The cruise ship industry is squarely in one of its stormiest periods in its history, and it’s hard to tell if it can reach calmer waters anytime soon. Over the past month, cruise line operators have faced an onslaught of debacles. First, the tragic capsizing of Carnival’s Costa Concordia off the coast of Italy in January, then public uproar over the cruise company’s initial remedy of offering a 30 percent discount off a future cruise to select survivors rather than a full refund to all; escalating unrest in the Middle East forcing cruise operators to cancel stops, and a stomach flu virus affecting hundreds of passengers on three ships that docked in Florida and Louisiana in February. Also in February, multiple lawsuits were filed against Carnival, the parent company of Costa Cruises, the Italian cruise line operating the ship.
The industry’s struggles are reflected in bookings data for Carnival and Royal Caribbean, which make up nearly 75 percent of industry revenue. Both cruise lines reported double digit declines in bookings so far in 2012, which will impact occupancy for the rest of the year, since the bulk of bookings occur between January and March. Carnival expects to lose between $155 and $175 million in 2012, but can mitigate its losses by offering steep discounts, particularly to new customers. The market segment most impacted will be first-time cruise travelers, as opposed to seasoned cruisers, who are more familiar with ship safety. First timers make up 10 percent of all passengers, according to Cruise Lines International Association.
The good news for cruise liners: in a recent poll by CruiseCritic.com, more than two thirds of respondents said they are not concerned about taking a cruise again despite the Costa Concordia accident. Cruise operators will be waiting for them with open arms.