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Articles from 2020 In April

Cruise lines seek US appeals court hearing for Cuba lawsuits

PHOTO: ANNE KALOSH CRUISE Havana Cruise Terminal.jpg
Havana's cruise terminal was seized by the Cuban government in 1960

Carnival Corp., Royal Caribbean Cruises Ltd., Norwegian Cruise Line Holdings and MSC Cruises filed with the Court of Appeals for the Eleventh District, in Atlanta.

The companies were sued under Title III of the Helms-Burton Act by a US businessman who holds a US-certified claim to Havana Docks Corp., the concession that built and operated wharves and warehouses in Havana. The property was nationalized by the Cuban government in 1960.

Appeals sought following US District Court rulings

The cruise lines' motions to appeal follow recent decisions by the US District Court for the Southern District of Florida that allowed Havana Docks Corp. to continue to pursue its claims.

Thanks to John Kavulich, president of the US-Cuba Trade and Economic Council, whose commentary on the appeals process is here.

April 30 updates: AIDA extends suspension, German travel agents seek state aid

AIDA's fleet will pause until July

Keep checking back. This is being continuously updated.

AIDA delay, booking incentive and agent protection

AIDA Cruises extended its suspension of operations through June. Passengers booked on the canceled cruises can get a refund or a 110% future cruise credit that may be applied to travel by the end of 2021. The credit may also go toward on-board purchases.

To support travel agents, AIDA will pay 10% commission on the future cruise credit as soon as it's issued to the customer.

Until July 31, passengers can reschedule any cruises without penalty as long as they cancel at least 60 days before the departure date.

German travel trade demonstrate for public aid

Thousands of German travel trade professionals demonstrated for public financial support in more than 30 cities throughout Germany. Wednesday's demonstrations started in Dresden, where 50 busses — each carrying just two people — proceeded to the Federal State Parliament. Demonstrations took place under strict regulations and with a limited number of participants keeping distance between each other.

The travel advisors called for direct and non-repayable financial aid from the German government and the federal states. They claim business development bank credit schemes set up during the COVID-19 crisis are practically inaccessible to most agents.


Cruise Terminal 46 a victim of Port of Seattle 2020 budget cuts (updated)

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Terminal 46 is shown here, with the site of the proposed cruise facility in blue

$70m in cutbacks

The Port of Seattle Commission announced nearly $70m in cutbacks amid the coronavirus pandemic, according to the Seattle Times, which said it's not clear when the port will restart the Terminal 46 development, or the dozens of other delayed aviation and maritime development projects.

Alaska homeport market

'The decision to put the new cruise terminal on hold is based solely on our need to better understand the impact of COVID-19 on the Alaska homeport cruise market before moving forward with the project,' Port of Seattle spokesman Peter McGraw told Seatrade Cruise News.

'We will provide an evaluation of those impacts and a recommendation on next steps as part of the port’s capital budget process later this year. The analysis will consider impacts of COVID-19 on the 2020 cruise season, health and safety regulatory requirements, industry and market forecasts, and economic benefit.'

In the meantime, he added, work on all elements of the proposed cruise project will be paused.

Cruise revenues at risk

The Times said 'a significant portion' of projected $26m in cruise revenues are at risk. Lines are currently under a US 'no sail' order and Canada has closed ports to certain cruise operations through June. Recently cruise operators announced dramatic changes to their Alaska cruise plans this summer, including some outright cancellations.

So far, though, companies like Princess Cruises and Holland America Line are keeping their Seattle-based programs, though those will be delayed.

In February the Port of Seattle issued a revised request for proposals for the new cruise facility at Terminal 46 with additional environmental elements.

Estimated $200m facility, half port-funded

The updated RFP went to shortlisted proposers being evaluated as potential investment and operating partners. The estimated $200m facility would entail a $100m investment from the port and the balance from a partner.

On the shortlist are Cruise Industry Leaders Group (Royal Caribbean Cruises Ltd., MSC Cruises, Carnival Corp. and SSA Marine, a subsidiary of Carrix), Global Ports Holding and Civil & Building North America, and Ports America with Jacobs Engineering Group.

Updated with Port of Seattle spokesperson's comments

Lindblad to report Q1 results on May 1

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The company will host a conference call at 8:30 a.m. Eastern time that day.

A live audio webcast of the call will be available here.

