Irma is the cruise line industry's worst nightmare
Cruise lines and their customers are among those bracing for Hurricane Irma as it tears through the Caribbean islands that cruise ships frequent and bears down on ports in Florida that many of the vessels call home.
The major lines have been busy canceling trips for some cruise vacationers and extending those of others -- all to ensure their ships and passengers can dodge Irma, a Category 5 storm and one of the strongest and largest on record in the Atlantic.
Royal Caribbean (RCL), Norwegian Cruise Line (NCLH), Carnival (CCL) and Walt Disney's (DIS) Disney Cruise Lines canceled cruises that were set to depart from Miami, Port Canaveral and Tampa this week. Cruise lines have canceled 10 voyages so far and changed itineraries on 15 more, according to a tally by CruiseCritic.com.
The industry's economic losses could add up quickly. It won't take many cancelations or much port-closure time to do serious damage to cruise companies' bottom lines, said James Hardiman, an analyst with Wedbush Securities who follows the publicly traded Carnival, Norwegian and Royal Caribbean.
Lost revenue from missed voyages is very difficult to recover because ships almost always sail at capacity, Hardiman noted. And many of them will still rack up the same expenses -- without new revenue -- because they'll remain at sea with existing customers whose vacations are involuntarily extended. The latest cancelations come on the heels of disruption to a smaller cruise market in Texas, thanks to Hurricane Harvey.
"Hopefully, the magnitude isn't that enormous," Hardiman said. "I don't think we're really going to know until we're further into the week and into the weekend. To the extent they have to close the Port of Miami or Port Everglades in Ft. Lauderdale, that could be a pretty big deal. Those are the biggest cruise ports in the United States."
The cancelations are mostly driven by forecasts that suggest Irma could hit the Florida home ports for many cruise ships, said Chris Gray Faust, a senior editor at CruiseCritic. Since cruise ships can maneuver around smaller storms by adding sea days or visiting other islands instead, many cruise travelers don't hesitate to book during the June-to-November hurricane season.
"Cruising during hurricane season is fairly popular," she said. "Prices are lower. There's more deals. There's fewer crowds on some of the islands than you'd see during winter months."
But cruise lines don't want customers arriving to take a trip at a time a major storm could be arriving. Passengers are nervous, too.
Carnival canceled trips set to depart Thursday on its Liberty ship and Friday on its Victory ship. "We sincerely apologize for the disruption to your vacation plans," the company said on its website. "We will automatically process a full refund."
Other travelers are getting longer vacations out of Irma, though it also means the next guests set to board will have to wait a few days to depart. Royal Caribbean is keeping its ships Oasis of the Seas, Harmony of the Seas and Allure of the Seas at sea longer than scheduled. "Due to the unpredictability of the storm, we plan to keep all of our guests currently sailing on these ships safely out of harm's way," the line said in a statement.
Norwegian canceled planned trips on its Escape and Sky ships and is giving customers full refunds alongside credits for future sailings. The cruise line also shortened the prior voyage on Escape and has encouraged customers who don't live in Florida to stay onboard to ride out Irma. "Norwegian Escape will set sail from Miami on Thursday evening on a course away from the storm," the company noted.
Meteorologists had warned the 2017 hurricane season could be fierce, and they were right. And forecasters already are keeping an eye on Tropical Storm Jose, which is forming in Irma's substantial wake. "This is a big one," CruiseCritic's Faust said of Irma. "It's scary when you look at the map and see all the islands right in the cone."
How bad will the damage be? "You really just don't know until it happens," she said.
The extreme weather is affecting the entire travel industry: United Airlines (UAL) on Wednesday cut its revenue outlook for the third quarter, blaming Hurricane Harvey for its cancelation of 7,400 flights and for higher overall fuel costs. Harvey also forced Carnival and Royal Caribbean to cancel voyages out of the Port of Galveston in Texas. Carnival and its chairman pledged $2 million to assist in Harvey recovery efforts.
Cruise travelers familiar with the islands were closely monitoring news from the communities in the path.
Early reports out of St. Martin (the Dutch side of the island is called St. Maarten) suggested extensive damage, including to government offices, while Antigua was spared the worst. A statement attributed to Antigua and Barbuda Prime Minister Gaston Browne said damage was minor and no lives were lost. And underscoring the importance of tourism, he added the airport was set to reopen Wednesday afternoon.
"Our people are safe, our country is secure and our piece of paradise remains open to be shared by people from all over the world," Browne said.
The cruise industry generates more than $3 billion in annual spending in the Caribbean and Bahamas, according to a 2015 study by the nonprofit Florida-Caribbean Cruise Association. The region accounts for more than 30 percent of the total cruise-industry capacity.
Many destinations that profit most from cruising are among those hit by Irma already or bracing for its arrival -- including St. Martin ($423 million in cruise spending), the Bahamas ($373 million), the U.S. Virgin Islands ($344 million) and Puerto Rico ($198 million).
Tourists will likely keep booking cruises during hurricane season, said Faust, who suggested they buy travel insurance and stay tuned to social-media accounts maintained by the cruise lines, which are aiming to give customers more advanced notice of storm-related changes to itineraries.
Meantime, they should count their blessings.
"It might be a ruined vacation for you, but for people impacted by these storms, it's obviously a devastating event," Faust said. "Keep things in perspective, and be flexible."
