The year that followed the devastation wreaked by hurricanes Irma and Maria last September has been a time of great uncertainty in the Caribbean.
One ray of hope has been the relatively quick snap-back of cruise tourism to the region, bringing thousands of visitors and millions of dollars to areas where many hotels are still shuttered.
But the storms of 2017 took a toll on the cruise lines as well as their destinations. They left damage that cruise CEOs would rather not dwell on but will readily acknowledge when the discussion goes there.
“We had the worst year we’ve ever had with respect to hurricanes,” Royal Caribbean Cruises Ltd. chairman Richard Fain said in an Aug. 2 conference call with stock analysts. He said the number and, especially, the location of the storms were “particularly impactful for us.”
St. Thomas welcomed back cruise ships in November, less than two months after hurricanes Irma and Maria struck.
St. Thomas. St. Martin. San Juan. All three were hit hard, and all three have been mainstays of the eastern Caribbean, an area that served as the launchpad for the modern cruise industry in the 1960s.
Bookings for these areas slowed to a trickle last fall as potential cruise passengers digested video of the storms and their aftermath. Sales picked up a month or two later but left a giant bookings void behind, and lines with a big presence in the eastern Caribbean have been playing catch up ever since.
“There’s no question that we got impacted originally by missing a booking period during the hurricane season,” said Carnival Corp. CEO Arnold Donald. “And now for portions of the Caribbean — and we keep referencing Puerto Rico and San Juan because it was so obvious there — there is a hurricane malaise.”
That hangover was a key factor in Carnival’s forecast that financial results for the third quarter, which ended Aug. 31, would be no better than in 2017. (Carnival reports its Q3 results around the end of September.)
It comes amid an otherwise excellent year for the industry, with strong demand for Europe, Alaska and Asia itineraries and even for fresh bookings in the Caribbean, according to several cruise executives.
With the exception of Norwegian Cruise Line, the industry has restored service to the eastern Caribbean islands.
San Juan, despite continued struggles with its electrical grid, has 14 cruise ships calling or homeporting this year, four more than it had going into the storm season in 2017. St. Martin opened its Rainforest Adventures theme park with a 2,800-foot zipline two months after Irma came through.
In the U.S. Virgin Islands, seven big cruise ships are scheduled to call this week, including the Caribbean Princess, the Carnival Fascination, Royal Caribbean International’s Harmony of the Seas and the Disney Fantasy.
Even in Dominica, arguably the island most flattened by Hurricane Maria’s 160 mph winds, Carnival Cruise Line returned on July 10, making the first of 10 scheduled calls this year with the Fascination. The Dominica government invested more than $6 million in post-hurricane site reconstruction to ready the island for tourists.
The beach at Trunk Bay in St. John is ready for cruise passengers and other tourists.
Centralizing ship and weather data
Although cruise lines are well schooled in coping with the disruption of Caribbean hurricanes, this year they’re more prepared than ever.
Carnival Cruise Line, for example, has a new fleet operations center at its Doral, Fla., headquarters. Opened in May, the 35,000-square-foot center brings together 150 employees previously scattered across Carnival’s two buildings.
A 74-foot video wall made up of 57 high-definition color screens helps teams track Carnival’s 25 ships, weather conditions, engine performance and other data. Four rooms are reserved for critical situations.
The center’s director, John Rowley, said that a year ago when Irma hit, much of the decision-making data for Carnival was handled manually. Should another storm menace Carnival this year, the information flow and decision-making process will benefit from having the new center, he said.
Meanwhile, Royal Caribbean Cruises Ltd. has contracted with Norman, Okla.-based Weather Decision Technologies for a weather risk-mitigation system, which was installed on all of its ships and in the Miami emergency operations center in November 2017. James Van Fleet, Royal Caribbean International’s chief meteorologist, said the WeatherOps analytical software will be used to “plan the safest route possible for our guests and crew members.”
When future Caribbean bookings ground to a halt last fall, consumers had two concerns, according to Fain. The first was that the destinations would be damaged and not ready for vacations. The second was a fear of more hurricanes of the magnitude of Irma and Maria striking this year.