Royal Caribbean gets more time to commit to new Galveston terminal

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The 170,000-square-foot terminal is planned on 10 acres in the eastern section of the port known as Pier 10

The Galveston Wharves Board of Trustees amended its lease with RCL after the company asked for an extension, according to The Daily News of Galveston County.

Capital projects delayed

In December, RCL inked a long-term contract with the port that required it to commit to the terminal's construction by April 10. RCL has been putting off capital projects to shore up liquidity during the suspension of cruise operations in the coronavirus pandemic.

New completion date goal: September 2022

The amended agreement gives RCL another year to commit and sets a goal of finishing the terminal by September 2022 and requires its completion by July 2023, The Daily News said.

The deal signed in December would have seen construction starting now and the terminal's opening in fall 2021. It is intended to become the home for Allure of the Seas.

The 170,000-square-foot facility is to go up on 10 acres in the eastern section of the port known as Pier 10.

'We love you, Barbados': AIDA captain

CRUISE AIDA Capt. Boris Becker.jpeg
Barbadians 'really helped us, really supported us ... We are very grateful for this and for sure will not forget,' Capt. Boris Becker said in a thank-you video

Seeing 'who your real friends are'

It's a challenging time for everyone — those on the island and on the ships, and for the whole travel and cruise industry. 'However, in those difficult times ... we can see [who] are your real friends and who are the people you can really rely on,' the captain said in a video message from the bridge.

After lying in the roads at Bridgetown for more than a month, along with a number of other cruise ships, AIDAperla recently cast off for Europe to carry home its remaining crew.

For seafarers, home is far away

'We want to send a big thank you, Barbados, from us on board to you on the island ... because all the support we got from you, the Barbadians, during these difficult times is for sure not taken for granted,' Becker continued. 'For those working at sea, home is far away, and we rely on and depend on all the ports on our routes to give us support in our daily operations.'

However, even for ships such as AIDAperla with no health issues on board, 'more and more doors were closing. On Barbados, things were different, though,' the captain said.

'We will not forget'

Becker noted that while the island took care to protect its citizens, everyone, from the prime minister, senators, port workers, airport workers, taxi drivers and many other Barbadians, 'really helped us, really supported us ... We are very grateful for this and for sure will not forget how you supported us and how we could rely on you in those difficult times.

'We will be back, bringing passengers and business to the island as soon as the seas are a little calmer. Thank you for everything. We love you, Barbados. See you soon.'

Barbados tourism minister's view

For Barbados, the homeporting business is 'very critical ... We had to take a very stout and robust position with regard to the cruise sector,' said Kerrie Symmonds, minister of tourism and international transport.

'When other countries were viewing what was transpiring in the early days on board cruise ships with a certain degree of horror and, in some instances, refusing access by some cruise ships to their shores, Barbados took a conscious and deliberate decision that we would not do that and that we would treat the cruise sector as partners should treat each other,' Symmonds elaborated.

Spirit of partnership

That's why Barbados afforded cruise ships — including some that don't include the island in their itineraries — a 'safe harbor' and allowed crew to be repatriated from there.

'That is the spirit of partnership within which we have tried to operate,' the minister said.

When AIDAPerla departed, alight with the message 'Thank you, Barbados,' it went 'a long way to demonstrate, in those difficult times, we have to build partnerships and maintain partnerships,' Symmonds added, 'because that is what the tourism industry is all about.'

Barbados impact and recovery strategies

Forty percent of Barbados' GDP comes from tourism, which employs 30% of the workforce. Last year was a record for the UK market, which grew 10.4%, and the No. 2 market, the US, also charted record growth, while visitor spending was up 7.5% in the first six months.

'So we were really on a fantastic growth trajectory prior to COVID-19,' Symmonds said. That's been derailed, with the more than 50 commercial aircraft movements a day halted, hotels shuttered and ground transport and watersports at a standstill.

The island has had 80 cases and six deaths from the virus.

Trying to do all the right things

$20m has gone into a new isolation/quarantine facility, while $10m was budgeted to secure essential medical supplies.

'A small island like Barbados tries to do all the right things,' Symmonds said, adding it's challenged by the inability to produce its own ventilators, for example, and the heavy global demand for equipment and supplies.

