It's the kind of headline that would send the cruise industry reeling in the springtime of last year. When Royal Caribbean's (RCL 0.11%) Symphony of the Seas pulled into Miami after a seven-day cruise on Saturday, it arrived with 48 passengers and crew members testing positive for COVID-19.
Did Royal Caribbean have to cancel future sailings to tend to the ill? No. The very next weeklong cruise took off with fresh passengers later that day -- as planned. Will Royal Caribbean's legal team have to fend off class action lawsuits stemming from the outbreak? Probably not. Vaccination requirements and other safeguards find the the four dozen positive cases seemingly dealing with mild or no symptoms of the COVID-19 virus.
It took Royal Caribbean and its peers more than a year to start sailing again after putting cruises on hold since mid-March of last year. There were a few hiccups with the gradual resumption of stateside-originating cruises, but things appear to be going as well as, if not better than, expected. Headlines of 48 people coming down with COVID-19 on a cruise are no longer scary. Dig deeper into this weekend's story, and the prognosis is probably better than you might expect.
Image source: Royal Caribbean.
Unfinished Symphony
We're still early in sizing up the eventual fates of these 48 passengers, but the initial outlook is pretty encouraging. All passengers testing positive were either asymptomatic or came down with mild symptoms. They all went into quarantine after testing positive, and just six of them chose to disembark mid-voyage to be transported home.
Royal Caribbean didn't just skirt disaster here. It made its own luck through strict vaccination requirements that have proved to generally keep severe symptoms or dire outcomes at bay. All passengers who are at least 12 years old need to be fully vaccinated. Royal Caribbean reveals that 98% of the 48 passengers -- all but one -- were fully vaccinated. The system and policies that the cruise line industries have embraced are working.
One last encouraging morsel in the report is that there were 6,091 passengers and crew members on board. We're talking about less than 1% of them coming down with COVID-19. More importantly, did you know that there were more than 6,000 passengers on any cruise ship? Symphony of the Seas is a massive ship with room for as many as 9,000 passengers, but it's a good sign that the industry is truly recovering after essentially disappearing for nearly a year and a half.
We already knew that things were starting to look up for Royal Caribbean. It posted disappointing quarterly results two months ago, but it helped ease that sting by pointing to strong bookings for future sailings. New bookings for 2022 sailings in September were clocking in 60% higher than the monthly average for the previous quarter. The year-ahead bookings are within Royal Caribbean's historical range, and passengers are willing to pay more than they did in 2019 (the last year before the pandemic rattled the market).
Royal Caribbean has been the best performer among cruise line stocks. It's not the largest player in this market, but it has consistently generated strong growth and the healthiest margins. Like its peers, Royal Caribbean has made sure it has loaded its coffers with the financial means to weather the storm. Its $4.1 billion of liquidity at the end of September includes $3.3 billion in cash and equivalents. Having four dozen passengers and crew members come down with COVID-19 is unfortunate, but just knowing that Royal Caribbean is handling this seamlessly -- without interruption -- is welcome news behind an unwelcome headline.
