an evolution to adapt to a virtual realm. I think of myself now like a Swiss Army knife — I do whatever the account needs me to do. There’s also more negotiations: the accounts are looking for co-op dollars, and we’re not sailing for a year now, so that’s a lot of lost revenue. There is the balancing act of trying to be good stewards of the organization and use the dollars we have to get the best ROI.
Agents are frustrated because they keep having to cancel for their clients. A few agents say, “I’m not booking anybody, because I don’t want to cancel.” I sympathize. If you keep booking and keep getting cancellations, it will lead to frustration.
I’m not judging those who don’t want to book right now but feel that’s shortsighted. If you’re not booking those clients, someone else will, so your pipeline will be in jeopardy.
‘If you’re not booking clients now, someone else will, so your pipeline will be in jeopardy.’
The most difficult part of this entire thing for me is seeing my accounts struggling. These agency owners, some spent their life savings to build their business. They gave it their heart and soul. I’ve been in the industry 20 years — you care about people, and seeing them suffer, seeing the pain and hearing the anguish and concern in their voices when they talk [is painful].
Celebrity and Royal have been phenomenal in terms of trying to keep us and the agent community whole. That’s something I take a great deal of pride in. Everyone wants to be part of an organization that shows it cares, and this is one that does.
The cruise industry is very resilient, and we will bounce back. My favorite expression is, “this too will pass.” The numbers for late ’21 are looking good and ’22 are very strong. The vaccine rollout has helped tremendously.
The sun will shine again at some point. If nothing else, this will give everyone in this industry a greater appreciation of what we do and how fortunate and blessed we are to be part of an industry that enriches and enlightens peoples’ lives, exposes them to other cultures and helps them create memories that last a lifetime.