Adream is a wish your heart makes, and Tuesday afternoon should’ve been when Disney’s (NYSE: DIS) dream — more specifically the Disney Dream cruise ship — resumed passenger sailings for the first time in nearly 16 months. The entertainment giant with a fleet of four cruise ships was supposed to embark on a two-night test sailing for the Disney Dream out of Port Canaveral on Tuesday, but it had to postpone the voyage earlier this week after “inconsistent” COVID-19 test results.
This is the latest setback for the cruising industry. Royal Caribbean’s (NYSE: RCL) Odyssey of the Seas was set to resume sailings this weekend, only to have to cancel the first four weeks of watery getaways after a handful of crew members tested positive for the COVID-19 virus.
It’s not all bad news, though. Some ships are starting to generate revenue again. However, the peak summer travel season that once seemed so promising for Royal Caribbean, Carnival, and Norwegian Cruise Line Holdings (NYSE: NCLH) is starting to fall apart.
Riding the waves
Summer is technically just getting started, but restarting a travel industry that has been largely up on blocks since March of last year is apparently easier booked than sailed. There have been isolated positive tests on the limited number of active sailings. They’ve been costly to deal with — a pair of young passengers testing positive on a Royal Caribbean sailing had to be flown back home with their families on a private plane — but thankfully, not disruptive to the rest of the passengers or the cruise-ship’s operations.
The pandemic isn’t over. The pesky and highly contagious Delta variant of the COVID-19 virus has triggered new lockdowns and restrictions from Sydney to London. Canada is still holding firm to strict travel restrictions. Even if cruise ships were operating with their full fleets — and they won’t be for some time — you still have fewer potential passengers with easy access to going on a cruise vacation without having to jump through hoops.
Disney’s special challenges
Disney’s situation is a bit unique than what’s happening with its larger peers. The U.S. Centers for Disease Control and Prevention is requiring ships to either complete test sailings to make sure that safety protocols are working or require that 95% of its passengers are fully vaccinated. Disney’s premium-priced sailings are a draw for young families, and with young children still not cleared for any of the viable COVID-19 vaccinations, there’s no way it can consistently fill a ship with young passengers making up less than 5% of the travelers.
Unlike Royal Caribbean, Carnival, and Norwegian Cruise Line, Disney can also afford to wait until next summer to cash in on the peak travel season. The company is a diversified media mogul. Its fleet of four — and next summer, five — cruise ships barely moves the needle.
The three traditional cruise lines aren’t necessarily desperate. They have raised a lot of money through stock and debt offerings over the past year and change. Carnival filed to sell another $500 million in stock on Monday.
However, investors and cruise-vacation fans eventually need to see some stability in the business. More than a year of nixed sailings has generated a wave of either refund requests or the issuing of enhanced future cruise credit.
Most segments of the travel and tourism sector are well into the turnaround process. Carnival, Royal Caribbean, Norwegian Cruise Line, and to a lesser extent Disney are just trying to get started. The summer that seemed so promising earlier this year is coming undone.