Will the 2022 Recession affect NCL cruise fares?

[DrSea]

NCL is one of my favorite lines. With the US technically being in a recession with 2 quarters of negative GPD growth, how do you think this will affect cruise fares? Do you think bookings will be affected at all due to pent up demand from the COVID shut down?

 

I am not an economist. I just am always on the lookout for good bargains. Recently though, prices on NCL have been high. I am hoping that prices will be coming down soon so that I can book more cruises. Thoughts?

[BermudaBound2014]

12 minutes ago, DrSea said:

NCL is one of my favorite lines. With the US technically being in a recession with 2 quarters of negative GPD growth, how do you think this will affect cruise fares? Do you think bookings will be affected at all due to pent up demand from the COVID shut down?

 

I am not an economist. I just am always on the lookout for good bargains. Recently though, prices on NCL have been high. I am hoping that prices will be coming down soon so that I can book more cruises. Thoughts?

 

FDR has stated that he will not decrease prices to fill ships, although last minute pricing continues to be very intriguing. If anything, I'd say that if you can book last minute, you are likely to get some great deals.

 

 

Regarding the recession; Economists have been saying that 2 quarters of negative growth indicated a recession (unofficially).  Based on the Beruae of Economics, we hit that today with another -0.9%.

 

However the White house released this statement indicating there are other factors to consider and 2 quarters of negative growth does not automatically indicate a recession. 😉 

 

The administration even took the unusual step of publishing an explainer of sorts, maintaining that two consecutive quarters of economic contraction does not, in and of itself, constitute a recession. The White House posted a blog entry last week saying that in addition to GDP, data pertaining to the labor market, corporate and personal spending, production and incomes all go into the official determination of a recession.

 

 

 

[FLAHAM]

Plenty of money sloshing around in the pockets of potential cruisers who are doing well.

[Middleager]

If someone knows the answer, please also advise us which stocks to buy.  Oh, and what color is your crystal ball.

[cruiseny4life]

@Middleager I'd wait on the NCL stock. It's been hovering around $11 for awhile. Don't worry - it's going to tank again soon. I just hope someone (not Frankie boy) will be around to pick up the pieces.

[QuattroRomeo]

NCL is our preferred line, and it seems to us also  that their prices aren't as competitive as they used to be. We would rather cruise more often, but bargains are scarce. Plus, we have the added cost of exchange rates. We did an Alaska cruise in late March/early June on HAL, because the rate was significantly better.

We might have to rely on last-minute deals for a while with NCL.But that poses a problem too with escalated airfare and hotel rates last minute. What to do, what to do?? 

[PATRLR]

1 hour ago, FLAHAM said:

Plenty of money sloshing around in the pockets of potential cruisers who are doing well.

This is really what it comes down to.  

While I agree that there is plenty of money in many pockets, I wonder if there is plenty of money in enough pockets. 

[Tippyton]

Not a recession.  A "Special Economic Operation".

[yankees111]

Elections have consequences and 1 consequence might be cheaper cruises!

[graphicguy]

NCL ships have been sailing at or near capacity for the last couple of months.  If that's any indication, I don't see anything that would dampen prices short of another pandemic type of catastrophe.

 

Will give NCL (and Celebrity) credit.  They made a plan upon start up, implemented it, and didn't waver from it.  They weren't wishy-washy when it came to the parameters they had in place for crew and guests.  Last year, I recall someone saying in here that those parameters were "fluid"...and that they'd change.  They weren't and they didn't.  Tweaked a bit to allow younger cruisers to sail, but that's about it.

 

I know Royal and Carnival did "rules du jour" when it  came to sailing again.  They suffered as a result because they weren't consistent.

 

I do think all of that has meant NCL has a pretty rosy financial picture moving forward.  I invested at $11.  I get $100 OBC on every cruise as a result.  NCLH is trading at $12 today.  I see lots of upside.  My ROI is looking good with the OBC, which I'll use at least once or twice more this year.

[BermudaBound2014]

3 hours ago, graphicguy said:

NCL ships have been sailing at or near capacity for the last couple of months.  If that's any indication, I don't see anything that would dampen prices short of another pandemic type of catastrophe.

