Will there be consolidation within the cruise line industry?

[Milwaukee Eight]

On 4/6/2020 at 11:05 PM, paulh84 said:

I would expect to see smaller ships prevail,

I believe just the opposite. The older smaller ships are getting old and require much more maintenance. Not to mention the emissions issues they have. 
 

I know so many want the return of the old days. 
 

In my opinion 

[John&LaLa]

1 hour ago, LXA350 said:

Since demand will go down and new builds can't be cancelled very likely the companies need to consider to retire it's oldest ships and amend such pace over the next years paralel with the arrival of new builds as demand will develop. In the Case of Royal, we hopefully will see them Order smaller ships again fitting max approx 3'000 passengers when it comes to replace the remaining Vision Class and eventually Radiance Class.

 

Why would Royal go back to smaller ships🤔

[DragonOfTheSeas]

I thought the Saudi investment in Carnival was curious when I read about it.  Cruise ships do not seem to fit with Saudi culture. 

 

But, then I wondered if they would get Carnival to break off a couple [few] ships to sail embracing the Muslim culture. This is a large and untapped market.

[LXA350]

10 minutes ago, John&LaLa said:

 

Why would Royal go back to smaller ships🤔

 

To continue to offer some itinararies that can't handle th mega ships, but I guess for this in future you need to cruise with X, Azamara and Silversea.

[Roger88]

I dont expect any consolidation to happen. Its a usual thing to postpone operation due to a crisis. The only difference is that no one expected the crisis to be so big. In any case the ships and companies will continue to operate in its usual manner starting mid May I suppose. Well, will see how it goes

[bouhunter]

4 minutes ago, Roger88 said:

 In any case the ships and companies will continue to operate in its usual manner starting mid May I suppose. 

May of 2020?  LOL.

[Georgia_Peaches]

I see more of a consolidation within the company itself.  For example, if things get really desperate for RCL, I can see them selling off a branch of the company, like Azamara to help keep them afloat.  NCL has their smaller lines they could sell as well.  Just my guess.

[strathcona]

UBS did a cash flow forecast of the three major cruise line. This is the burn rate each month to service debt, operation cost and refunds. Revenue is very low, even though there are still people booking cruises as we speak. All three are borrowing on their line of credit with Carnival selling stock at $8 at share. This dilute the corp even more. They assess all three between 8 to 12 months. I hate to be one of the CEO trying to figure the way out of this mess. 

[strathcona]

2 minutes ago, Georgia_Peaches said:

I see more of a consolidation within the company itself.  For example, if things get really desperate for RCL, I can see them selling off a branch of the company, like Azamara to help keep them afloat.  NCL has their smaller lines they could sell as well.  Just my guess.

Yes, that was an brokerage assessment as well. Not a comment on the cruise line but they assess Norwegian as the weakest since they have less of an ability to consolidate operations and therefore save cost. Almost like the car industry, cutting division to the core. 

[Ourusualbeach]

20 minutes ago, Georgia_Peaches said:

I see more of a consolidation within the company itself.  For example, if things get really desperate for RCL, I can see them selling off a branch of the company, like Azamara to help keep them afloat.  NCL has their smaller lines they could sell as well.  Just my guess.

Royal has already put Celebrity up as collateral against the 2 billion loan they just took out.  The sale of Azamara would be inconsequential to their needs

[ONECRUISER]

On 4/6/2020 at 4:57 PM, Got Out There said:

Interesting to see if there will be consolidation ...... who will buy who?  Not many big players out there beyond the big four (carnival, Royal, NCL, MSC) ....

 

From a RCCL perspective, I recall years ago Carnival tried to buy them, but the Pritzker  family came in and saved the day..... later RCCL tried to buy Princess but Carnival out bid them.  Been sometime since any significant merger or buyout.   Interesting to see what happens going forward .

Not going happen

[ONECRUISER]

55 minutes ago, bouhunter said:

May of 2020?  LOL.

Yeah, people forget after 2001 9/11-Anthrax scare even half way into 2002 Royal ships were still Cruising without ships Full, this on their Newest/Largest ships. I know, took 4 Cruises from Oct2001-May2002, CHEAP!

[njkruzer]

2 hours ago, Milwaukee Eight said:

Could you just imagine a cruise ship without alcohol?  Men only in the Diamond lounge?

Was wondering the same thing!  Of course not likely as they like to make money also.

[zekekelso]

14 minutes ago, njkruzer said:

Was wondering the same thing!  Of course not likely as they like to make money also.

 

The Saudi wealth fund invests in all kinds of things that would be foreboden in Saudi Arabia. Let's not get into the politics of that, but just sayin' they are unlikely to change anything about the way Carnival is run. And let's not get into that either 🙂 For now at least, we can all cheer for all the lines.  

