Globaldata: Securing finance will be key to cruise industry survival

Published on : Thursday, March 26, 2020

Royal Caribbean has agreed a $2.2bn loan facility with banks to shore up cash flows as the coronavirus (COVID-19) pandemic hits travel companies.

According to Ben Cordwell, Travel & Tourism Analyst at GlobalData, a leading data and analytics company, given that cruise operations could be restricted for months; it is crucial that businesses secure finance to ensure they can navigate a period of great uncertainty.

Observing the ‘cash and cash equivalents’ between the three biggest cruise operators found that Royal Caribbean had US$243.7m, Norwegian US$225m and Carnival US$518m. Although this gives companies a certain degree of security, the costs of running a cruise line are enormous and these outgoings will begin to take their toll.

 

The cruise company might need to address their importance to economies as the aviation industry, railways, car manufacturers and banks generally contribute more to a nation’s economy than the cruise sector. This may lead to governments prioritizing these industries which means that cruises are offered less in terms of financial support.

 

So it is important for cruise businesses to secure finance rather than expect to be helped by governments if the need arises. It will not come as a surprise to see more companies following the lead of Royal Caribbean and borrow large amounts to further bolster their liquidity.

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