Securing Finance Is Key To Cruise Industry Survival, Says GlobalData

Anna Kroupina, Open Jaw

Royal Caribbean on 23MAR announced that it had agreed to US$2.2 billion in financial assistance from banks to shore up cash flows as the COVID-19 pandemic hits travel companies. It's a move that one analyst calls "crucial" given that cruise operations could be restricted for months.

“It is crucial that businesses secure finance to ensure they can navigate a period of great uncertainty," says Ben Cordwell, Travel & Tourism Analyst at data and analytics company GlobalData.

A look at the ‘cash and cash equivalents’ of the three biggest cruise operators found that Royal Caribbean had US$243.7 million, Norwegian US$225 million and Carnival US$518 million, according to GlobalData.

"Although this gives companies a certain degree of security, the costs of running a cruise line are enormous and these outgoings will begin to take their toll," says Cordwell.

One serious problem that cruise companies will need to address is their importance to economies. 

"The aviation industry, railways, car manufacturers and banks generally contribute more to a nation’s economy than the cruise sector. This may lead to governments prioritizing these industries, meaning that cruises are offered less in terms of financial support," Cordwell says.

“This makes it even more important for cruise businesses to secure finance rather than expect to be helped by governments if the need arises. It will not come as a surprise to see more companies following the lead of Royal Caribbean and borrow large amounts to further bolster their liquidity.”

Anna Kroupina

Anna Kroupina Journalist

Anna is OJ's newest member and she joins the team as a writer/reporter. She co-writes the daily news and covers events. Although she's new to the industry, pursuing a career path in travel/tourism has been a goal since her first family road trip to the Florida Keys sparked a desire to discover the world and this exhilarating, fast-paced industry.

Leave a Comment...

(will not be published)