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Norwegian Cruise Line Is Finally Ready to Sail in Florida

By Rick Munarriz – Aug 9, 2021 at 11:30AM

Key Points

  • A federal judge is siding with NCL's requirement of a fully vaccinated roster of passengers and crew.
  • It's too late to save this summer season, but it's not as if the players already operating with limited sailings are doing much better.
  • The recovery process is far from over for the hard-hit cruising industry.

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The country's third-largest carrier finally clears a legal hurdle to sail on its terms out of Florida this weekend. It's still not pretty.

With a return to limited sailing out of Florida now less than a week away, Norwegian Cruise Line Holdings (NCLH -0.48%) scored a courtroom victory that could help it hit the open seas. A federal judge is siding with the country's third-largest cruise line in its legal battle against the state of Florida to request proof of vaccination for all of its passengers. 

Norwegian Cruise Line decided earlier this summer that a return to sailing as COVID-19 cases were starting to spike again could only be achieved safely if 100% of its crew and passengers are fully vaccinated against the coronavirus. It's a strategy that has proven easier said than done in Florida, as Gov. Ron DeSantis pushed out a new law last month that allows the Sunshine State to fine businesses $5,000 for every instance where a customer is required to provide vaccination records.  

The ruling may seem to come too late to save Norwegian Cruise Line from cashing in on the peak summer travel season, but it's not as if its larger rivals are faring any better. Carnival (CCL 0.30%) (CUK -0.34%) and Royal Caribbean (RCL -0.66%) have been highly limited in the number of sailings that they have completed through iffy workarounds. At least now they can also follow Norwegian Cruise Line's lead, even if a true recovery doesn't seem likely until the pandemic is fully in check. 

A cruise line passenger looks out to the sea from a balcony railing.

Image source: Getty Images.

Storm warning

Dance partners have changed in this game. Earlier this year it was DeSantis fighting the U.S. Centers for Disease Control and Prevention to allow cruise lines to start sailing again, but when vaccination requirements entered into the industry's game plan the state turned against the cruise lines. 

The threat to fine cruise lines that require vaccine documentation more than they make on a passenger's ticket makes it a non-starter. The state isn't covering the costs of any potential COVID-19 outbreaks and what it would mean for interrupted operations or the reputation hits for the cruise brands.

The workaround for Carnival and Royal Caribbean isn't ideal. They are allowing pre-approved exemptions for unvaccinated passengers older than 12, but those patrons have have to submit to routine testing on the vessel as well as pay up for travel insurance that covers medical and evacuation costs. 

It's still been a bit of a mess. Over the past week alone the CDC has had to monitor or investigate 27 of the 63 ships currently operating on U.S. waters for COVID-19 case reports, and this is with the vessels operating under restricted, simulated, or crew-only sailings. 

It's not a surprise that in a summer that finds consumer-facing companies hitting fresh highs, the cruise lines are being left behind in the wake. Norwegian Cruise Line begins this week trading 28% below its springtime high. Carnival and Royal Caribbean are also more than 20% below their 52-week highs. 

This was already shaping up to be a lost summer even before the delta variant triggered a record number of new COVID-19 cases and hospitalizations in Florida. Among the various segments of the travel and tourism stocks it's hard to find a niche with more headwinds than the cruise line industry. Even requiring full vaccinations for everyone on the ships may not be enough, since breakthrough cases will inevitably happen when passengers explore ports of call. It's refreshing to see Norwegian Cruise Line Holdings getting back to business in the U.S. this week for the first time since March of last year, but it's still hard for shareholders to get excited. 

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

Stocks Mentioned

Norwegian Cruise Line Holdings Stock Quote
Norwegian Cruise Line Holdings
$16.54 (-0.48%) $0.08
Carnival & Plc Stock Quote
Carnival & Plc
$10.00 (0.30%) $0.03
Royal Caribbean Cruises Stock Quote
Royal Caribbean Cruises
$60.51 (-0.66%) $0.40
Carnival & Plc Stock Quote
Carnival & Plc
$8.92 (-0.34%) $0.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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