Business & Tech

Cruise giant Carnival works to manage deepening coronavirus crisis

YOKOHAMA, JAPAN - FEBRUARY 19: A bus carrying passengers who will take the flight chartered by the government of the Hong Kong Special Administrative Region of the People's Republic of China drives past the quarantined Diamond Princess cruise ship docked the Daikoku Pier on February 19, 2020 in Yokohama, Japan. About 500 passengers who have tested negative for the coronavirus (COVID-19) were allowed to disembark the cruise ship on Wednesday after 14 days quarantine period as at least 542 passengers and crew onboard have tested positive for the coronavirus. Including cases onboard the ship, 615 people in Japan have now been diagnosed with COVID-19 making it the worst affected country outside of China. (Photo by Tomohiro Ohsumi/Getty Images)
Tomohiro Ohsumi/Getty Images
A bus carrying passengers who will take the flight chartered by the government of the Hong Kong Special Administrative Region of the People's Republic of China drove past the quarantined Diamond Princess cruise ship docked the Daikoku Pier on February 19, 2020 in Yokohama, Japan.

The arrival of the Westerdam cruise ship in Cambodia seemed like cause for celebration.

After days of circling in the sea, hundreds of elated passengers disembarked in the Cambodian city of Sihanoukville on Feb. 14, amid assurances the ship was free of the coronavirus. President Trump broadcast the news on Twitter, thanking the Cambodian government for its hospitality and tagging Micky Arison, the chairman of the vast multinational cruise company, Carnival Corporation, that owns the Westerdam.

But the joy was short-lived. Over the weekend, an American passenger who had been on the Westerdam tested positive for the virus, raising concerns that infected passengers were dispersing across Asia.

Advertisement

Now the situation is fast becoming a crisis for Carnival. Thousands of miles away, another Carnival ship, the Diamond Princess, has been moored outside the Japanese port city of Yokohama with hundreds of coronavirus cases reported on board. Passengers who tested negative began leaving the ship on Wednesday. American officials had already evacuated some passengers.

Get Today's Headlines in your inbox:
The day's top stories delivered every morning.
Thank you for signing up! Sign up for more newsletters here

“We have protocols, standards and practices for every possible issue you might imagine, including coronavirus,” said Roger Frizzell, a spokesman for Carnival. “But this virus is so new and unknown that everyone, including the medical profession, is learning on the job.”

Carnival serves nearly 11.5 million travelers a year, or roughly 50 percent of the global cruise market. It runs some of the best-known cruise brands in the industry, including its flagship Carnival Cruise Line, the Princess Cruises brand, and the Holland America Line, whose fleet includes the Westerdam.

In the coming months, industry analysts say, the coronavirus crisis could take a financial toll on Carnival, potentially hurting its efforts to make inroads into China, a fast-growing market in the cruise industry.

“That is a very negative initial impression for an awful lot of Chinese consumers,” said James Hardiman, a travel industry analyst at Wedbush Securities.

Advertisement

Since the outbreak began in January, the coronavirus has disrupted virtually every major industry, from cruise lines to technology companies. Before the Westerdam docked in Cambodia last week, Carnival said it was expecting a “material impact” on its finances.

Given its size, experts say, Carnival regularly becomes a lightning rod for problems afflicting the industry.

“It’s the biggest cruise company in the world by an order of magnitude,” Hardiman said. “If you’re going to have bad luck on a ship, it’s 50-50 at least that it’s going to be a Carnival ship.”

In recent days, Carnival has taken a series of steps to mitigate the business impact of the coronavirus crisis, redeploying ships that were scheduled to sail in Asia to other parts of the world. Princess Cruises has canceled 17 trips and one of it ships, the Sapphire Princess, is redeploying from Shanghai to Australia. Another Carnival brand, Costa Cruises, has canceled 12 voyages in China.

“This is a big issue that’s being handled at the corporate level at Carnival,” said Ross Klein, a sociologist who studies the cruise industry. “They won’t want to redeploy a Princess ship on the same itinerary at the same time as a Holland America ship or another Carnival ship.”

Advertisement

The problems for the cruise operator began early this month, when the Diamond Princess was stranded in waters off the coast of Japan with hundreds of passengers reported to have the virus. At the same time, the Westerdam struggled to find a country willing to let its passengers disembark. Ports in Taiwan, the Philippines and Thailand denied the ship entry over concerns about the coronavirus.

Throughout the crises, Carnival Corporation has received help from the State Department and other American officials. On Monday, the US government evacuated hundreds of passengers from the Diamond Princess, putting them on charter flights to the United States.