The second factor has not materialized so far. In July, the National Oceanic and Atmospheric Administration (NOAA) cut back the estimated threat from 2018 Atlantic hurricanes, forecasting a 60% chance of a below-normal season, producing between zero and two major hurricanes, down from a range of between one and four when the season started.
Explaining the change in its forecast, NOAA cited exceptionally cool sea surface temperatures, the emergence of an El Nino weather pattern in the Pacific Ocean, stronger vertical wind shear and trade winds, generally cooler and drier air and increased atmospheric stability.
Hurricanes Irma & Maria, one year later
But even without new storms, a few weak spots remain in the Caribbean, at least for Carnival Corp. In its July discussion of financial results, Carnival said that for its North American brands, the Caribbean is behind last year’s occupancy levels and is selling at lower prices. The company said that while eastern Caribbean itineraries have pulled even with last year, hurricane impact continues to affect its southern Caribbean routes.
“As a result, the lower prices are driven principally by the San Juan itinerary,” Carnival chief financial officer David Bernstein said.
Carnival sails the Fascination year-round on seven-day cruises from San Juan to islands such as Dominica, Barbados, St. Lucia and St. Kitts at website prices currently listed as low as $373 per person.
In addition to fly/cruise clients from the mainland, the itineraries attract residents of Puerto Rico, but in the wake of Hurricane Maria, many of those customers have been distracted with clean-up, recovery or financial issues.
Travel advisers said that a year ago, after the storms, U.S. residents were reluctant to commit to the Caribbean, especially eastern Caribbean itineraries that included San Juan, St. Thomas and St. Martin.
“I saw a decline in the number of clients wanting to go to the Caribbean,” said Penny Rushing, owner of Four Points Travel in Winter Garden, Fla. “I didn’t have cancellations, but I just had reluctance to go down there for a couple of reasons, mainly just because of the damage that was caused by the hurricanes. Whether it being Grand Turk or St. Martin or St. Thomas, especially St. John, too. There was a decline in sales because of that, probably until the end of November into December.”
A drag on cruise pricing
Rushing added: “When Wave season hit, it seemed things were back to normal, but a lot of that had to do with the fact that the news was reporting things are looking better. Everything’s not totally up and running, but it’s very, very close. Aside from some of the islands that were really, really hard hit.”
Sherry Leybovich, a Cruise Planners franchisee in Riverview, Fla., said she also saw a drop in Caribbean demand last fall and that some of it had lingered into this year.
“A lot of my clients, rather than doing the eastern Caribbean, they’re doing more the southern or western islands,” Leybovich said. “So they’re still going. There’s just a little hesitation on their part. People are still reluctant because they wonder, ‘What kind of activities can I do on the island?’ My clients who go as a family, they’re a little leery of wanting to expose their children to that devastation and everything.”
That kind of reluctance has impacted pricing in the Caribbean, the advisers said.
“There were some unreal deals out there close to the end of November, beginning of December,” Rushing said. “Quite frankly, a lot of the clients said, ‘The deal is so good, I’ll just stay on the ship. I don’t even have to get off the ship.'”
To some extent, the Caribbean continues to be a buyer’s market.
Cruise analyst Patrick Scholes, of SunTrust Robinson Humphrey, wrote in a July report, “We believe that consumers remain a bit spooked about the upcoming hurricane season, and the third quarter still is feeling the impact from last year’s hurricane-related bookings pullback.”
In a pricing survey taken in June, Scholes said he found “a small drop in pricing in order to stimulate demand, most notably for the third quarter in the Caribbean and Bermuda, which was on top of weak third-quarter pricing to start with.”
He said Caribbean pricing was off 7% to 8% from year-ago levels, compared with 5% to 6% previously.
Scholes said third-quarter pricing for eastern Caribbean sailings appeared to be down industrywide by a percentage in the “low teens,” while prices were down “mid-single digits” for western Caribbean itineraries and down “low- to mid-teens” for the southern Caribbean.
He said surveys show pricing rebounding in the fourth quarter, suggesting that hurricane concerns, not an oversupply of new berths in the region, are the primary drag on cruise pricing.
