What happened
Cruise tourism stocks floated higher Tuesday as positive news on the COVID-19 front gave investors more reason to hope that the crisis stage of the pandemic may be heading toward its end. At the close of trading, Carnival (CCL 1.13%) stock was up a healthy 5.7%, while Norwegian Cruise Line (NCLH -0.21%) was up by 3.7%, and Royal Caribbean (RCL 0.54%) had sailed ahead by about 4.4%.
Image source: Getty Images.
So what
Tuesday's coronavirus news came on two fronts: statistics and regulations.
As regards statistics, ABC News reported that across the U.S., the numbers of daily new coronavirus infections are now only rising in five states: Idaho, Maine, Minnesota, Montana, and Washington. In addition, the American Academy of Pediatrics and the Children's Hospital Association say the surge in pediatric COVID-19 cases has peaked. Meanwhile, the percentage of the population that is fully vaccinated against the coronavirus has inched up to 63.8%, and CNBC reports that nearly 250 million Americans have received at least one vaccination shot.
On the regulatory front, a number of countries are slowly starting to relax the more stringent rules they imposed in recent months to reduce the impact of this winter's wave of coronavirus cases. Austria announced last week that it is ending its lockdown on unvaccinated citizens, France and the Netherlands are relaxing their rules, Sweden promises to loosen restrictions next week, and England is lifting essentially all restrictions. Additionally, Denmark on Tuesday lifted most of its pandemic-related restrictions.
Now what
Whether you applaud these moves or think those countries are letting down their guard too soon, the implications for investors in cruise line operators -- and other companies in the travel and tourism sector -- seem clear.
The much more infectious omicron variant spread rapidly, confounding efforts to contain it, and while it is less likely than the variants that preceded it to cause severe cases and deaths, with so many more infections, COVID-19 hospitalization and mortality numbers have soared. However, thanks to the widespread use of effective vaccines and the fact that surviving a case of COVID-19 does confer a degree of immune-system protection against future infections, there are indications the pandemic is approaching an endemic stage. At that point, governments' focus will likely shift toward policies for managing the virus and its inevitable outbreaks with less disruption to normal life.
In such a situation, it's unlikely that the U.S. Centers for Disease Control would impose another cruise ban. With that risk now receding, cruise lines can pretty much assume they can get back to business. Now, it's just a race to see which cruise company will be able to return to profitability first.
