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Tourists tempted with $28-a-night cruises as operators bid to revive sector

Following the devastating effect the coronavirus has had on the travel & leisure industry, cruise operators have turned to offering deals in an attempt to get people back on boats. As major players like Carnival resume sailing from 1 August, becoming the first major cruise operator in the Americas to outline a return to operations after the pandemic and subsequent lockdown shuttered the industry.

The company is offering discounts of as little as $28 a day to entice customers back. This is not the first time the cruise industry has used discounts to attract customers, but the extent of the sale shows the crisis of confidence Carnival is trying to overcome.

Travellers who want to book a cruise have several affordable options. Carnival (CCL), is offering five-day cruises in September 2020 for about $108, plus taxes and fees. This breaks doown to $28-a-day including food, cheaper than staying home for many people.

A “no-sail” order from the US Centers for Disease Control and Prevention is due to expire on 24 July after a 100-day extension of the agency’s original edict. The end to the lockdown measures that saw all sailing halted is highly anticipated by cruise operators who face high fixed costs and heavy debt burdens, making it likely that they will face a long path back to profitability.

In normal times, cruise lines are highly profitable: Royal Caribbean finished 2019 with a 17% profit margin, while Norwegian and Carnival both had profit margins of 14%. But normal times are unlikely to return anytime soon.

As investors wait for cruise lines to be profitable again, they remain optimistic about the plan to restart operations for Carnival. Carnival shares rose as much as 4.7% to $14.58 after it made the announcement on 4 May. The stock was down 3% to $14.22 on Tuesday morning, but has plummeted 72% this year.

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    Galina Mikova

    Galina is a Hubspot-certified Technical Writer with over 10 years of experience in working with Fortune 500, private investment, banking, FOREX and niche tech companies as well as crypto and blockchain startups. She has a solid background in FinTech and blockchain technology.

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