It's finally happened. Congress passed its second stimulus bill last night, allocating $900 billion to revive an economy weakened by the coronavirus. Among other provisions, within a matter of weeks, if not days, American taxpayers should begin receiving $600 stimulus checks from the government, putting money in their pockets at the same time as new COVID-19 vaccines are rolling out, to create the conditions that will permit people to feel safe venturing out and spending again.
And yet, cruise line investors aren't happy. As of 3:10 p.m. EST, shares of all three major publicly traded cruise line stocks -- Royal Caribbean (NYSE:RCL), Carnival Corporation (NYSE:CCL)(NYSE:CUK), and Norwegian Cruise Line Holdings (NYSE:NCLH) -- are down significantly, falling 2.8%, 4.8%, and 6%, respectively.
Why are cruise stocks selling off on what appears, by all logic, to be good news for companies dependent upon discretionary consumer spending? Partly, I suspect investors are spooked by worries of the potential for a new, more contagious variant of SARS-CoV-2 that's been spreading in the United Kingdom.
But also partly, I suspect it's the fact that there's nothing in the new coronavirus relief bill directly designed to bolster the cruise industry. As RoyalCaribbeanBlog.com lamented yesterday, "airlines are going to get $15 billion in additional payroll support [but] the cruise industry that has been shutdown for 9 months will be getting no financial aid."
And yet, not all is lost. As CruiseIndustryNews.com reported earlier today, coronavirus notwithstanding, and lack of government support notwithstanding either, "global searches between April and September this year for cruises in 2021 gradually increased month-on-month, with a noticeable month-on-month spike between August and September." Then between October and November, search interest for cruises spiked by another "almost 30 percent compared with the monthly average of April to September."
Expedia Cruises president Matthew Eichhorst is predicting "a neat overlap between the vaccine rollout, the cruise lines increasing their testing capabilities, and the CDC's updates on protocols next year," leading to "strong interest for cruises sailing in 12 to 18 months' time."
Granted, the recovery will take time to manifest. Twelve to 18 months' time is not the same thing as "immediately."
Eichhorst told CruiseNews that, as late as the second quarter of 2021, total global cruise traffic could still be as little as 12.5% of total capacity, due to few ships sailing, and those ships taking on less than full complements of passengers. Still, industry insiders are hoping to see the recovery ramp in the second half of the year.
Long story short: If you're betting on cruise stocks recovering, you probably still have plenty of time left to place your bets.