Consider This from NPR - COVID Nearly Sunk the Cruise Industry. Now it's Trying to Make a Comeback.

Episode Date: August 16, 2023

The CDC says that a new omicron variant called EG.5 is causing a summer wave of COVID cases.Yet, COVID is nowhere near the threat that it was more than three years ago at the beginning of the pandemic.... And that might be one of the reasons that people are cruising again on big ships following a COVID-19 decline.WLRN reporter Tom Hudson tells us how one of the hardest hit industries during the peak of the pandemic is trying to make a comeback.In participating regions, you'll also hear a local news segment to help you make sense of what's going on in your community.Email us at considerthis@npr.org. Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

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Starting point is 00:00:00 This message comes from Indiana University. Indiana University performs breakthrough research every year, making discoveries that improve human health, combat climate change, and move society forward. More at iu.edu forward. More than three years in, and coronavirus is still a problem. The CDC says during the last week of July, there were about 9,000 new COVID-19 hospital admissions. We do know that in our health care system, positivity rates of people coming into the ER and the hospital are up about double compared to a month ago. This is what it's like for the virus to become endemic. Bruce Farber is an infectious disease doctor at Northwell Health in New York. When Farber says this is what it's like for the virus to become endemic, he means
Starting point is 00:00:58 we've reached a time in the U.S. where there's a baseline of COVID around all the time. The CDC says this uptick in summer cases is not surprising. And while COVID doesn't pose the same level of threat that it did three years ago, it is still seriously affecting people. It often takes weeks until the cough goes away and the brain fog goes away and the malaise goes away and they're back to exercising to levels that they were before. So I think people need to keep that in mind when they think COVID is nothing. Now, Dr. Farber says most of the people he has seen admitted to the hospital were originally coming in for something else, like a hip surgery or some sort of injury.
Starting point is 00:01:41 Then they end up testing positive for COVID. Unlike the worst days of the pandemic, very, very few are critically ill with COVID and very few are dying with COVID. What's causing this rise in COVID cases? The CDC says a new sub-variant of Omicron and that it may become a dominant strain globally. The EG5 variant is still a sub-variant under the Omicron family, and there's a single mutation that separates it from the most recent variants. That's Anu Hazra, an infectious disease doctor at the University of Chicago. He says that since coronavirus is always mutating, a new booster isn't a perfect match against this new Omicron variant,
Starting point is 00:02:26 but they're closely related. So when the new booster comes out in late September or early October, Hazra advises that people do get it for some level of protection. It takes a few weeks to develop immunity once you get the booster. And we know, you know, from good amount of data that these boosters have high amounts of antibodies for at least 12 weeks after. So if we're looking at getting a booster in the fall, that should really protect you at least for the lion's share of the winter. And while it's critical to take any increase in COVID cases seriously, Celine Gounder, infectious disease specialist and senior fellow at KFF, says that does not mean people should panic. This is not really a surge. And it's not dismissing that COVID is a threat. It's that
Starting point is 00:03:12 you have to know when to sound the alarms and when not to. Consider this. We have learned to live with COVID, which is why, despite an uptick in cases, people are getting on with their lives. For some, that means doing something that might have been unthinkable. Terrifying at the beginning of the pandemic, like getting on a cruise ship. Coming up, we'll hear how the hard-hit cruise industry is trying to make a post-pandemic comeback. From NPR, I'm Mary Louise Kelly. It's Wednesday, August 16th. This message comes from WISE,
Starting point is 00:03:52 the app for doing things in other currencies. Send, spend, or receive money internationally and always get the real-time mid-market exchange rate with no hidden fees. Download the WISE app today or visit wise.com. T's and C's apply. This message comes from Indiana University. Indiana University performs breakthrough research
Starting point is 00:04:12 every year, making discoveries that improve human health, combat climate change, and move society forward. More at iu.edu forward. This message comes from NBC News. Did you know you can listen to Meet the Press as a podcast? Join moderator Kristen Welker for breaking political news, in-depth analysis, and interviews with leaders and newsmakers. Search for Meet the Press and follow now. It's Consider This from NPR. We were in shock.
Starting point is 00:04:45 I started crying. Now I'm beginning to realize that if more and more and more people are getting sick on the ship, what are we doing here? If you discover that your temperature is 37.5 degrees Celsius or above, you must immediately...
Starting point is 00:05:01 This is crazy. You know, I'm frankly now starting to get nervous. More than 3,000 passengers were trapped on a cruise ship under quarantine back in February of 2020. The crisis aboard the Diamond Princess, which at the time comprised the largest number of COVID cases outside of China, sent the cruise industry spiraling. Cruise ports became desolate after several cruise companies halted operations. But three years later, people are cruising again. Tom Hudson from member station WLRN in Miami tells us how the cruise industry is trying to make a comeback. This is what Port Miami's Terminal B sounded like in May of 2021.
Starting point is 00:05:49 It was a beautiful day to cruise. The sun was shining. It was in the mid-80s with a slight breeze. Two ships sat dockside, but there were no crew members, no stevedores, no passengers. The cruise business was still closed because of COVID-19. And here's what Port Miami sounded like a couple of weeks ago as thousands of passengers lined up to board the Disney Magic for a five-day cruise. The cruise business has come, well, cruising back, stronger than it was before the COVID-19 virus shut down sailing, costing tens of thousands of jobs and billions of dollars. I'm thrilled to share with you this morning our strong second quarter results
