This was supposed to be a summer of love for the cruise line industry, but the bounce for Carnival (NYSE:CCL) (NYSE:CUK), Royal Caribbean (NYSE:RCL), and Norwegian Cruise Line Holdings (NYSE:NCLH) is starting to take on water. Florida has gone from being a state that was at one point backing the three Miami-based cruise lines in efforts to resume operations to one that's become a hindrance to the restart process.
Carnival -- the world's largest cruise line -- has just one cruise ship currently sailing out of Florida. Royal Caribbean and Norwegian Cruise Line are also finding it hard to build momentum during the peak summer travel season. With the U.S. Centers for Disease Control and Prevention (CDC) and Florida Governor Ron DeSantis trading shots in disagreeing with sailing guidelines, it's the cruise lines that are now caught in the crossfire. Shareholders and cruise line fans are starting to pay the price.
Governor DeSantis was standing up for the cruise industry just a few months ago, battling it out with the CDC over requirements that each individual ship complete costly test sailings or demand that 95% of passengers -- and an even greater number of its crew members -- be vaccinated to resume operations. Just a few weeks ago, he was threatening cruise lines to fine them if they required that passengers wear masks out of Florida-originating itineraries.
The fallout isn't pretty. According to The Miami Herald, Carnival will be joining Royal Caribbean in requiring that unvaccinated passengers older than 12 buy new COVID-19 travel insurance if they're leaving from Florida ports come August. Carnival is officially requiring passengers to be vaccinated, but in order to play within the gray area between Florida and the CDC, it's allowing pre-approved exemptions for unvaccinated passengers, as long as they're OK with additional testing on the ships and now, Florida-specific travel insurance to cover medical and evacuation expenses.
Cruise lines already have a hard time convincing folks to trust the safety of cruising, and we've already seen a few isolated cases of passengers and crew members coming down with the COVID-19 virus on limited sailings. Now we're at the point where the brands may be forced to alienate some customers as the restart process gets politicized between the vaccinated and the unvaccinated.
Florida policies requiring that businesses can't ask for proof of completed vaccinations to go maskless indoors may also be leading to a surge in COVID-19 cases as vaccination rates start to stall. Case counts in the state have more than doubled since Florida switched to weekly tallies of COVID-19 deaths and infections last month. Orange County Mayor Jerry Demings -- in the heart of Central Florida's theme-parks-heavy heartland -- is now urging even vaccinated residents to mask up indoors to battle the surge in cases of non-vaccinated locals and tourists.
After an understandably lost summer in 2020, things are only going marginally better this time around. Cruise lines were always going to be the last of the travel and tourism stocks to recover, but with schools in the state now a month away from returning to class, one has to wonder if it's too late to get going this summer.
Carnival, Royal Caribbean, and Norwegian Cruise Line are generating negligible revenue. International travel restrictions remain in place. All three cruise line stocks are now roughly 20% below where they were earlier this year. In short, it hasn't been such a bon voyage.