 

Will give NCL (and Celebrity) credit.  They made a plan upon start up, implemented it, and didn't waver from it.  They weren't wishy-washy when it came to the parameters they had in place for crew and guests.  Last year, I recall someone saying in here that those parameters were "fluid"...and that they'd change.  They weren't and they didn't.  Tweaked a bit to allow younger cruisers to sail, but that's about it.

 

I know Royal and Carnival did "rules du jour" when it  came to sailing again.  They suffered as a result because they weren't consistent.

 

I do think all of that has meant NCL has a pretty rosy financial picture moving forward.  I invested at $11.  I get $100 OBC on every cruise as a result.  NCLH is trading at $12 today.  I see lots of upside.  My ROI is looking good with the OBC, which I'll use at least once or twice more this year.

 

 

You can't possibly be serious. As you are full aware, it was me who suggested that protocols were fluid then, and I suggest they remain fluid to this day. 

 

NCL has done an excellent job responding to the fluid nature of Covid protocols. NCL has not 'stuck to the plan' as you suggest. They have amended it consistently since cruise resumption, proving, yet again, that protocols remain fluid. IMO; If NCL didn't waver from the plan they would already be in Ch 11. They had to make changes to stay afloat.

 

Imagine if they didn't waver, they would be the only line still requiring full mask wearing. They would also be one of the only major cruise lines to not welcome families. They would be one of the very few to require testing in overseas on all of it's ships. What do you think their occupancy loads would be if they didn't respond to the fluid nature of covid? 

 

Remember when you said NCL would not allow unvaccinated children because their policy was 100% vaccination and they were going to stick to that? At that time, I gave the policy of 100% vaccination 6 months before NCL changed that policy. I was wrong, it took 8 😉 

 

To refresh your memory on some of the changes:

- Mandatory masks were removed

- NCL first Allowed unvaccinated children under 5

- Revised to allow unvaccinated children under 12

- Eliminated testing (except the USA, Canada, Bermuda, and Greece).

- Remaining testing will likely be amended when NCL releases their 2nd quarter earnings next Tuesday.  

 

In fact, the only protocol I see remaining for passengers is 100% vaccination requirement for over 12 and I'll bet dollars to donuts this is also changed very soon. Currently several cruise lines are allowing 10% unvaccinated. Princess cruises recently put out news which stated "We Welcome the Unvaccinated" and discussed their much easier exemption process. 

 

Just today RCL has removed testing from all cruises less than 6 days and said they would look into longer cruises in the very near future. Azamaran and Virgin cruises have also removed all pre-testing requirements. It's only a matter of time before NCL does also. 

 

BTW: NCL ships aren't sailing at or near capacity. By their own admission stated they "HOPED" to get to 65% occupancy in second quarter. Perhaps they will beat this modest estimate, but no way are they full when you take into account the entire fleet. Of course, certain popular sailings may very well be sailing at or near capacity, but we all know this is not how you calculate load factors for the fleet. We'll know the answer definitively next Tuesday. I'll come back to this thread to update. If I'm wrong I have no problem admitting it. 

 

 Virtually every aspect of society has changed the way they respond to Covid because Covid itself is extremely fluid. Cruise lines are no exception and certainly NCL has responded appropriately by making changes to their Covid protocols over the last year. 

 

 

 

Edited July 28, 2022 by BermudaBound2014

[BermudaBound2014]

4 hours ago, graphicguy said:

I do think all of that has meant NCL has a pretty rosy financial picture moving forward.  I invested at $11.  I get $100 OBC on every cruise as a result.  NCLH is trading at $12 today.  I see lots of upside.  My ROI is looking good with the OBC, which I'll use at least once or twice more this year.

 

This little tid bit requires it's own reply. NCL is currently nearly 14 Billion dollars in debt. This is not a rosy picture moving forward. I won't spell it all out for you because NCL is going to release 3Q22 next Tuesday and those numbers will be much more up to date, but I will revisit this thread then to give an update on just how 'rosy' the picture really is. If you don't believe that restructuring is on the table, you are extremely naïve. 

 

BTW, you left a whole bunch of money on the table by holding the $11 stock you bought in the crash. Let's say you bought 100 shares. If you had sold it last year at $30 you would have made $2,000 profit. Switching to shorts at that time (which many of us did because we saw the writing on the wall) would have netted you another $2,000 at today's prices. More if they restructure. And that's just a mere 100 shares. The real money wasn't in holding this stock the last year because it has lost nearly 60% of it's value since the resumption.