[LMaxwell]

I would not be entirely surprised if at some point Princess is the first to disappear with ships absorbed into other brands in Carnival Corporation; their reputation and name has been severely damaged.  United States Operations had already been merged with Holland America a few years ago.  Inheriting a couple of ships like Royal, Majestic, and Regal Princess could be quite a boon for Cunard...just thinking out loud. 

[davekathy]

3 hours ago, Milwaukee Eight said:

Could you just imagine a cruise ship without alcohol?  Men only in the Diamond lounge?

The DL will then be renamed the "Royal Order Of The Seas". Admittance will only be allowed by those with a microchip implant (done by the LA) and smuggling rum runners in. 

Edited April 12, 2020 by davekathy

[brevardcruiser]

2 hours ago, DragonOfTheSeas said:

I thought the Saudi investment in Carnival was curious when I read about it.  Cruise ships do not seem to fit with Saudi culture. 

 

But, then I wondered if they would get Carnival to break off a couple [few] ships to sail embracing the Muslim culture. This is a large and untapped market.

Saudi investment is definitely interesting.  If they could eventually gain controlling interest new era of cruising perhaps? After all one ships number one expenses is fuel.  Guess what Saudi has a lot of!!! 

[John&LaLa]

1 hour ago, LMaxwell said:

I would not be entirely surprised if at some point Princess is the first to disappear with ships absorbed into other brands in Carnival Corporation; their reputation and name has been severely damaged.  United States Operations had already been merged with Holland America a few years ago.  Inheriting a couple of ships like Royal, Majestic, and Regal Princess could be quite a boon for Cunard...just thinking out loud. 

 

You don't think P&O would be a better fit

[Georgia_Peaches]

1 hour ago, Ourusualbeach said:

Royal has already put Celebrity up as collateral against the 2 billion loan they just took out.  The sale of Azamara would be inconsequential to their needs

Dang it.  Celebrity is our go to for the most part...hope they can hang on!

[WeatherFx]

UBS seems to think they will survive barring any long term shut downs.

 

https://seekingalpha.com/news/3559072-carnival-wins-ubs-stress-test

"CCL's capital raise last week gives it the longest runway of liquidity to stay afloat in a zero-revenue scenario, at about 12-13 months with potential for another 2 months based on prolonged layups, and more beyond that (as we detail below.) That puts CCL further ahead of RCL, which we believe has ~10 months of liquidity in a zero-rev scenario, and NCLH which we believe has ~7-8 months of liquidity in such a scenario."

Edited April 12, 2020 by WeatherFx

[LMaxwell]

4 minutes ago, John&LaLa said:

 

You don't think P&O would be a better fit

 

Possibly; they share a number of sister-builds with Princess.  I don't know if there is room for P&O to expand in its markets. Cunard only runs 3 ships currently. Only used as an example. I think any of Princess mid-size ships could be rebranded and used in any of the Carnival brands.  

 

I guess the question is whether having a proliferation of brands is going to prove to be profitable, or if those brands end up drawing too many resources from the parent company to be sustainable. 

[zekekelso]

48 minutes ago, brevardcruiser said:

Guess what Saudi has a lot of!!! 

 

Bublin' curde. Oil that is. Black gold. Texas tea. 

[not-enough-cruising]

4 hours ago, Milwaukee Eight said:

Could you just imagine a cruise ship without alcohol?  Men only in the Diamond lounge?

Emotional support camels?

[grapau27]

5 hours ago, Milwaukee Eight said:

Could you just imagine a cruise ship without alcohol?  Men only in the Diamond lounge?

At least there would be no shorts or vest tops in the restaurant.

[livingonthebeach]

1 hour ago, WeatherFx said:

UBS seems to think they will survive barring any long term shut downs.

 

https://seekingalpha.com/news/3559072-carnival-wins-ubs-stress-test

"CCL's capital raise last week gives it the longest runway of liquidity to stay afloat in a zero-revenue scenario, at about 12-13 months with potential for another 2 months based on prolonged layups, and more beyond that (as we detail below.) That puts CCL further ahead of RCL, which we believe has ~10 months of liquidity in a zero-rev scenario, and NCLH which we believe has ~7-8 months of liquidity in such a scenario."

 

Thanks for this information.  I was wondering how long they could continue to bleed revenue and stay afloat.  Since this article came out before the CDC 100 day travel ban order last Thursday after the markets closed, it would be interesting to see if UBS is still recommending RCL stock and how the cruise stocks will open come Monday morning. 

 

The problem I foresee is that 0 revenue, while still having overhead costs (ships still floating around with reduced staff), inability to cancel new ship orders, added debt, no stimulus money (not registered in US and they pay no US taxes), no government bailout for same reasons they will not receive stimulus funds, increased costs due to added health related measures, lost consumer confidence (Diamond Princess public relations nightmare), will likely translate into reorganizations, if not bankruptcies.  I do hope I'm wrong.  I live in Florida where local businesses that depend on the cruise industry have the potential of becoming casualties if the travel ban lasts longer than expected.  Let's hope for the best!