Cruise industry set to resail, but with changes: Hackman

Michael Hackman

The cruise industry has gone through its fair share of trials over the years, but nothing has accelerated trends within the industry more so than the Covid-19 pandemic, says cruise industry expert Michael Hackman.

“Historically, cruise shipping has proven to be resilient in a crisis,” notes Hackman, Managing Director of Admirals Associates, a service provider to the cruise, ferry, and superyacht sectors.

In 2003, the SARS respiratory virus caused massive disruption to cruises in Asia, despite there being relatively few infections and deaths globally. Years later, outbreaks of the Avian Flu and the H1N1 swine flu forced the cruise industry to adopt even more passenger testing and quarantine measures.

But time and time again, the cruise industry has been able to come back stronger. Even when the 2008 financial crisis was wreaking havoc across the world’s economies, the cruise industry was still able to attract a record 13 million passengers, up 2.4 percent from the previous year.

It’s true that the latest pandemic may have just trumped all others as being the most disruptive event in this side of the century, but nevertheless, there is an expectation that the cruise industry will enact its trademark rebound once it’s over.

That being said, Hackman notes that the industry will likely have had to go through a raft of changes first.

“This pandemic has undoubtedly changed the way the cruises will operate in the future. This has been abundantly demonstrated by Genting Cruise Lines who are making those changes now for future deliveries.”

Last month, Genting CEO Colin Au detailed the innovation and technology set to come into place in its new Universal line of cruise ships. According to Au, these future ships will be “optimally designed for social distancing”, and come with numerous health safety features in the event of future viral outbreaks with 20 percent more space compared to comparable ships.

“In keeping with their record of industry firsts, they are reimagining the design of new builds going forward to cater for public health matters.”

Cruise ship customers might also see some changes to the way they’ve experienced cruise ship holidays.

“In the short to medium term, shorter itineraries will be considered, with possibly more operators conducting more cruises to nowhere, or at least in close proximity to shore medical assistance.”

Ships may also become smaller, reversing the trend that has seen increasingly larger ships with more capacity over the last few decades.

On this end, it’s worth noting that increasing social distancing on board will mean ships may have to accommodate reduced guest numbers, which will put some upward pressure on pricing.

“After years of steady increases in ship size and guest capacity, there may be a rethink as to what is optimal post-pandemic size. Time will tell,” said Hackman.

“But there will always be a huge demand for large ships with family and retiree budgets. This demand will be generated through attractive offers. At the other end of the spectrum, expedition and private cruising will see a comeback as guests from that segment aren’t as price sensitive. Silver Seas is reported to be converting Silver Wind into an ice-class expedition ship.”

There are other considerations. Obvious ones being travel and business interruption insurance policies – which will need to be more comprehensive, and thus more expensive. Last-minute cancellations are being offered to appease hesitant customers, but it’s unknown how long the industry will be able to keep this up.

“This crisis has presented opportunities to right-size fleets, workforce and distribution channels, and to do it quickly.  A lot of tonnage that was marginal at best in the good times now is being broken up. The industry is restructuring to survive.”