8th Apr 2022
COVID-19 left travel stocks reeling, particularly since it came hard on the heels of one of the most successful years the travel industry has ever known. For a good 18 months, cruise ships waited in cold layup for the seas to reopen. 2021 saw the tide finally begin to change, but the reopening hasn’t been easy even for the best cruise ETFs.
Although passengers are famously loyal, they are nervous about infection in close quarters on board. Many top cruise destinations remained closed for much of 2021 (Canada didn’t lift its cruise ship ban until November 20211). And without any international hygiene and health coordination, cruise companies have to stay on top of dozens of different regulations.
“We have a set of regulations from 50 different countries to comply with and it’s these little different details that make it a real challenge for a cruise line that calls at different ports in different countries to comply,” said Joep Bollerman, Vice President for Passenger Ships at LR.2
Fortunately, technology is riding to the rescue, delivering solutions to many of the challenges facing cruise companies.
Germs can travel fast through a densely-populated ship, so cruise companies have always adhered to high standards of hygiene, but COVID-19 pushed them to the next level. “Customers may expect airlines, hotels, and cruises to implement hospital-like hygienic practices for every change of flight, room, and cabin,” observe analysts at Accenture3.
Fast, thorough cleaning using UV light disinfection robots is one solution. Maintenance teams are leveraging data about crowd flow and usage levels from wearable tracing bracelets, to optimize disinfection scheduling. Most new ships already boast advanced air filtration systems, but companies are accelerating refits to add them to older ones.
Verifying passenger health before they come on board is an important factor too. Cruise companies such as Carnival Cruises introduced thermal imaging thermometers at the terminal to check guests before they board, and are considering implementing them on the ship to keep tabs on passenger health throughout the cruise4.
Most cruise ships now require proof of vaccination, including Carnival5, Princess6, Royal Caribbean and Celebrity cruise lines. Digital health passports store vaccine status, covid status, travel insurance coverage, test results, and more, to help cruise ships reassure themselves — and other passengers — that there isn’t a superspreader on board. It’s likely that these will endure even when COVID-19 recedes, as a convenient, secure way for travelers to store and share health details.7
Like airlines, cruise ship companies are using technology to reduce face to face contact. Royal Caribbean invites passengers to check in by taking a selfie, scanning their passport, and choosing from a list of staggered arrival times8. MSC Cruise uses an artificial intelligence (AI) wizard to guide passengers through a self-service check in procedure9.
Cruise ships are increasingly adopting Internet of Things (IoT) systems to support smart wearables on board. Cell phone connectivity is spotty at sea, and many people keep phones off to avoid expensive data roaming charges, making apps impractical for contact-free interactions, but IoT systems enable fast connections and data sharing even in the middle of the ocean.
Guests use connected wristbands to open cabin doors, pay for on-board purchases, check children in and out of kids’ clubs, order room service, book and pay for restaurant tables and spa services, and more. These capabilities are more needed than ever now, since ships are requiring reservations to limit crowding.
Cruise ships harvest data from these bracelets to track guest movements on board, so they can reduce crowds and allocate resources more accurately. Leading companies embracing smart connected wristbands include Royal Caribbean and Viking Cruises10. Royal Caribbean is going a step further, with a patent for facial recognition technology that opens cabin doors11.
Cruise ships are finding numerous ways to use digital interactions to improve the travel experience. One popular move has been to replace in-person “muster” for emergency safety drills with virtual emergency training. Instead of gathering in a single location, guests have to complete digital emergency training individually on an in-cabin device or their smartphones.12
One of the most important tech applications is on-board telehealth. For example, Tritan Software’s SeaConsult platform allows medical teams to offer a virtual consultation with passengers and crew members through a voice call, chat, or video, without them leaving their cabin. Better telemedicine capabilities mean that medical professionals can assess someone’s health, diagnose, and advise, all without face-to-face contact.13
Cruise lines like Norwegian and Royal Caribbean adopted “virtual balconies” for inner cabins, displaying a high-resolution stream of the external view so occupants enjoy a greater sense of space and relaxation. Meanwhile, companies are embracing customer service bots, with MSC Cruise installing a voice-enabled AI bot called Zoe in every cabin to answer simple questions about on-board activities.14
Additionally, automated messaging services keep passengers up to date about changes to planned cruises, notifying them immediately if entry regulations alter, boarding requirements change, or destinations have to be replaced. Cruise ships are also using online platforms to educate passengers about shipboard rules and safety recommendations, and delivering information through wearables about sanitization schedules, dinner invitations, and daily events.
