How big is the cruise industry?
2019 was a record year for the Global Cruise Industry with nearly $28 billion in total revenue.
However, Covid shook the industry almost to death. And 2020 revenue dropped to about a quarter of 2019’s take. As a result of Covid older boats were retired quicker than previously planned. In addition, newer boats were introduced, and upgrades added to the surviving fleet.
According to the Cruise Line Industry Association, “More than 75% of ocean-going member capacity has returned to service.”
When The Cruise Industry Will Become Profitable Again?
International cruises have grown in popularity worldwide over the five years to 2021. Moreover, cruise tourism was one of the fastest-growing segments of the tourism market. Between 2016 and 2019, the surging demand for cruise line services, rising consumer spending, and total recreation expenditures contributed to the robust revenue growth in the industry.
The COVID crisis strongly disrupted the cruise industry. Cruise companies were banned from sailing from mid-March 2020. Many governments and ports had banned cruise ships from docking by May 2020. The cruise industry experienced significant reputational damage due to many people being detained on cruise ships. All cruise companies have incurred multimillion-dollar financial losses since March 2020.
In 2020, the cruise industry’s average margin (profits before interest and taxes) declined to -12.9 percent.
In 2021, Carnival Corporation & plc revenue was around 1.9 billion US dollars, down nearly 91 percent from 2019. Norwegian Cruise Line’s revenue fell by 90 percent, and Royal Caribbean Cruises’ revenue fell by 86 percent.
Travel begins to return in significant numbers following the COVID-19 pandemic in 2022. According to CLIA, industry-leading protocols facilitate the resumption of cruise tourism worldwide, and people’s demand for cruises remains robust. The cruise industry is steadily recovering. Major cruise operators Carnival Corporation, Royal Caribbean Cruises Ltd, and Norwegian Cruise Line expect a return to profitability in the second half of 2022.
The biggest cruise line holding company and operator Carnival Corporation turned cash positive in November 2021, a month ahead of expectation.
The company aims to return to profitability in the second half of 2022. Carnival’s CFO, David Bernstein, said forward bookings for the second half of 2022 and 2023 are at the high end of historical ranges and higher rates. Furthermore, Carnival Corporation expects EBITDA to be higher than it was in 2019.
As a result of the end of Covid restrictions we witnessed a strong demand for cruises.
Furthermore, the pent-up demand has already resulted in a massive increase in bookings in 2022 and 2023, and a trend in higher pricing supports a positive long-term outlook. In addition, if the cruise industry normalizes and is on track for a strong recovery through 2022, we can expect to turn profitable in the second half-year of 2022.
In conclusion, the Cruise Lines International Association expects “Nearly 100% projected to be in operation by August 2022” Source.
How bad was Covid in the Cruise Industry?
“Compared to 2019, the 2020 economic data illustrates the pandemic’s amazing effects on the wider cruise community. Furthermore, underscores the importance of cruise tourism to so many economies around the world.”Source.
- 5.8M passenger embarkations (-81%)
- 576K cruise-supported jobs (-51%)
- $63.4B total economic contribution (-59%)
For more reading & statistics on the Cruise Line Industry see Cruise Industry: 100+ Statistics, Facts, and Trends 2023
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Sources
Doris Peručić. (2021). Key Factors Driving the Demand for Cruising and Challenges Facing the Cruise Industry in the Future. https://eds-p-ebscohost-com.proxy.library.nyu.edu/eds/pdfviewer/pdfviewer?vid=7&sid=0d6d5547-7542-4d00-921c-15c61e467ebd%40redis
Statista Research Department. (2022). https://www.statista.com/statistics/1224511/cruise-line-company-leading-predicted-share-growth-usa/
Antonellini, A. (2021, March 24). Covid 19 and the cruise industry [Presentation]. The Future of Adriatic Cruises, Ravena. https://www.researchgate.net/publication/350372372_COVID-19_AND_THE_CRUISE_INDUSTRY#fullTextFileContent
Cruise Line International Association. (2021). 2020 Global market report. https://cruising.org/en-gb/news-and-research/research/2021/february/2019-global-market-report
Norwegian Cruise eyes return to profitability in the second half of 2022. https://www.reuters.com/business/autos-transportation/norwegian-cruise-posts-bigger-loss-restart-expenses-2021-11-03/
Industry News. (2021). Carnival: ‘Profitable in Second Half of 2022’ – https://www.cruiseindustrynews.com/cruise-news/26440-carnival-profitable-in-second-half-of-2022.html
