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Royal Caribbean Cancels Cruises After Another COVID-19 Crisis

By Rick Munarriz - Jun 16, 2021 at 10:05AM

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Odyssey of the Seas cancels four weeks of July sailings after crew members test positive for the deadly virus.

The cruise line industry can't seem to shake free of the COVID-19 calamity. Royal Caribbean (RCL 0.10%) has announced that its Odyssey of the Seas ship that was supposed to start simulated cruising later this month with a resumption of revenue-generating voyages on July 3 won't get going again until the end of July at the earliest.

Eight crew members have tested positive for the COVID-19 virus. Royal Caribbean is making sure that its staff is fully vaccinated, but the eight employees had not reached the point where the shots were fully effective.

A tourist ziplining in Labadee with a Royal Caribbean ship in the background.

Image source: Royal Caribbean.

Sailing into the sea of unknown

The good news is that six of the crew members who tested positive for the virus are asymptomatic and the other two are only displaying mild symptoms. The timeline of when the shots were administered, on June 4, would have ensured that all crew members were fully vaccinated by the date of the test sailing two weeks from now. 

However, if partially vaccinated crew members are coming down with COVID-19 what do you think will happen with Florida sailings when they begin later this summer? Florida's governor has threatened to fine cruise lines for requiring proof of vaccinations for passengers, throwing a wrench into the restart process. Royal Caribbean, Carnival, and Norwegian Cruise Line Holdings have regulatory clearance to get going again if they have at least 95% of their passengers fully vaccinated, but they can't sail with that benchmark in place out of Florida -- the state where all three of the major cruise lines are headquartered and the home of many of the cruising industry's most popular ports. 

Running a series of simulated cruises is the other way to get around the industry's restrictions that have kept stateside sailings suspended for 15 months, but we've already seen COVID-19 cases pop up on industry sailings outside of the U.S. market with only a handful of actual cruise ships in action. We're seeing the same thing we saw in early 2020: Cramped cruise ships with folks spending so much time in maskless gatherings is a hotbed for the spread of COVID-19 when folks aren't fully vaccinated. 

The cruising industry that was scrambling to get sailing again this summer -- and at one point had Florida's governor challenging regulators to clear a return to business -- is now caught in a lose-lose tussle between politicians and regulators. We now have one of the larger ships resuming sailings this summer pushing out its restart to the end of July, just as many families have to start getting ready for a return to school in August. 

The problem for investors here is that all three stocks already command pre-pandemic enterprise values. The recovery is discounted on Wall Street, but now we're seeing that it's going to be easier said than done. Investors are seeing travel and tourism stocks bounce back, but Royal Caribbean, Carnival, and Norwegian Cruise Line have a lot to prove to earn their suddenly buoyant valuations. It's going to be a cruel summer.

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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Stocks Mentioned

Royal Caribbean Cruises Ltd. Stock Quote
Royal Caribbean Cruises Ltd.
$41.72 (0.10%) $0.04
Carnival Corporation Stock Quote
Carnival Corporation
$10.54 (1.93%) $0.20
Norwegian Cruise Line Holdings Ltd. Stock Quote
Norwegian Cruise Line Holdings Ltd.
$13.76 (1.48%) $0.20
Carnival Corporation Stock Quote
Carnival Corporation
$9.60 (1.91%) $0.18

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