In the early days of the COVID-19 pandemic, cruises were hotspots for the spread of the disease. Because of its early brush with COVID-19 outbreaks and the suspension of sailing for months after, the cruise line industry has worked hard to implement health and safety protocols that will encourage travelers to come back onboard. In this respect, cruise lines are ahead of the curve compared to other segments of the travel industry.

The cruise industry spent months researching best practices so they could come up with industrywide plans for returning to sailing. The most notable was the “healthy sail panel” formed by Norwegian Cruise Lines and Royal Caribbean. This panel of health experts, headed by Dr. Scott Gottlieb, the former head of the FDA, and Mike Leavitt, a former governor and secretary of Health and Human Services, came up with 74 recommendations for cruises to return safely.

Cruise lines around the world have also committed to testing every passenger and crew member for COVID-19 before boarding. A negative test is required before embarkation, and the rule applies to all ships with a capacity to carry 250 or more persons.

Equipped with these safety measures and benefitting from pent-up demand for travel, the cruise line industry is starting to see some green shoots.

In Europe, ships large and small have hit the waters again, boosting the industry’s confidence that service can resume safely. More than 100 cruises carrying 50,000-plus passengers have already sailed successfully in Europe since the summer. Asia’s cruise market is also slowly coming back to life. Domestic river cruising resumed on China’s Yangtze River this summer, including classic three- and four-night itineraries sailing the gorge area between Chongqing and Yichang. Meanwhile, Singapore is introducing “cruises to nowhere” for locals next month, operated by Genting Dream Cruises and Royal Caribbean. A spokesperson from Genting says inquiries for the Singapore cruises are “coming nonstop” and that occupancy rates for similar sailings in Taiwan have risen from 50 percent in July to 90 percent today.

North America’s market remains shuttered; however, the no-sail order from the U.S. Centers for Disease Control is set to lapse on Oct. 31, as of this writing.

In the meantime, cruise operators have begun repatriating to the United States many crew members that were sent overseas for the duration of the no-sail order. The fact that they are bringing staff back now indicates their growing confidence that cruises could resume in the United States before year end.

Carnival Corp., Royal Caribbean Cruises and Norwegian Cruise Line have all indicated on earnings calls that bookings for 2021 remain strong. Between 15 million to 20 million customers were unable to take cruises this year, resulting in some pent-up demand.

Carnival CFO David Bernstein also noted that about 60 percent of bookings taken during the first three weeks of September were new bookings, rather than customers using credits from canceled trips. Further ahead, Carnival has a “backlog of repeat customers” ready to fill its ships, which will target drive-to markets and shorter cruises, CEO Arnold Donald said. While the company is planning on a staggered restart, demand is not expected to be a big issue in the short term.

Carnival Corp., Royal Caribbean Cruises, Norwegian Cruise Line and MSC Cruises are the four largest cruise lines in the world. Together they hold more than 80 percent of the global market share. While the first three companies trade independently on public exchanges, MSC Cruises is part of the Mediterranean Shipping Company S.A., the world’s second-biggest container shipping operator.

On Feb. 13, MRP published a report titled Expect Further Losses Ahead for Cruise Line Stocks, in which it is argued COVID-19’s impact on the cruise line industry would be felt for months. Indeed, shares of the three major publicly-traded cruise liners — Royal Caribbean, Carnival Corp. and Norwegian Cruise Line Holdings — plunged 70 percent on average between Feb. 13 and the March 23 market bottom.

While cruise line stocks have bounced back from those March lows, they are still down significantly year-to-date, leaving plenty of upside as the industry gets back to sailing.

Nelly Nyambi is managing director of research for McAlinden Research Partners, a provider of independent research for investors. Read the firm’s complete report at this link: https://bit.ly/3jX3QaW