'It would be a positive event for the cruise industry if diplomatic relations resulted in the opening of Cuba to American tourism, which represents a significant opportunity for cruise lines,' UBS Investment Research said in a note.
Royal Caribbean gained 6.62% to $81.84, Norwegian climbed nearly 4.5% to $45.76 and Carnival was up almost 3.5% to $44.61.
Wells Fargo Securities cautioned near-term Cuba-related gains 'will likely prove fleeting.'
In analyst Tim Conder's view, 'Clearly Cuba is the positive “tail risk” of what could go right for the cruise industry. However, lifting broad travel and economic/trade sanctions by Congress must occur prior to the cruise industry seeing any material benefit. We believe it will be several years, at best, before all of the pieces fall into place to allow US-based cruise operators to begin calling on Cuban ports,' he said in a note.
Havana and a handful of other ports have been handling cruise ships for a years, but only smaller vessels from non-US operators. Cuba has a number of deep-water ports that potentially could serve larger ships.
Should travel sanctions go away, it may be possible to build dockside infrastructure on a much faster timeline than hotel infrastructure, UBS told investors.
'It could take years to develop three- to five-star American branded hotel product in Cuba, favoring cruise ships as the way to visit the island in the medium term. Itineraries could be sold with just several months' advance notice,' UBS analyst Robin Farley said.
The brokerage projected 'significant pent-up demand from American tourists,' adding: 'Cuba could prompt many cruise passengers who've already been to many Caribbean ports to return to a Caribbean itinerary to see a unique and novel port that has gone unseen by many Americans for decades.'
Wells Fargo cited Cuba’s natural beauty, history and ecological preservation as leading points of appeal to tourists. 'From the cruise operator’s perspective, the close proximity to Florida (fuel savings) and multiple excursion opportunities are ideal,' Conder said. He added that cruise executives estimate once restrictions are lifted it would take six to 12 months to initiate calls via tendering to as many as 11 Cuban ports, and 18 to 24 months, following Cuban government approval, to construct permanent pier facilities required to handle most cruise ships from leading operators.
Which of the cruise giants would benefit the most from an open Cuba?
According to UBS, in 2015 the Caribbean comprises 44% of Royal Caribbean itineraries, 45% for Norwegian Cruise Line Holdings and 34% for Carnival Corp. & plc.
But Farley noted the Caribbean is clearly much larger for the recovering Carnival brand specifically, whose pricing is still significantly below pre-recession levels. So Carnival Cruise Lines, she said, could benefit strongly from improved Caribbean demand.
Though cruise operators shy away from discussing Cuba because of the trade embargo, it's no secret many have long had contingency plans in case an opportunity arises.
Plus, destination developments such as Amber Cove on the north coast of the Dominican Republic, scheduled to open in 2015, and the existing Grand Turk Cruise Center in the Turks & Caicos Islands along with Carnival Corp. & plc's interest in developing Haiti's Tortuga Island for cruise calls present an array of content-rich destinations in close proximity to Cuba.
These open numerous fuel-stingy itinerary possibilities.