Starting point is 00:06:30 and another step change in the trajectory of our business. That's Jason Liberty, the CEO of Royal Caribbean Group based in Miami. He was speaking on a conference call after the company released its second quarter financial results last month. We not only delivered another outstanding quarter that significantly exceeded expectations, but are also increasing our full-year earnings guidance by another 33 percent. The cruise operator expects this year's profits to be stronger than it predicted just a few months ago. And it's not alone in riding this wave of passenger demand. There was much to celebrate in the second
Starting point is 00:07:05 quarter. This is Josh Weinstein, the CEO of Carnival Corporation based in Doral, Florida. We just hit all-time highs for bookings and customer deposits. And remarkably, we are still experiencing a phenomenal wave season, which started early, gained strength, and is still going strong midway through the year. And it was a similar message from Harry Sommer, the CEO of Norwegian Cruise Line Holdings in Miami, though the company's forecast was less than anticipated. We achieved record revenue of $2.2 billion in the second quarter, an increase of 33% over the same period in 2019. I think these companies have really been able to figure out
Starting point is 00:07:47 how to run in a much more efficient way. This is Jamie Katz. She's a stock analyst at Morningstar. This time off has really given these management teams a way to think about how do we optimize revenue management. And I think that has permitted these companies to come back with really diplomatic pricing tactics. Diplomatic pricing. Instead of simply offering deep discounts to fill up the ships, package together amenities. This allows the cruise ships to add or subtract items based on demand. The more people bind, the fewer amenities included in the base price. Strong demand has allowed the companies to keep prices up, and they need the cash.
Starting point is 00:08:38 This trio of South Florida-based cruise giants have lost tens of billions of dollars combined since the beginning of the pandemic. All three were profitable in the second quarter, if you don't count the hundreds of millions of dollars they spent paying interest on loans. But they have to pay that interest, and it takes a big bite out of profits. Those loans kept the companies afloat when they weren't allowed to sail. Together, these three big cruise companies owe almost $70 billion to lenders. It's still massive, still much higher than it was pre-pandemic. Pete Trombetta is a senior analyst with Moody's, the credit rating agency. The companies have spent more paying interest on those loans this year than they have spent paying for fuel for their ships. They had to borrow to stay
Starting point is 00:09:25 alive. So it's going to take time for them to start tackling that debt, but they're definitely on the right path. This big rebound of cruising is big for South Florida, with two of the top three busiest cruise ports in the world. Already this year, the number of passengers moving through Port Everglades is up 77 percent compared to a year ago. The Fort Lauderdale port has been renovating a terminal that will be dedicated to Disney in time for the winter cruise season later this year. And this comes after renovating a separate terminal earlier this year for Royal Caribbean's Celebrity brand, says director Jonathan Daniels. We're actually hiring additional people. We're creating our own
Starting point is 00:10:06 cruise operations department, which the port has never had. More passengers mean more revenue for Miami-Dade and Broward counties in Florida, the owners of the ports. Cruise passenger revenue in Miami fell 95 percent when ships were ordered to stop sailing. It already tops 100 million dollars this fiscal year, on par with 2019, the year before the pandemic put a stop to stop sailing. It already tops $100 million this fiscal year, on par with 2019, the year before the pandemic put a stop to cruises. Now to a developing story in South Florida, where two cruise ships carrying passengers with coronavirus have been allowed to dock. For some on board... Another cruise ship with COVID-positive passengers has docked at Port Miami. Some of the early COVID cases and headlines came from
Starting point is 00:10:45 cruise ships. After weeks in limbo at sea overnight, two Holland American... Some ships were quarantined and not allowed to dock for days over fears of passengers spreading the virus on shore. The Coast Guard is currently monitoring more than 50,000 crew members on various ships that are in U.S. waters. Thousands of crew members remained on board other ships for sometimes months after the industry was ordered to suspend operations. It added up to plenty of negative publicity at the time, but it has not hurt the optimism now from the industry's CEOs. We are clearly gaining momentum on an upward trajectory. Clearly, the very healthy demand environment we are seeing is quite encouraging.
Starting point is 00:11:25 This acceleration demand, the record booking levels really are increasing our optimism about 2024. In order for that optimism to be realized, the industry needs to continue attracting first-time cruisers and converting them into repeat customers. Worldwide, one out of every three cruise passengers are at least 60 years old, but the average age for passengers sailing in the Caribbean, where ships from South Florida travel, is in the mid-40s. Joe Chili is an assistant dean at Florida International University and creator of the school's Cruise Line Operations Management degree. You're starting to see somewhat of a trend of, let's lure a younger demographic here. And that's not related to the family cruises with all of the, you know, water slides and go-karts and things
Starting point is 00:12:11 like that on it. Shareholders certainly are optimistic about the fortunes of the firms. Norwegian stock was up almost 80 percent in the first half of the year. Carnival and Royal Caribbean shares more than doubled in price during that same time period. In fact, Royal Caribbean stock has almost returned to its pre-pandemic price. That was WLRN's Tom Hudson. It's Consider This from NPR. I'm Mary Louise Kelly.

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