Meanwhile, a fund has been set up to help small hotels, and a special recovery task force was formed. Barbados plans to use this pause to retrain workers across the tourism sector. According to Symmonds, this is an 'opportunity for us to increase the quality of our service industry.'

In a time of social distancing, practices such as buffet dining will need to be rethought, and new protocols developed. The minister pointed to JetBlue newly requiring travelers to wear masks, and Emirates looking at quick testing for its passengers.

'On a regional level, we have to make sure our ports of entry are in a position where we can do those tests,' Symmond said.

A hygiene 'gold standard'

Barbados has an excellent healthcare system, he added, and hopes to build on that, creating a hygiene 'gold standard.'

The island is in shutdown to May 3, when some restrictions will be eased. Because Barbados has a robust luxury villa market, that may be a way to reactivate tourism on a limited, careful basis. Those travelers use private jets and can self-isolate for a period because they typically stay at least six weeks.

Summer will be tough for tourism, in the minister's view: 'Realistically speaking, it may be more a matter of winter.'

As for the cruise market returning, nobody knows. But based on Barbados' actions during the crisis, it's likely to be a favored destination for ships in the future.

April 29: Massive crew repatriation by Carnival, Bahamas Paradise lends computing power to virus research, MSC extends suspension

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Carnival Dream and two other Carnival ships off the coast of the Bahamas, awaiting the arrival of additional vessels

Keep checking back. This is being continuously updated.

Carnival undertakes massive crew repatriation by ships

Eighteen Carnival Cruise Line ships will rendezvous in the Bahamas over the next several days as the final plans are put in place to sail nine of the ships to repatriate more than 10,000 healthy crew members who remain on board due to restrictions limiting air travel to Asia, Africa, Europe, India and Latin America.  

The ships have been at various US homeports provisioning and bunkering for their journeys. Certain crew will join ships using water shuttles off the coast of the Bahamas.  Once this is completed, nine ships will sail to their destinations with crew from North American-based ships on board.

Nine ships to remain at Bahamas, Panama

The remaining nine ships will spend most of their time in anchorage positions in the Bahamas or Panama and eventually all ships will reduce their crew numbers to safe operational manning levels.

Carnival President Christine Duffy thanked the crew for their 'hard work, patience and understanding during this process,' and acknowledged the government of the Bahamas for their support of this operation, as well as the US Centers for Disease Control and Prevention,  US Coast Guard, US Customs and Border Protection and local port agencies.

Crew who will be returning home have undergone a health check and were cleared fit for travel by Carnival’s medical team. The company has been working closely with immigration officials in arriving countries on an efficient debarkation process. All crew have their temperature taken daily and will do so again during debarkation, and will follow enhanced protocols to ensure continued health.

10,000 will be homeward-bound on the nine voyages

Prior to Carnival’s pause in operations on March 13, its fleet of 27 ships had nearly 29,000 crew on board. Since that time, Carnival has repatriated more than 10,000 crew via flights and another 10,000 will be traveling on the nine voyages leaving this week. Approximately 6,000 additional crew will be repatriated by air charters or three ships that already departed from Australia and Long Beach.

By the time all these movements are completed, the Carnival fleet will be down to approximately 3,000 crew identified for safe operational manning, plus several hundred who, the company said, will be repatriated as quickly as possible.

Bahamas Paradise dedicates computing power to virus research

Bahamas Paradise Cruise Line is dedicating its unused computing power to help researchers find a cure for COVID-19 via the Folding@Home project.

'We have an enormous amount of idle computing power at hand, given our ships are currently restricted from their normal operations, and this program gives us a way to utilize those resources, helping researchers who are working around the clock to find a coronavirus cure,' said Oneil Khosa, CEO of Bahamas Paradise Cruise Line. Khosa is appealing to industry partners and peers to commit their resources to this effort, as well.

Folding@Home is a distributed computing project that helps researchers conduct simulations to analyze the protein folding process and movements in various diseases, including COVID-19. The project enables scientists to use donated computing power from anywhere in the world to run simulations, study the virus and find a vaccine. The software is free and available to download for Windows, Mac and Linux, and the more computers donated to the cause, the more simulations can be run.

Bahamas Paradise joined the project in early April and has donated computer resources from its offices, as well as Grand Classica and Grand Celebration.