 

 

 

Edited July 29, 2022 by BermudaBound2014

[barb65]

If I have to spend a little extra on a cruise, I tell my kids, "I'm spending your inheritance."🙂

[BirdTravels]

9 hours ago, DrSea said:

NCL is one of my favorite lines. With the US technically being in a recession with 2 quarters of negative GPD growth, how do you think this will affect cruise fares? Do you think bookings will be affected at all due to pent up demand from the COVID shut down?

 

I am not an economist. I just am always on the lookout for good bargains. Recently though, prices on NCL have been high. I am hoping that prices will be coming down soon so that I can book more cruises. Thoughts?

What recession? That can’t occur during a mid-term. 

[Jim The Lizard]

56 minutes ago, BirdTravels said:

What recession? That can’t occur during a mid-term. 

Good one, Bird.  

[david_sobe]

The question is based on a false assumption.  We are in unchartered territory since Covid and everything is upside down.  If someone would have told you that gas would go over $5.00 per gallon and interest rates would keep rising, that would be sure signs to tank the economy.  GDP is down but hiring is through the roof.  Those two indicators are usually never going in opposite directions.  Until hiring slows and people get laid off or lose their jobs there is no recession.  The job numbers last month were some of the best of economic booms.  Christmas hiring is coming too which should also yield better job numbers.  Other indicators are not great especially with inflation but until the hiring slows the economy churns on.  It seems nothing can stop this roaring economy, not Covid, supply chains, inflation, high gas prices, etc.  Its something for the history books.
Cruise prices will not come down.  People are flying and taking vacations like crazy.  I dont know where everyone is getting this money but everyone has it except me 😲  The media keeps talking recession but the economy is not listening.

Edited July 29, 2022 by david_sobe

[graphicguy]

1 hour ago, david_sobe said:

The question is based on a false assumption.  We are in unchartered territory since Covid and everything is upside down.  If someone would have told you that gas would go over $5.00 per gallon and interest rates would keep rising, that would be sure signs to tank the economy.  GDP is down but hiring is through the roof.  Those two indicators are usually never going in opposite directions.  Until hiring slows and people get laid off or lose their jobs there is no recession.  The job numbers last month were some of the best of economic booms.  Christmas hiring is coming too which should also yield better job numbers.  Other indicators are not great especially with inflation but until the hiring slows the economy churns on.  It seems nothing can stop this roaring economy, not Covid, supply chains, inflation, high gas prices, etc.  Its something for the history books.
Cruise prices will not come down.  People are flying and taking vacations like crazy.  I dont know where everyone is getting this money but everyone has it except me 😲  The media keeps talking recession but the economy is not listening.

Yeah….that’s where we’re at right now.  The time to snag a deal for cruises was this time last year.

 

That said, if you shop a little bit, deals are out there to be found.

 

I also see the cruises out of North America starting to relax the COVID restrictions for testing soon.  They were diligent in having those sailing to provide a negative test.  Now, with such a high percentage of the population vaccinated, that becomes less and less of a requirement.  NCL in particular was the leader in setting the parameters for sailing a year and a half ago.  And, their persistence paid off.

 

The result?  More people will cruise.

 

Demand is pretty strong.  I’m happy for the cruise lines.  Happy for us as we like to cruise.  Looks like strong tail winds ahead.

[phillygwm]

21 hours ago, DrSea said:

NCL is one of my favorite lines. With the US technically being in a recession with 2 quarters of negative GPD growth, how do you think this will affect cruise fares? Do you think bookings will be affected at all due to pent up demand from the COVID shut down?

 

I am not an economist. I just am always on the lookout for good bargains. Recently though, prices on NCL have been high. I am hoping that prices will be coming down soon so that I can book more cruises. Thoughts?

Recession and negative GDP are macroeconomic concepts.  The question is how is it affecting the households of people who would be inclined to cruise.  With unemployment still historically low, the real concern for households has been inflation.  Not to minimize that, but it has a regressive impact: If you're making $25K, inflation will hit you harder than someone making $250K.   

 

If employment numbers crash and inflation continues to get worse, all bets are off.  Ditto for a new, especially virulent and lethal COVID strain.  Otherwise, perhaps "destination" cruises will suffer a bit because the cost of airfare is way up.  Personally, I opted for a cruise out of NYC, which is a train trip for me.  But I just don't think most people will cut out cruising entirely, especially with travel demand so strong.

