Cruise ship exodus from Alaska cuts very deeply

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Only a few months ago, most talks about Alaska cruises revolved around the record season expected this summer and some concerns about over-tourism.

Then came the coronavirus. Now, Princess Cruises and Holland America Line have cancelled most of their 2020 Alaska sailings and all land products.

Sarah Leonard, CEO of the Alaska Travel Industry Association, called the cuts “devastating, not just to the hundreds of businesses that rely on cruise passengers for their livelihoods but also to the communities that receive a large portion of their revenue from visitor taxes and fees.”

Leonard said cruise ships bring a little more than half of Alaska’s visitors and that the state’s tourism industry in total supports more than 52,000 jobs and creates more than $4.5 billion in economic activity.

According to CLIA Alaska, more than 1.4 million people on 43 ships were projected to spend $793 million this year. Juneau was projected to have 626 calls this year, more than any other municipality in Alaska, followed by Ketchikan (558) and Skagway (454).

The changes mean that Holland America will not offer an Alaska land program for the first time in 70 years.

“These are unprecedented times,” Holland America Line CEO Orlando Ashford said in a statement. “We know this decision impacts our loyal guests, travel advisor partners, staff members and local businesses who rely on summer tourism for their economies.”

Princess president Jan Swartz called the decision “extremely difficult” and lamented not being able to support the small-business partners throughout the state as it has “every summer for decades.”

“We know these decisions will have a large, adverse economic impact on the state of Alaska, which relies on tourism,” she said in a video.

Several factors played into why such a hot market became one of the first to see major cruise reductions this summer.

The biggest might be that because of the U.S. Centers for Disease Control and Prevention’s no-sail order from U.S. ports until mid-July, combined with Canada’s restrictions on cruising through June, half of the Alaska cruise season was already lost. This has an outsize impact on Holland America and Princess because so much of their business includes land and cruise combinations.

“The shortened summer season has made it simply not viable to operate our [lodges, trains and buses] throughout Alaska,” Swartz said.

Holland America also cited the “complexities of starting up hotels, rail operations and motorcoach fleets for what is at best a mid-to-late restart of travel to Alaska.”

Tom Garrett, the owner of Union Hill Travel, a Protravel independent agency in Kansas City, Mo., that specializes in Alaska travel, said that given how high the startup costs are for companies on the land side in Alaska, it would be hard to recoup costs if they lost half the season.

“The season is roughly 130 days long,” said Garrett, who is also the former director of tourism for Alaska. “They’re going to miss out on over 50% of the season already. We used to say in Alaska, our businesses didn’t begin to make money until late August.”

Adding to that is the uncertainty as to whether the national parks will be open.

“If nobody can go on a tour of Denali, and that’s one of the main reasons for Alaska and guests can postpone for a year and get a future cruise credit worth 125%, they’ll say, let’s just go next year,” Garrett said.

Both Princess and Holland America are still offering some Inside Passage cruises that are not tied to the land product.

And while the massive cuts have some advisors wondering if other lines will follow, Garrett said none are as tied to the land extensions as Princess and Holland America.

“They’re heavily invested in land assets,” he said. “A huge portion of their business revolves around those land extensions. A company like Celebrity takes advantage of those extensions but isn’t personally financially invested in them.”

In fact, he added, “it’s possible that some lines will say, ‘If Holland America and Princess don’t want to go, we’re happy to take their space.’”

Another factor some travel advisors cited was the demographic of Alaska cruisers. Eric Hrubant, president of CIRE Travel in New York, said the decision did not surprise him.

“Alaskan cruises tend to have a big baby boomer population,” he said. “People in the retired age bracket or not in perfect health probably aren’t going to want to get on a cruise this summer.”

He also said those cruises attract a lot of multigenerational families.

“Over the years, most of the people I do Alaska cruises for are affluent retirees, and we’ll do a multigen thing: grandparents, their kids and their kids’ kids,” he said.

Deborah Deming of Frosch Classic Cruise & Travel in Woodland Hills, Calif., also said her Alaska business is made up of a lot of multigen families, which means “the 60-to-80-year-old is the one paying for it,” and this year, they are unlikely to take a cruise.

One thing she is grateful for is that the cancellations happened before most clients made final payments.

“With so many things in flux, it makes sense for this to happen now before they took in more money that would then have to be refunded,” she said.

Canada implements cruise restriction

Alaska cruises from Seattle must call in Victoria, B.C., in accordance with U.S. cabotage laws.
Alaska cruises from Seattle must call in Victoria, B.C., in accordance with U.S. cabotage laws.

Canada’s government will restrict cruise ships with more than 500 passengers from calling at its ports until at least July 1, delaying the start of the Alaska cruise season for most large ship lines.

The decision will impact Alaska cruises from Seattle that have to call in Victoria, B.C., in accordance with U.S. cabotage laws requiring foreign-flagged ships sailing from U.S. ports to call in a foreign port before returning to the U.S.

Small-ship lines that operate in Alaska with U.S.-flagged ships such as Lindblad Expeditions, Alaska Dream Cruises, Uncruise Adventures and American Cruise Lines will not be impacted.

The restriction won’t impact Canada/New England cruise itineraries, as that season starts after July 1.

More than 140 cruise ships from 10 countries docked in Canada last year, Canada said, bringing at least 2 million travellers to the country. The country also deferred all cruise vessel calls in the Canadian Arctic for the entire cruise season this year, citing the limited public health capacity in Canada’s Northern communities.

Canada’s chief public health officer has already issued a health advisory recommending that Canadians avoid going on cruise ships.

