The quarantine of thousands aboard two luxury ships hit by the coronavirus off Japan and Hong Kong escalates a threat to the cruise industry in the middle of what is normally the busiest period for summer vacation bookings.
Authorities said they would hold those aboard for up to two weeks after finding at least 13 infections on the two cruises, turning them into a form of confinement for the more than 7,000 passengers and crew. Carnival Corp.’s Princess Cruise Lines operates the vessel off Yokohama, and Dream Cruises Management Ltd. runs the ship being held off Hong Kong.
Cruise line operators have up to now indicated that the impact of the coronavirus on their business has been limited, even after people were temporarily kept aboard a different Carnival ship in a port near Rome last month when a passenger was suspected of having the virus. Tests showed that was a false alarm.
Companies have stepped up defenses, including altering routes and increasing health checks. Even so, the latest quarantines come at a crucial time for the industry. The period of January through March, known as “wave season,” is historically the peak sales period when the companies entice travelers with early booking incentives.
“Cruise lines appear more at risk from illness because so many people live in close proximity, and adverse publicity may lead to some potential customers postponing booking a cruise” or choosing another type of vacation, said Jamie Rollo, an analyst at Morgan Stanley who covers Carnival and Royal Caribbean Cruises Ltd., in a note to clients. “How this plays out depends on how long the epidemic lasts, and whether the operators have to discount to stimulate demand.”
The cruise industry has some protection from a relatively long booking window of about six months, and customers may be reluctant to cancel existing reservations because they’ll lose their deposits, Rollo said.
On Tuesday, Royal Caribbean Chief Executive Officer Richard Fain said few potential cruisers were asking about the coronavirus, suggesting most consumers were taking the threat in stride. Outside the affected area, the company was seeing little impact, he said.
China accounts for about 5% of the industry’s global revenue, according to Morgan Stanley.
Ten people on the Diamond Princess, which has about 3,700 crew members and passengers aboard, have tested positive for the new coronavirus and been taken to hospitals, Japan’s Health Ministry said. The ship had been moored off Yokohama and moved further out to sea Wednesday, tracking data showed.
A total of 273 people on the Diamond Princess are to be tested. The 10 positive findings were among 31 tests whose results have already come through, the Japanese ministry said. All passengers and crew will be required to stay aboard apart from those who are hospitalized, and passengers will be asked to stay in their rooms.