Ahoy! (by Pianoman)

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I wanted to shed a bit of light on the serious issue in the cruise industry and to do that I want to offer some background information.

There are probably a few of you that never cruised or even considered cruising. It’s a massive industry! Royal Caribbean and Carnival have about 26 ships each with Norwegian and Princess having 17 ships each.

Then you have MSC, Holland America, Costa, Disney, Celebrity, Crystal, Seabourn, SilverSea, Avalon, Tauck, Emerald, Azamara, Uniworld, Regent, Viking (River and Ocean), Oceania,  Windstar, Ponant, Ritz Carlton, Virgin (probably not the best time to start a new cruise line ) and many others around the world.  A

ll of these companies have their complement of ships with new ships on the way plus extensive plans for refitting the existing ships over the next few years. Just like education having profited nicely from the Central Bankers so has the cruise industry.

Some of the new ships on Royal Caribbean, Symphony of the Seas for example, have a capacity for 6000 passengers and 2400 crew. Entire ports had to be created or rebuilt to handle the ship.  Symphony has 2 sister ships – Oasis of the Seas and Harmony of the Seas that are just as large. Carnival is coming out with the Mardi Gras with about the same capacity for passengers. Norwegian has the Bliss which is about 5000 passengers capable. More ships, bigger ships and more ports have equaled more money.

So how does one get on one of these ships? They can reserve any cruise itinerary displayed by the cruise line out to 2021 or 2022 through the cruise line or a travel agent by naming the occupants and depositing a small sum of money when compared to the full price. Sometimes someone can hold a cabin for $1 per person but most often it is from about $50 per person to approximately 20 to 25% of the cruise price depending on the promotion and the cruise line.

The remaining amount, in about 80-90% of the cruises, is taken at 90 days before the sailing with stiff penalties for cancellation and penalties getting even stiffer as one gets closer to the sailing date. Some of the specialty cruises, like the Galapagos, can make final payment 6 months in advance and a few other, more prestigious cruise lines, offer special incentives and discounts when making full payment almost a year in advance.

So what? Big deal. It is. January through March of each year the phones are ringing off the hook as people use this time of year called ‘Wave Season’ to book their next cruise.  Wave Season is to the travel industry what Spring Baseball Training is to the nightlife in the Phoenix area. Not this year, reservations are being cancelled left and right. Typically, during Wave Season, overtime is expected to handle the calls with, quite literally, an open schedule and any time off is severely restricted until after March. This year, there is a shortening of hours to keep costs in line while they wait for calls.

All of that is to say that the majority of the cruise industry lives on a 90 day feasting cycle of cash flow which may be drying up at the speed of a phone call. Arrrrrgh!

I like a man that grins when he fights. – Winston Churchill ( James 1:2-4 )