“There is no immediate solution to allow cruise ships to operate in Canada while adequately containing the public health risk associated with Covid-19, other than delaying the start of the cruise ship season,” said Canada Minister of Transport Marc Garneau. “We do not take these decisions lightly and will continue to reassess as the situation evolves.”

Cruise lines must move quickly and creatively to redeploy ships

Cruise lines must move quickly and creatively to redeploy ships

The Celebrity Millennium is being repositioned from Asia and will be in Los Angeles in March.
The Celebrity Millennium is being repositioned from Asia and will be in Los Angeles in March.

At last count, at least 27 cruise ships in Asia have had to cancel or modify not only single itineraries but in some cases entire seasons in response to the Covid-19 coronavirus outbreak in China.

Fixing that kind of disruption on short notice is no small feat, especially for lines whose ships are being turned away from ports or are dealing with outbreaks onboard.

For example, it took weeks for Celebrity Cruises to rework itineraries for the Celebrity Millennium, which was in the midst of its Asia cruise season when the outbreak occurred in China.

After talks with the deployment team, travel advisors and port and health authorities, the cruise line cancelled its remaining Asia cruises, starting with its Feb. 15 sailing.

It will instead arrive in Los Angeles on March 20, said Celebrity Cruises CEO Lisa Lutoff-Perlo. There it will conduct free sailings for first responders, active military and veterans. It will also sell a series of revenue cruises and donate the net proceeds to charities and foundations that help first responders and the military.

“At the end of the day, you really have to make the right decision for your guests,” she said. “Unfortunately, with coronavirus, there’s been growing concern for travelling to that region. Safety is paramount to us. It was clearly not our desire or intention to leave that region, but we felt it was the prudent thing to do in the short term. You just didn’t know each day what was going to happen.”

Celebrity’s sister cruise line Royal Caribbean International made a similar decision: Its China-based Spectrum of the Seas is going to Australia, where it will give free cruises to first responders who helped fight the recent devastating wildfires.

The Millennium, which was renovated last year, will make a three-day stop in Hawaii en route to Los Angeles to equip the ship to be able to hook up to shore power once there.

“Redeploying the ship is one thing,” Lutoff-Perlo said. “We had to work with the deployment team to put the itineraries together. We had to work with the global marine organization on how to get shore power on Millennium in just five weeks.”

She said that anybody who understands the complexity of this knows “it’s heroic to be able to do this.”

Details of the new sailings are still being worked out, but Celebrity offered a rough sketch.

Once in California, the Millennium will operate three four-day cruises and one five-day cruise for revenue. As of now, it will also host four two-day cruises for first responders, active military, veterans and their families.

The Millennium will resume its regular Alaska season on May 22. The ship’s Japan cruises are still scheduled for later this year.

Lutoff-Perlo said her team has had to answer several questions, such as whether or not they will be able to sell the new itineraries on such short notice. In response, she said that the staff has had to deal with many crises before, such as the 9/11 attacks, and that they are prepared to make adjustments.

They are still finalizing all the ports, but she said once the relevant officials found out that the cruises would be used to benefit first responders and military, they were willing to be more accommodating.

“As you can imagine, we went back and forth a lot as we fine-tuned these itineraries and figured out what we wanted to do, and every time we went back to every port we talked to, they couldn’t have been more gracious, and they couldn’t have been more wonderful,” she said.

Other lines are still figuring out what to do with their ships, citing the complexity of making such big changes on such short notice to frustrated customers.

Holland America Line said in an online blog post last week that it was figuring out a solution for its Asia-based Westerdam, on which it cancelled sailings through March 14.

In a statement, the line said it was “still working through the extremely complex factors and decisions of itinerary planning. We understand that our guests are eager to learn more about their departures, and we are assessing future cruise itineraries as quickly as possible.”

For travel advisors, the slew of itinerary changes and cancellations has had them working overtime to keep up with changes happening while their clients were at sea as well as awaiting the fate of ships with upcoming departures.

Michelle Fee, CEO of Cruise Planners, said the last time this many cruises had to redeploy from a region this quickly was after 9/11, when nearly all ships repositioned to the U.S.

And despite the logistical difficulty of having so many ships change itineraries on such short notice, Fee said this response points to one of the industry’s best qualities in a time like this: “Unlike land destinations, the upside is that cruise lines can move their hardware. At this point, China and parts of Asia have completely shut down, whereas the ships are just relocating.”

Fee was among several advisors who said the biggest challenge is not knowing “what decisions the cruise lines will make and what types of refunds or accommodations will be offered.”

Linda Terrill, a cruise specialist with the Luxury Travel Group, an independent affiliate of Brownell Travel, agreed. She had clients on a Seabourn Ovation sailing in Asia that was eventually cancelled.

“The most challenging part was spending so much time just checking, checking and rechecking,” she said. “Searching and contacting the sales managers and saying, ‘Tell me what to do.’”

Terrill said the challenges are “all-encompassing.”

“But these are long-time clients, and they were so worried, and I kept putting myself in their shoes and saying, ‘What would I do?’” Terrill said.

In the end, she said, “All’s well that ended well,” and she added that she understands what the cruise companies are facing.

“The lines are completely overwhelmed,” she said. She said one sales manager told her, “We’re just trying to get people home right now.”

Fee said last week that the communication from cruise lines had improved.

“In the beginning of the coronavirus crisis, some cruise lines made decisions and communicated them immediately, while others took a bit longer,” she said. “In the last weeks, we have seen a robust amount of communication from the cruise lines, which is helpful.”

And although the industry has borne the brunt of negative travel headlines due to the challenges on Princess Cruises’ Diamond Princess, Fee is among those who hope that once everyone disembarks the ship, “the story will die down.”

“If history repeats itself,” Fee said, “a few weeks afterwards, we should get back to normal booking trends.”