Photos of the same corner in Puerto Rico help illustrate the island’s recovery from Hurricane Maria. The earlier image is an SOS asking for food and water. The later photo says “welcome” in Spanish and includes the #covertheprogress hashtag.
Puerto Rico climbs back
Destinations that were hit by Maria and Irma are working hard to get out the message that they’re open for tourism.
None more so than Puerto Rico.
Brad Dean, CEO of a newly created tourism promotion entity Discover Puerto Rico, coined the slogan “Cover the Progress” for his initial media campaign.
“Eleven months into this, not only are we recovering, but the tourism business is ready and eager to welcome visitors,” Dean said. “Today, we have 132 hotels open. We have more than 4,000 rooms set to reopen over the next several months.”
Old San Juan, the Bacardi rum distillery, the beaches, even parts of El Yunque rainforest are open for shore excursions.
Dean said that as destructive as Maria was, it served to raise Puerto Rico’s sometimes forgotten status as a part of the U.S., where English is widely spoken, dollars are accepted and passports aren’t required. Going forward, he said he hopes to harness the past year’s publicity to bring more tourists, including cruisers, to the island.
Multiple ships docked together at the cruise ship piers in Old San Juan as the recovery continues. San Juan has 14 cruise ships making calls or homeporting this year, four more than it had going into the 2017 storm season.
As for Carnival’s pinpointing San Juan as a weak spot, Dean acknowledged that not everyone is ready to cruise yet.
“Given what the island has been dealt, there’s a lot of people who are just all-in and completely focused on accelerating the recovery, and we see that particularly in the business community,” Dean said.
In Dominica, recovery is also proceeding. The island has 168 confirmed cruise calls for the upcoming winter season.
Carnival’s 10 calls this summer brought 2,000 visitors each at a crucial time and were “significant for the tourism sector,” said Careen Prevost, permanent secretary for the Ministry of Tourism.
Cruise ships bring 10% to 25% of Dominica’s visitors in a normal year, according to the Discover Dominica Authority.
The commissioner of tourism discusses hurricane recovery efforts one year later.
In the U.S. Virgin Islands, many attractions have reopened and have been improved, said tourism commissioner Beverly Nicholson-Doty. In particular, she cited Coral World and Paradise Point.
At the Magens Bay beach in St. Thomas, a partnership with Royal Caribbean helped clear debris from the beach, groom the sand and replant and repair the damaged forest near the waterfront.
Nicholson-Doty said that to return, the cruise lines made it clear they needed clean beaches, working activities and attractions and available dining. “When we reopened in November, we had all of those components in place,” she said.
Even though thousands of residents were evacuated, there has been no shortage of labor, because 50% of the hotels remain closed, so workers from those properties have transitioned to other tourism businesses, Nicholson-Doty said.
Some areas are still scarred, she acknowledged, adding, “I want to be as transparent as possible. There are those areas that are going to take years for total recovery.”
She continued: “We were very careful to work with our ground operators to ensure that the traversed areas of tours and where tourists are going to be frequenting were addressed early on. That’s not to say that they’re not going to see debris. That’s not to say they won’t see areas where there are still roofs missing. But in terms of a lot of destruction in those areas that visitors would be traversing, I don’t think that is a challenge here.”
For the eastern Caribbean, lapping the one-year anniversary of the storms this month will be a milestone. Another will be the return of Norwegian Cruise Line, which hasn’t sailed in the region for a year.
Alone among the biggest lines, Norwegian has stuck to western Caribbean itineraries since Irma, diverting the Norwegian Escape and later the Norwegian Getaway from their scheduled eastern Caribbean routes.
Norwegian is set to resume eastern Caribbean sailings with the Norwegian Bliss from Miami in November and with the Norwegian Epic from Port Canaveral in December.
Bookings for those and other Caribbean itineraries look solid, Norwegian president Andy Stuart told Wall Street analysts on a conference call in August.
“We feel very much that we’re past the concerns that were driven by last year’s storm season and are pretty happy with the momentum that we’re seeing,” Stuart said.
Read More —> Source link