MSC Cruises suspends through July 10

MSC Cruises extended its service suspension through July 10, from May 29 previously. Passengers on canceled sailings can apply the amount they paid to a future cruise through to the end of 2021.

Certain markets, like MSC Cruises USA, are offering a bonus 25% future cruise credit on top of that.

MSC also extended its Flexible Cruise Program to include all existing bookings for sailings between July 11 through September. This allows travelers to reschedule their cruise to a future departure date through 2021, at no penalty.

What it will take for the cruise industry to survive — a PR professional's perspective

CRUISE Virginia Sheridan.jpeg
Virginia Sheridan isn't ready to count cruising out. She argues that qualities like value, innovation and ongoing improvement will sustain the sector through this latest crisis

The coronavirus pandemic has cut a deep and devastating swath through the travel industry — with negative impact on all sectors — but none greater than cruising.

$75bn business

The cruise industry is an estimated $75 billion business, highly attractive to 32 million people who take one or multiple ocean or river cruises around the world per year. Since the emergence of COVID-19, the industry has suffered from harrowing headlines and an almost total shutdown of business.   

No stranger to incidents stimulating negative press, the cruise industry is always under the media microscope. Images of distressed passengers and large vessels at sea play a major role in the frequency and ferocity of coverage.    

There’s probably no other sector of travel that generates such strong emotion — people are either faithful fans or those who can’t imagine ever stepping on a cruise ship. There’s not much of a middle ground on cruising.     

Capital intensive

On the business side, ships are expensive propositions. The largest ones with glamorous shopping promenades, scores of restaurants, theaters, water attractions, ice rinks and even a planetarium (e.g. Royal Caribbean, Cunard and Carnival) can cost well over $1 billion to build. Then there’s the cost of maintenance and crew, which can number in the thousands. There are few businesses that are willing or able to take on that level of financial and operational obligation, especially in the absence of a bailout.    

Today’s cruise industry has become a global industry with ports and destinations around the world vying for cruise industry business; each offering up new terminals and technology to make passenger processing efficient and a pleasant part of a highly anticipated journey, rather than the tedious experience of air travel. Exciting shore excursions that enhance local economies are also in the mix with opportunities for passengers to easily experience remote locations, such as Greenland, Antarctica, Falkland Islands and even a bucket list African safari, courtesy of lines like Celebrity, Silversea, Norwegian and Crystal.   

Jobs generator

In short, the cruise industry is big business for shipyards, industry suppliers, employment (about 421,000 American jobs according to Cruise Lines International Association), cruise destinations, direct and indirect spending and consumer enjoyment. 

In the face of dramatic and devastating financial impact and a tarnished reputation, many wonder if the cruise industry can stay afloat and what cruising might look like post COVID-19. Here are some thoughts on cruise industry survival. 

  • Staying power. The cruise industry has always been resilient. It’s had more comebacks than Britney Spears. It has also found a global voice with greater collaboration between lines and governing authorities. After Costa Concordia, the cruise industry instituted new safety initiatives and has demonstrated a greater willingness to shine a light and do something about sensitive subjects. 
  • Loyalty. Cruise passengers are very loyal customers and cruise bookings for 2021 are already higher than 2019 with some reports saying a 40% increase. The cruise industry understands loyalty, rewards customers with early booking incentives, and in the case of COVID-19 related cruise interruption, has given passengers the option to postpone cruise vacations without incurring fees.
  • Huge sales force. For decades, the cruise industry has cultivated hundreds of thousands of cruise-selling travel advisors, investing heavily in training, first-hand shipboard experiences, and rewarding compensation for high-volume producers. Advisors specializing in cruise planning do well in their niche and enjoy the satisfaction of helping customers navigate the complexity of choosing the right cruise, thereby making them loyal cruisegoers for life.
  • Value. People like deals and there will be bargains galore when ships start sailing again. The cruise industry, however, has moved away from price as the motivation to cruise. There are many other value markers on the benefits of taking a cruise and the industry will lean in on inspiration and education more than cost as it rebounds with existing and new customers.       
  • Global market value. Ships are commodities as they can be quickly moved to areas of recovery to build new markets and they are attractive for acquisition to countries and companies that want to easily move into the cruise industry without having years-long shipbuilding delays.
  • Size matters. Cruise lines will merge, they will sell off ships, brands will shrink or disappear.  These are natural outcomes of a major economic crisis in any industry and assuredly the type of changes the cruise industry can quickly adopt for economic survival.
  • Innovation. This is where cruise lines are the MVP of the travel industry. The list is endless from Swarovski crystal staircases on MSC ships, flow riders and robotic bartenders on Royal Caribbean, Norwegian’s Freestyle, show kitchens on Oceania and “ships within ships” that offer havens of exclusivity, such as the concierge lounges on Princess Cruises and Disney Cruise Line. 
  • Improvement. A hallmark of the cruise industry is ongoing improvement. Ships today have become iconic symbols of ground-breaking ways to entertain, feed and pamper customers through unrivaled amenities. The industry has also made strides in sustainability, safety, security and technology. The captains of sea will overperform to ensure onboard health and safety protocols are met including sanitization, air filters, passenger screening and fewer passengers per ship to accommodate social spacing.   