 

Edited July 29, 2022 by phillygwm

[BermudaBound2014]

30 minutes ago, graphicguy said:

 Now, with such a high percentage of the population vaccinated, that becomes less and less of a requirement.  NCL in particular was the leader in setting the parameters for sailing a year and a half ago.  And, their persistence paid off.

 

 

You must not be aware that the percentage of the population fully vaccinated in the USA is only 67.7% and this figure has remained virtually unchanged since January of 2022. It seems that those who wanted to be vaccinated did so early on.

 

I highly doubt cruise lines are changing pre-testing now because "such a high percentage of the population is vaccinated" considering that the actual percentage has remained consistent for last 8 months lol. 

 

Instead I propose that it is far more likely cruise lines are reducing the pre-testing requirements because this virus continues to be fluid and, like most viruses before it, has evolved to become far less dangerous. 

 

 

[david_sobe]

15 minutes ago, phillygwm said:

Recession and negative GDP are macroeconomic concepts.  The question is how is it affecting the households of people who would be inclined to cruise.  With unemployment still historically low, the real concern for households has been inflation.  Not to minimize that, but it has a regressive impact: If you're making $25K, inflation will hit you harder than someone making $250K.   

 

If employment numbers crash and inflation continues to get worse, all bets are off.  Ditto for a new, especially virulent and lethal COVID strain.  Otherwise, perhaps "destination" cruises will suffer a bit because the cost of airfare is way up.  Personally, I opted for a cruise out of NYC, which is a train trip for me.  But I just don't think most people will cut out cruising entirely, especially with travel demand so strong.

 

These times are unprecedented and nothing makes sense anymore.  Inflation is at record levels which if it continues a recession will definitely come.  However even with high inflation,  it was just released that consumer spending was up 1.1% in June.  Even with high prices people are spending more which again does not make sense.   Every business is hiring and unemployment is low.  Inflation usually does not happen in a recession.  Record car sales which is another indicator of a strong economy.   Recession alerts happen when hiring stalls, unemployment ticks up, inflation goes down and consumer spending slows or goes backwards.  NONE of that is happening yet GDP is down.  It makes no sense.   People compare it to the late 70s when there was stagnation with high inflation yet the recession did not come until late 1981 early 1982.  Businesses cannot even keep open because they cant find workers which also does not happen in a recession.   If the Fed is successful maybe they can delay the recession which is inevitable at some point.

Edited July 29, 2022 by david_sobe

[Daytonasailor]

20 hours ago, Middleager said:

If someone knows the answer, please also advise us which stocks to buy.  Oh, and what color is your crystal ball.

Shoulda, coulda,wooda. In October 2010, Bitcoin was 10 cents a share. If you had invested $100 you would have had 1000 shares. On Thursday, those 1,000 bit coins would be worth $48 million. Wish I had that crystal ball.

[BermudaBound2014]

11 minutes ago, phillygwm said:

  But I just don't think most people will cut out cruising entirely, especially with travel demand so strong.

 

 

I agree that there are lots of cruise enthusiasts (me included) that will continue to cruise. But do cruise enthusiasts make up enough of a percentage to get ships back to 100% occupancy? Are they 'most' people?  Arnold Donald said his ships need to operate at a 95% load factor to be profitable. NCL can't be far off that figure.

 

While travel demand remains strong and there are people who are returning to cruising, the challenge is that there maybe large groups of people who will not cruise anytime soon:

- Those concerned with getting covid.

- Those who now perceive cruising as in a petri dish

- Those hesitant of a quarantine

- Those who will never be vaccinated

- Now add to that those who won't cruise under more relaxed protocols.

 

As stated above, I think there will be lots of last minute deals to be had for those who can be patient in booking. 

[BermudaBound2014]

6 minutes ago, david_sobe said:

These times are unprecedented and nothing makes sense anymore.  Inflation is at record levels which if it continues a recession will definitely come.  However even with high inflation,  it was just released that consumer spending was up 1.1% in June.  Even with high prices people are spending more which again does not make sense.   Every business is hiring and unemployment is low.  Inflation usually does not happen in a recession.  Record car sales which is another indicator of a strong economy.   Recession alerts happen when hiring stalls, unemployment ticks up, inflation goes down and consumer spending slows or goes backwards.  NONE of that is happening yet GDP is down.  It makes no sense.   People compare it to the late 70s when there was stagnation with high inflation yet the recession did not come until late 1981 early 1982.  Businesses cannot even keep open because they cant find workers which also does not happen in a recession.   If the Fed is successful maybe they can delay the recession which is inevitable at some point.

