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Carnival, Royal Caribbean, and Norwegian Cruise Line Have a Lot to Prove This Week

By Rick Munarriz – Oct 26, 2020 at 10:30AM

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Halloween can't come soon enough for the cruise line industry, but will it be another trick or finally a treat?

This is a big week for the cruise line industry. The U.S. Centers for Disease Control and Prevention's (CDC) ban on sailing -- the infamous "No Sail Order" -- is set to expire on Saturday night. Will Carnival (CCL 0.11%) (CUK), Royal Caribbean (RCL -1.46%), and Norwegian Cruise Line Holdings (NCLH -0.40%) finally receive regulatory clearance to get back to the cruising business?

The cruise lines don't currently have any stateside sailings scheduled until the start of December, giving them all of November as a buffer from the order if it does in fact expire. With COVID-19 cases inching higher it wouldn't be a surprise if the CDC extends the deadline. What started originally as a 30-day ban on March 14 has been pushed out three times this year, with the length of the extensions varying along the way. In short, Halloween is going to be trick-or-treat time for the industry.

A man standing on a small boat with two sharks circling in the water.

Image source: Getty Images.

Bobbing for departure dates

Cruise lines would love nothing better than to start sailing again, especially in time for the seasonal spike in holiday cruises near the end of the year. Carnival, Royal Caribbean, and Norwegian Cruise Line have scaled back on the number of cruises that are currently scheduled to restart operations in December, and it's just as well. Consumer confidence will take time to win back. 

Royal Caribbean and Norwegian Cruise Line recently headed up a panel offering recommendations for the safe resumption of cruising operations. The Healthy Sail Panel's stiff guidelines, put out last month, weren't enough to keep the CDC from extending its No Sail Order last time around. The CDC may also want to extend the ban beyond October to see how the presidential election plays out on Nov. 3. It was earlier reported that the CDC wanted to push the ban all the way into early next year, but only extended the No Sail Order through the end of October under pressure from the current administration. 

The odds are not in the industry's favor to start sailing anytime soon right now, but an extension of the sailing ban isn't a slam dunk. The travel industry keeps inching its way back to normal operations despite the global uptick in COVID-19 cases. Airlines -- where passengers spend a lot more time sitting within six feet of strangers than a typical cruise ship dining or leisure activity -- have started to sell middle seats again. Some regions are starting to ease up on their travel restrictions. Resort hotels are marketing their destinations again. 

It's just a matter of time before regulators give cruise lines a shot at staying afloat, at least for long enough to see if the new health and safety measures make a difference. Shareholders have experienced brutal year-to-date losses in the three stocks, but that obviously isn't the driving factor at the CDC. It wants to keep people safe, and if it does take chances now it's more to recover the jobs that have been displaced, a situation that's made even worse given the global recession. If the CDC finally gives cruising a chance to prove that it can be done safely in the new normal, it will be more about heeding the leisurely pursuits of passengers that have been interrupted for seven months than the gains and losses of its shareholders. No matter where you stand on the matter, Halloween is coming. It's trick-or-treat time for Carnival, Royal Caribbean, and Norwegian Cruise Line.

Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool recommends Carnival. The Motley Fool has a disclosure policy.

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