Between pent-up demand for travel, the reassurance of tech-driven hygiene processes, and a need to get away from lockdown neighborhoods, cruise stocks could see a resurgence, alongside hotel stocks, airline stocks, and other travel stocks.
P&O cruises announced that their 2022 Caribbean cruise sold out within 6 hours, and Virgin Voyages and Crystal brought forward their 2023 itinerary release date in response to high demand15. Likewise, Carnival Corp.’s bookings for H2 2022 have already exceeded those for 2019, and Royal Caribbean reports that 2022 bookings are close to 2019 levels16.
With bookings and revenue perking up, some investors are considering which travel stocks to buy before they think the travel industry recovers, in the hopes of making a profit when prices rise. Cruise stocks, hotel stocks, and airline stocks all have their appeal, leading other people to consider investing in a cruise line ETF instead of having to choose between them. A travel ETF like Defiance’s CRUZ allows you to spread your investment across a number of promising travel stocks in multiple sub-sectors with a single purchase..
For current performance and holdings, please visit defianceetfs.com/CRUZ
1 “Transport Canada Lifts Cruise Ship Ban, Effective November 1, 2021” July 16, 2021 https://www.travelagentcentral.com/cruises/transport-canada-lifts-cruise-ship-ban-effective-november-1-2021
2 “Helping cruise lines meet post-COVID challenges.” April 29, 2021 https://www.lr.org/en/insights/articles/helping-cruise-lines-meet-post-covid-challenges/
3 “COVID-19: Fast decision-making helps travel companies survive” March 23, 2020 https://www.accenture.com/us-en/insights/travel/coronavirus-fast-decisions
4 “How Technology Will Help Cruise Lines Restart Operations Post-Pandemic” https://www.easemytrip.com/blog/future-of-cruise-post-pandemic
5 “HAVE FUN. BE SAFE. COVID-19 GUEST PROTOCOLS” February 8, 2022 https://www.carnival.com/Legal/covid-19-legal-notices/covid-19-guest-protocols?icid=advisory_cruisehealth_072821
6 “CruiseHealth™ FAQ: Sailings from the United States” February 7, 2022 https://www.princess.com/plan/cruise-with-confidence/cruise-health/frequently-asked-questions/us-cruises/
7 “5 Technologies for Travel and Tourism Industry in Post-COVID Era” March 15, 2021 https://www.digiteum.com/technologies-travel-tourism/
8 “5 WAYS ROYAL CARIBBEAN’S APP CHANGES CRUISING” March 11, 2021 https://www.royalcaribbean.com/blog/5-ways-royal-caribbeans-app-changes-cruising/
9 How Technology Will Help Cruise Lines Restart Operations Post-Pandemic” https://www.easemytrip.com/blog/future-of-cruise-post-pandemic
10 “What You Need To Know About The Internet Of Things And Cruise Ships” September 27, 2021 https://www.tracesafe.io/newsroom/what-you-need-to-know-about-the-internet-of-things-and-cruise-ships
11 “Royal Caribbean patents opening a cruise ship cabin door with facial recognition” November 11, 2021 https://www.royalcaribbeanblog.com/category/category/technology
12 How Technology Will Help Cruise Lines Restart Operations Post-Pandemic” https://www.easemytrip.com/blog/future-of-cruise-post-pandemic
13 How Technology Will Help Cruise Lines Restart Operations Post-Pandemic” https://www.easemytrip.com/blog/future-of-cruise-post-pandemic
14 “10 Jaw-Dropping Cruise Ship Innovations” July 12, 2021 https://www.cruisecritic.co.uk/articles.cfm?ID=1697
15 “Cruises set for strong demand post-Covid” December 15, 2021 https://www.ship-technology.com/comment/cruises-demand-post-covid-19/
16 “What’s it like to go on a cruise now? Here’s how COVID changed the onboard experience” November 3, 2021 https://www.latimes.com/business/story/2021-11-03/covid-changed-cruises-cruise-ship-safety-protocols-what-to-know