 

I'm with you. All the parameters we have used in the past just aren't applicable today since we never shut down the entire world before. This is brand new territory.

[graphicguy]

1 hour ago, david_sobe said:

These times are unprecedented and nothing makes sense anymore.  Inflation is at record levels which if it continues a recession will definitely come.  However even with high inflation,  it was just released that consumer spending was up 1.1% in June.  Even with high prices people are spending more which again does not make sense.   Every business is hiring and unemployment is low.  Inflation usually does not happen in a recession.  Record car sales which is another indicator of a strong economy.   Recession alerts happen when hiring stalls, unemployment ticks up, inflation goes down and consumer spending slows or goes backwards.  NONE of that is happening yet GDP is down.  It makes no sense.   People compare it to the late 70s when there was stagnation with high inflation yet the recession did not come until late 1981 early 1982.  Businesses cannot even keep open because they cant find workers which also does not happen in a recession.   If the Fed is successful maybe they can delay the recession which is inevitable at some point.

Again...good points.

 

As an aside, I've flipped 3 cars in the last 12 months.  Received more for them used than I paid for them new.  Gross profit of nearly $11K.  But, it's been a perfect confluence of factors....artificially inflated fuel prices and what was thought to be a long road to EVs, which has since accelerated dramatically, so that the road is much shorter.

 

Flipped two rental properties...one in Sea Pines and one in VA Beach.  Thought I'd always keep them as rental income.  Prices got way too attractive and the general feeling of the real estate bubble about to burst forced my hand (well, not exactly forced).

 

Demand for cruises is obviously going way up.   Demand is picking up.  A cruise is still a value vacation, where you have a nice room to stay in, get fed regularly and can look outside and see exotic locales, all for one, relatively reasonable price. Can they price themselves out of the market?  Sure.  They clearly haven't yet.

 

Investing in NCL has netted me about a 30% ROI with my OBC figured in.  If I sail again before the end of the year, that number will go up.

 

I believe the cruise lines are getting back to normal after the last 1.5 to 2 years of COVID protocols.  For the most part, they did a good job of navigating those waters during that time (at least the lines I cruised on did).  That will help them.

 

I think folks are hoping for a soft landing, as this can't keep up.  Or maybe, there is a wholesale shift going on with the way we do business?  I know the auto industry is looking to shift away from typical sales of their products which hasn't changed for several decades.  Ford has just announced layoffs of up to 8,000 people who are associated with their internal combustion vehicles.  Manufacturers in general want to take the dealership experience away, much like Tesla is doing.  That would thwart any sort of price gouging that we're seeing right now.

 

Oil refinery industry is headed off a cliff.  They can't see the forrest for the trees.  Gasoline is a commodity with a shrinking demand base.  Yet, they are charging record prices.  They're shooting themselves in the foot.

 

Service industry (thinking restaurants) says they can't find help.  Is it they can't find help?  Or, is it when their workers were furloughed during COVID they found better paying jobs?  And, they need to hire at a higher hourly?

 

Almost every industry has learned to do more with less.  There are examples all over the place.

 

Boy, did I even go off on a tangent.... 😉

[CruisingSince1982]

5 hours ago, david_sobe said:

The question is based on a false assumption.  We are in unchartered territory since Covid and everything is upside down.  If someone would have told you that gas would go over $5.00 per gallon and interest rates would keep rising, that would be sure signs to tank the economy.  GDP is down but hiring is through the roof.  Those two indicators are usually never going in opposite directions.  Until hiring slows and people get laid off or lose their jobs there is no recession.  The job numbers last month were some of the best of economic booms.  Christmas hiring is coming too which should also yield better job numbers.  Other indicators are not great especially with inflation but until the hiring slows the economy churns on.  It seems nothing can stop this roaring economy, not Covid, supply chains, inflation, high gas prices, etc.  Its something for the history books.
Cruise prices will not come down.  People are flying and taking vacations like crazy.  I dont know where everyone is getting this money but everyone has it except me 😲  The media keeps talking recession but the economy is not listening.

Oh good grief 😆