Royal Caribbean announced this week what could be the definitive travel experience: a nine-month around-the-world cruise. Given that the global economy has yet to rebound fully from the pandemic, we will give them credit for moxie. Images of the Diamond Princess floating in Yokohama harbor, unable to disembark some 3,700 passengers, will presumably be recast as science fiction by the time this cruise sets sail in December 2023.
The rack rate for the 274-day journey is $61,000 per person for an interior room. Royal Caribbean asserts that the itinerary includes 150 destinations, suggesting that each destination costs about $400. Not bad. Of course destination does not mean port-of-call. And the incidental bill is likely to weigh heavy on the traveler. We doubt they will discount laundry charges, although they may offer a spa certificate or two.
So what’s going on? Royal Caribbean’s marketing department is operating in overdrive, trying to get their firm out of the revenue abyss created by the pandemic. The firm’s stock price (NYSE: RCL) has yet to recover from the low reached in March 2020; it now hovers at levels seen in 2017. Compare Hilton Hotels, another hospitality sector player and fellow constituent of the S&P 500; its stock (NYSE: HLT) is bouncing along at all-time highs.
The so-called Ultimate World Cruise helps Royal Caribbean to re-focus its marketing campaigns on attainable luxury, rather than coronavirus defense. The company and others in the industry are presumably more comfortable with consumer messaging, than public-health broadcasts. Most industry executives assume that vaccine mandates and negative test requirements provide sufficient cover. Regardless, this cruise is not scheduled to depart for another two years. Much can change between now and December 2023, just as it has between October 2019 and October 2021.
The cruise-line business is operating on a limited-scale basis at this time, either within travel bubbles or on a cruise-to-nowhere basis. We think it is naïve, if not deceptive, for the industry to be baiting travelers with global packages, however distant the prospect. Fortunately, from a consumer perspective, if you can afford the pricey fare, you can probably afford the travel insurance required to cover the outlay.
What will it take for institutional investors to return to the sector? Given overall buoyancy in the S&P 500, the downward pull on Royal Caribbean’s stock price is severe. Other cruise lines suffer from similar problems. We think it will be hard to allure smart money to the business until there is sustained evidence of profit delivery. And that, realistically, is a distant prospect. ■
Our Vantage Point: The cruise-line industry is a lingering commercial casualty of the pandemic. Opportunities in this hospitality segment exist, but they are likely to be found in restructured, niche businesses with transparent and controllable cost structures.
Learn more at Business Insider
© 2021 Cranganore Inc. All rights reserved.
Unauthorized use and/or duplication of any material on this site without written permission is prohibited.
Image shows Spectrum of the Seas, a Royal Caribbean vessel launched in April 2019. Credit: Phuong at Adobe Stock.
A first-hand account of dark tourism would seem like an odd choice to be featured here. Think again. Thanatourism is an ever-growing field of the hospitality business, albeit one that is seldom discussed in the trade. One reason is that aspects can be deeply personal. Travelers may visit dark sites—such as the September 11 Memorial and Museum in New York or the Killing Fields of Cambodia—to satiate a desire to understand death. That is hardly the sort of experience that hoteliers can scale in travel magazines.
