The covid-19 crisis may dramatically decrease the demand for cruisers in the coming years and months. First time cruisers who have seen the media stories about ‘super spreading’ ships may avoid booking and even experienced cruisers are unsure about what the future of cruising will hold. Increased prices of travel insurance, reduced ports and social distancing onboard does make it feel as though the future of cruising is doom and gloom. But in 2021 I think we can expect to see cruise prices plummet.
Will Cruise Prices Go Up or Down In 2021?
There are a number of arguments both ways. The mostly likely reason for cruise prices to go down is that many first time and experienced cruisers have been put off of cruising by the crisis so demand may be lower. However, prices may increase as cruise lines try to implement social distancing onboard and re coop some costs lost during the crisis.
Having said this, there are a number of signs that I have already seen which indicate that prices will fall. It may be a case of WHEN will prices fall, as opposite to IF they will fall.
Potential First Time Cruisers May Not Book
If you’ve seen anything cruise and covid-19 related in the news you’ll likely have seen stories about ‘super spreading’ cruise ships. Cruise ships are often described by the media as petri dishes for illness but this couldn’t be further from the truth. Despite the majority of claims in these stories being incorrect the damage in regards to the cruise industry’s image is likely already done.
Coronavirus isn’t the first thing to do this to the industry, cruise ships have been under the spotlight for years when it comes to Norovirus. Norovirus is a highly contagious virus which causes stomach upsets. Despite the fact that Norovirus is sometimes known as a ‘cruise illness’ only 0.18% of cases happen on cruise ships and 62% in hospitals. The media doesn’t report on that though. – source.
It isn’t unrealistic to assume that potential first time cruisers may be put off by the news stories and won’t consider a cruise as a result. It’ll be very difficult for the cruise lines to change this image. Good news doesn’t ever travel as fast as bad news.
Reduced demand could lead to a decrease in cruise prices.
The Uncertainty About The Future of Cruising May Decrease Demand
Many people who have previously cruised may be put off of cruising by the fact that we don’t know what cruising will look like in the future. At the moment we are unsure about social distancing measures with some cruise lines stating that they’ll be removing buffets, introducing my stringent health checks and limiting the number of passengers in venues onboard.
We also don’t know if we will be able to visit certain ports as some are closing their doors to cruise ships. The Seychelles for example have banned cruise ships until 2022. Canada has recently extended its ban through October which means that any alaskan cruises this season are unlikely.
This may lead to a decrease in cruise demand or may just mean that cruisers postpone their cruises into 2022 and beyond.
It may be the case that passengers have to provide ‘fit to travel’ certificates. We have seen this with many cruise lines who are asking for a doctors note for over 70s passengers. The Bahamas are also asking tourists for a negative Covid 19 test within 10 days of their travel date. Both of these things could end up decreasing the number of passengers willing and able to cruise.
Cruise Lines Need Income
The Coronavirus crisis has caused MASSIVE financial problems for all cruise lines. Royal Caribbean is estimating a monthly cash burn of around $250 million dollars. No company is designed to deal with such a long period of time without any revenue.
The cruise lines have been able to improve their liquidity and survive by seeking private investors, releasing more stocks onto the market and keeping as much money within the company as possible through future cruise credits.
If the cruise lines aren’t able to fill their cruise ships they will more than likely be forced to reduce the prices of the cruises. Cruise lines are no longer in a position where they could risk having unsold cabins. The average cruiser spends around 50% of their cruise fare again onboard on things like drinks, gambling and spa treatments. Even if the cruise line has to sell cabins at a loss they could in theory make a profit on cruisers who spend a lot onboard.
The danger of reducing prices last minute is that passengers may learn to expect this and would therefore be unwilling to pay a higher price earlier, preferring instead to wait until last minute and chance the cruise being sold out.
Luxury Lines May Do Better
It may be the case that smaller more luxurious cruise lines have the advantage as they already have a greater amount of space per passenger. Cruisers may feel safer on a 900 passenger Viking cruise ship as apposed to a 7000 Royal Caribbean ship and so will chose this option. River cruising could also increase in popularity as the ships usually only have around 100 passengers and it would be much easier to enforce social distancing rules.
Having said this, many people have lost their jobs or been placed in financial difficulty by the crisis. This could mean that passengers have less money to spend, or possibly no money at all.
Travel Insurance Changes May Decrease Demand
The cost of travel insurance is set to increase and it may not actually be very useful. If you were to book a travel insurance policy now it would not include any coronavirus related claims apart from emergency medical expenses and repatriation costs. If your cruise was cancelled due to coronavirus you wouldn’t receive anything from your insurance. Most companies aren’t currently selling the travel disruption insurance that they usually would.
If you bought travel insurance before the Coronavirus crisis you will be covered for Coronavirus related events.
It is worth noting that if the cruise line cancels your cruise you would receive the money back from the cruise line but this reduced coverage and increased cost pay put off many cruisers and reduce demand.
The average cruise passenger is in their 50s with many being much older. My gran is 93 and still loves cruising! Getting travel insurance at this age is already very expensive and the expected increase in costs could mean that many people are now unable to cruise.
Some Cruise Lines Are Already Reducing Prices
We are already seeing some evidence of cruise lines reducing prices, particularly for new ships.
I have JUST booked a cruise for 2021 for £55 per night, including gratuities on P&O’s new ship Iona! Virgin Voyages have also cut their prices dramatically as well as offering guests with cancelled cruises 200% onboard credit and even more in some circumstances. The situation caused by the Coronavirus is difficult for all cruise lines but possibly more so for those who are set to be launching new ships this year.
There definitely are bargains out there if you know where to look for them. If you are interested in learning more about how to cruise cheaply, start now by joining the How to Cruise For Less cruise course. You’ll learn how to save 60% off advertised cruise prices and for a limited time, I’m also throwing in an audio consultation with me (usually $30).
Cruise Prices May Also Rise
There are many reasons why cruise prices may also rise. Many people are seeing that at the moment cruise prices are higher than this year but I suspect that the prices will lower when we know more about the future of cruising.
Currently flight prices are extremely expensive due to limited capacity and the same could happen to cruise ships if they decide to reduce the numbers of passengers that they operate with. This may be necessary for adequate social distancing to work but realistically I cannot see how cruise lines would be able to operate at 50% or lower capacities. Again, if this does happen it’ll likely be short term with things returning to normal at some point in the future.
Other Benefits Instead of a Reduced Cost
If demand does reduce as mentioned above the cruise lines may look for other ways to attract cruisers such as onboard credit, drinks packages or excursion credits. If a cruise line was to throw in something like a soda package this is a relatively small cost to the cruise line but could save passengers considerable amounts of money. A soda on a cruise usually costs around $4 and it’s amazing how much soda you can get through on a cruise!
If some cruise lines go bust there will be less choice for cruisers and a lessened supply may lead to increased demand. Increased demand for cruises with lessened options may mean that cruise lines are able to increase their prices as passengers now have less choice and are unable to chose the option which they may have previously chosen.
Limited Spaces Due to Future Cruise Credit
The majority of future cruise credits currently being given out have to be used by the end of 2021. This means that a lot of people who had cruises booked for 2020 have moved these to 2021, in addition to the people who had cruises originally booked for 2021. This could mean that there is less space onboard and as a result prices rise. That said, only around 50% of passengers have opted for the future cruise credit with the other half taking cash refunds.
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