The road to recession recovery is long and complicated. The cruise industry has every reason to be concerned about its future but for many reasons and to many people, it will remain a viable business proposition that the smart people running this global industry are already figuring out.    

This commentary originally appeared as a Finn Partners' blog.

April 28 updates: American Cruise Lines/Pearl Seas Cruises delays

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American Cruise Lines' American Song is pictured at berth on the Columbia River

American Cruise Lines

American Cruise Lines extended its suspension of operations until June 14. Passengers on canceled sailings can get a full refund or a 125% future cruise voucher.

The company continues its 'Cruise with Comfort' option for new and existing bookings through August. This allows cancellations up to 24 hours before departure for a 100% future cruise voucher.

Travel advisor commissions are protected, based on the original sailing date, for cruises canceled by American or by the traveler under the 'Cruise with Comfort' plan.

Pearl Seas Cruises

Sister brand Pearl Seas Cruises’ sailings are suspended through June.

Del Rio's 2019 compensation valued at $18m

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Frank Del Rio received the target cash incentive since the lower EPS resulting from the US's abrupt Cuba policy change was deemed an extraordinary event beyond management's control

Cuba's impact on cash incentives

For 2019, NCLH's compensation committee established an adjusted earnings per share target level of $5.33 for cash incentive compensation, which required an 8.3% increase from the prior year. The actual adjusted EPS was $5.09 after the company took a hit from the abrupt US decision to ban cruises to Cuba. The compensation committee deemed that an 'extraordinary event' outside management's control and excluded its impact, increasing the adjusted EPS by 45 cents per share.

Consequently, target-level cash incentives were approved for Del Rio and other named officers. However, they were capped at target level even though a full adjustment for the Cuba cessation would have resulted in a payment above the target amount.

So Del Rio's cash incentive was $3.6m, compared to $5.4m in 2018. His base salary edged up to $1.8m from $1.75m, while stock awards were valued at $12.2m, compared to $15.2m the year before. He also received $207,040 of 'other compensation,' including a car allowance, medical plan premium, travel expense allowance, tax preparation service and country club membership.

Bob Binder

The second highest earning of NCLH's five named executives was Bob Binder, president and CEO, Oceania Cruises, and vice chairman, Oceania Cruises and Regent Seven Seas Cruises, with total compensation valued at $5.8m, up from $5.3m in 2018.

Andy Stuart

Andy Stuart, former president and CEO, Norwegian Cruise Line, followed with nearly $5.5m, up from $5.3m.

Mark Kempa and Jason Montague

Mark Kempa, EVP and CFO, who appeared for the first time as a named officer, received total compensation valued at $4m, up from $3m in 2018.

Jason Montague, president and CEO, Regent Seven Seas Cruises, also had total compensation worth $4m. That was down from $5.35m in 2018.

Salaries/cash incentives

Binder, Stuart, Kempa and Montague each had salaries of $700,000, and each received cash incentives of $700,000. That was lower than Binder, Stuart and Montague's cash awards of $1.75m each and Kempa's of $1.57m in 2018.

Annual meeting and election of directors

The compensation appears in a proxy ahead of NCLH's annual meeting, set for June 18 in Miami. Up for election are Class I directors David Abrams, John Chidsey and Chairman Russell Galbut. Class I directors' terms expire in 2023.

Continuing directors include Del Rio, Adam Aron, Stella David, Mary Landry, Chad Leat, Steve Martinez and Pamela Thomas-Graham.