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GRAPHIC-Coronavirus concerns loom over cruise industry

Fri, 14th Feb 2020 17:23

By Saqib Iqbal Ahmed and Uday Sampath Kumar

NEW YORK/BENGALURU, Feb 14 (Reuters) - The rapid spread of
the coronavirus disease is taking a toll on the $46 billion
global ocean cruise industry.

Dominated by three U.S.-listed companies, Carnival Corp
, Royal Caribbean Cruises Ltd and
Norwegian Cruise Line Holdings, the industry is under
sharp scrutiny following the virus outbreak that has left one
ship quarantined in Asia.

Many see Asia as a potential growth area for cruise tourism:
39 cruise brands were active in Asian waters last year,
deploying a total of 79 ships, according to trade group Cruise
Lines International Association.

The long-term impact of the virus on the industry is unclear
and some analysts have cautioned investors against dumping
cruise stocks.

"We remind investors not to hit the panic button, as in the
year following SARS, H1N1, and Zika, Carnival and Royal both
posted positive as-reported yield growth, conveying the
resilience of demand across the industry," Morningstar analysts
said in a recent note.

Authorities on Friday reported 5,090 new coronavirus cases
in mainland China and 120 additional deaths. Cases now total
63,851, with 1,380 fatalities.

Royal Caribbean Cruises on Thursday canceled 18 cruises in
Southeast Asia after calling off eight trips to China last week.
It joined industry leader Carnival in warning that full-year
earnings would be hit by the epidemic.

The big three of the cruise industry - Carnival, Royal
Caribbean and Norwegian Cruise Line - have nearly 200 ships in
their global fleet. Norwegian declined to comment on the
long-term impact of the virus on its business. Carnival and
Royal Caribbean did not immediately respond to requests for
comment.

Each of these companies garner a major portion of its annual
revenue from the region. China, in particular, has grown as a
cruise market in recent years because of its large middle-class
population and expanding international tourism.

Carnival, which considers China its most significant
long-term growth opportunity in Asia, has been in the eye of the
coronavirus storm.

Carnival's Diamond Princess has remained docked in Yokohama,
Japan, since Feb. 3 after a man who disembarked in Hong Kong was
diagnosed with the virus. With 218 passengers and crew infected,
the British-flagged ship has the biggest cluster of infected
people outside China.

Another Carnival ship, the MS Westerdam, found itself stuck
at sea for about two weeks after several Asian countries barred
it from docking at their ports. The ship finally docked in
Cambodia.

Carnival has already suspended cruise operations at ports in
China. The company estimated its 2020 earnings would drop 55
cents to 65 cents per share if it was forced suspend operations
in the rest of Asia.

The virus scare has hit shares of all cruise liner companies
in recent months.

Cruise ships, which bring large numbers of people together
in crowded, semi-enclosed environments, can sometimes facilitate
the spread of contagious diseases such as norovirus and other
gastrointestinal illnesses.

The average age of a cruise ship customer as of 2018 was
46.7 years, according to Cruise Lines International Association.
The average age of the people who have contracted the
coronavirus is 55.5 years, according to a study of 99 patients
at a single hospital in Wuhan, China, from Jan. 1-20, as
reported in the Lancet medical journal.

(Reporting by Saqib Iqbal Ahmed, additional reporting by Uday
Sampath Kumar in Bengaluru; editing by Megan Davies, Ira
Iosebashvili and Richard Chang)

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