Royal Caribbean Cruises and Norwegian Cruise Line Holdings have admitted their profits will take a hit from the sudden US government ban on sailings to Cuba.
Royal Caribbean, world’s second largest cruise group, estimated that the financial impact of the regulatory change would be a cut adjusted earnings per share this year in the range of $0.25 to $0.35 per share – the equivalent of $52 million to $73 million.
Chief financial officer Jason Liberty said: “While the affected sailings impact only 3% of our 2019 capacity, the extremely short notice period for this high yielding destination amplifies the earnings impact.
“The result of this policy change has created a short-term impact to our guests, operations and earnings; fortunately, we have many alternative and attractive destinations for our guests to choose from.”
Lines serving Cuba from the US were forced to alter itineraries as a result of the order imposed on Wednesday.
Royal Caribbean had to change itineraries of Havana-bound ships over two days.
The company is “determining alternate destinations for future sailings”.
Royal Caribbean said its “primary concern is for its guests, and the company is working closely with them to offer alternative destinations and compensation for any inconvenience”.
Norwegian Cruise Line Holdings revealed that the Cuba restrictions will impact all three of its brands, with about 25% of the impacted days attributable to the combined sailings by Oceania Cruises and Regent Seven Seas Cruises, the majority of which were Cuba-intensive “premium priced” itineraries.
Sailings that include a Cuban port of call represent slightly more than 3% of the company’s remaining sailings in 2019 for all three brands.
“The extremely abbreviated timeframe to modify our itineraries to be in compliance with the new travel restrictions to Cuba has exacerbated the impact to the company’s earnings estimates,” the company said.
“The modification of these itineraries, the substantial discounts offered to guests for them to remain on their booked cruise, the accommodation of cancellations and changes to reservations, incremental marketing investment to support the compressed sales cycle for the modified voyages, along with the protection of travel agent commissions will result in an estimated impact to adjusted eranings per share for 2019 of around $0.35 to $0.45.”
President and CEO Frank Del Rio said: “Our three brands are working diligently to accommodate the needs of our guests and travel partners as we quickly modify itineraries to meet the new Cuba travel regulations.
“We share in the disappointment that comes with these changes especially on such short notice and sincerely appreciate the cooperation and understanding of our guests for this inconvenience.
“Our brands have put in place generous compensation programmes that offer guests and travel partners a compelling, value-packed alternative.”
NCL said passengers booked on cancelled cruises to Cuba through to September 2 can continue on a revised itinerary and receive a 50% refund as well as a 50% future cruise credit valid through December 31, 2020.
Alternatively, they can cancel and receive a full refund provided the line in notified by June 11.
Sailings beyond September 2 will be automatically cancelled and refunds will be applied.
Affected passengers are bring offered a 20% discount off current cruise fares on any new voyages booked by August 5 for sailings no later than December 31, 2020.
Travel Weekly in the US reported a note from Wells Fargo Securities, which estimated the economic impact on Carnival at $21 million to $42 million and on Norwegian at $26 million to $60 million.
European line MSC Cruises has also had to change planned itineraries from the US to Cuba.
“MSC Cruises will modify effective immediately all its cruise itineraries previously scheduled to call at that country,” the company said.
“Due to these substantial changes in US law and regulation, MSC Armonia is no longer authorised to call the port of Havana, Cuba, as part of her current Caribbean sailings.
“The alternative ports of either Key West, Florida; Costa Maya, Mexico; George Town, Cayman Islands; or Cozumel, Mexico will replace Havana.
“The remainder of MSC Armonia’s itinerary will remain as originally planned.”
Passengers on board MSC Armonia and their travel agents have already been informed and have been offered a number of options.
These include $400 per cabin onboard credit, with the difference refunded if not used during the cruise. Pre-paid shore excursions in Havana will also be refunded.
Cancellation fees will be waived and funds transferred to a different ship or itinerary if needed.
Virgin Voyages, which is to start Caribbean sailings from Miami in 2020, plans to announce a destination to replace Cuba next week.
Cruise trade body Clia warned that almost 800,000 passenger bookings around the world have been affected by the Cuba cruise ban.
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