Coronavirus Sailing Cancellations Start to Hurt Royal Caribbean’s Earnings

Royal Caribbean Cruises has suspended three more sailings through Feb 8th on Spectrum of the Seas, homeported in China, amid aggressive measures pursued by Chinese authorities to contain the spread of coronavirus.

Spectrum of the Seas
Image Courtesy: Meyer Werft

The move follows the cancellations of sailings on the Quantum-class cruise ship that were scheduled to depart on January 27 and January 31 from Shanghai.

The Spectrum of the Seas was custom built for the Chinese market, and made its debut in China in June 2019, a couple of months after its delivery from German shipbuilder Meyer Werft.

The Bahamas-flagged vessel altogether has 18 decks and can accommodate 4,246 passengers and 1,551 crew members.

The company estimates that this (which included the Chinese new year’s cruises) will impact 2020 financial results by approximately USD 0.10 per share. If the travel restrictions in China continue until the end of February, the company estimates that this would further impact its results by an additional USD 0.10 per share.

“There are still too many variables and uncertainties regarding this outbreak to calculate the overall impact on the business. For example, we expect an erosion of consumer confidence in China could have an additional impact on load factor and rate in the region until the market normalizes.

“If these travel restrictions continue for an extended period of time, they could have a material impact on the overall financial performance of the company,” the cruise liner major said in a statement.

For the winter sailing season, the company only has one ship based in China; two additional ships are scheduled to join in May and July 2020, respectively.

For all of 2020, China represents about 6% of the company’s capacity.

Royal Caribbean is not the only cruise company affected by the ongoing situation in China.

MSC Cruises and Costa Cruises also had to suspend several of their sailings planned for this and next week in order to comply with the measures being undertaken by the Chinese authorities to mitigate the spread of the virus.

According to the latest update from the Guardian, the death toll from the coronavirus in China stands at 170, with 7,711 confirmed cases of infections.