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China has taken 'unprecedented steps' to contain coronavirus, according to RCL Chairman and CEO Richard Fain

No coronavirus impact on non-China business, Fain reports

The coronavirus outbreak isn't having a big impact on overall bookings outside of China, Royal Caribbean Chairman and CEO Richard Fain said Tuesday.

'But we just don't know' what will happen, he added. 

4% of RCL's Q1 capacity

China was expected to account for about 6% of RCL’s full-year capacity, and about 4% in Q1. Spectrum of the Seas is currently the only RCL ship there, with two others scheduled to enter the market in May and July.

So far, Royal Caribbean has canceled eight cruises from China ending March 4 and modified certain itineraries in the region. The financial impact is estimated as 25 cents per share.

Shares rise in trading

RCL shares, and all cruise stocks, traded higher Tuesday morning on RCL's fourth quarter earnings report and market update

‘We’re kind of pleased with what we’re seeing in all our markets around the world, except for China,’ Michael Bayley, president and CEO, Royal Caribbean International, said during the call with analysts.

Very few call center questions

Bayley said fewer than 1.5% of calls from trade partners and customers to the company’s call centers involve questions or concerns about coronavirus. Most of those queries are about policies.

He was asked if nonrefundable deposits are helping deter cancellations. Royal Caribbean introduced those a few years ago and Bayley said more bookings stick as a result, and more customers year-over-year are chosing nonrefundable fares.

Asked if Japan and Australia sailings are affected, Bayley said there hasn’t been a lot of regional disruption.

While the situation is very fluid, he assured analysts that contingency plans are in place for the company's ships and they could be redeployed regionally or outside the region as needed. He declined to go into specifics but said Royal Caribbean is monitoring this ‘very dynamic’ situation closely and its medical teams are in daily contact with public health authorities.

And, like other lines, Royal Caribbean has instituted aggressive protocols, including denied boarding to any individual traveling through mainland China or Hong Kong in the past 15 days. They’ll receive full refunds.

Mandatory specialized health screenings are being performed on anyone who has been in contact with individuals who have traveled through mainland China or Hong Kong in the past 15 days, and all holders of China or Hong Kong passports — regardless of when they were last in China or Hong Kong. Specialized screenings are also carried out for anyone who reports feeling unwell or demonstrates flu-like symptoms.

These standards apply to all passengers, employees, crew members and contractors and will be updated as needed.

'Unprecedented steps' for containment

With 20,000 coronavirus cases now reported in China, the country has taken ‘unprecedented steps to contain it,’ Fain said, noting that China is essentially on lockdown.

He added that RCL continues to feel positive about, and committed to, the long-term development of cruising in China.

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