Up next in 10
Cruise Line Bailout, Finances And Refunds. A Point Of View (Cruise Shutdown Questions #3)
Jan 28, 2025
In the third in my cruise shutdown Q&A videos, I give my thoughts on a number of questions following on from my last video about refund options (https://youtu.be/BEadOjDRwAA ) about the viability of cruise lines from the shutdown, which is currently looks like being expanded with some lines already announcing, others due to make announcements and some regions like Canada and New Zealand closing ports until July, and Australia closing ports until June. Many people have asked for thoughts on the viability of cruise lines as they have concerns about getting refunds and advisability of taking future cruise credits, and if they are likely to get bailouts you assist through the impact of the shutdown.
The other videos in the cruise shutdown Q&A series:
1: What should you do with bookings: https://youtu.be/Bp4xA21bsY4
2: Cancellations and refunds: https://youtu.be/BEadOjDRwAA
3: Cruise Liens Finances and refunds: https://youtu.be/E5Uco5H3CYU
Gary Bembridge's Tips For Travellers aims to help you make more of your precious travel time and money on land and when cruising the oceans or rivers of the world. To help you, in every video I draw on my first-hand tips and advice from travelling every month for over 20 years and 77 cruises at time of making this video.
Follow Tips For Travellers on:
- Instagram: http://www.instagram.com/garybembridge
- Facebook: http://www.facebook.com/tipsfortravellers
- Twitter: http://www.twitter.com/garybembridge
#CruiseShutdown #CruiseTips #CruisingTips
Show More Show Less View Video Transcript
0:00
I'm Gary Bembridge and this is the third
0:02
in my series answering questions the
0:04
people are sending me around the cruisin
0:06
shutdown and the crazy world of travel
0:08
as I mentioned before not posting
0:10
regular cruising videos didn't seem
0:12
appropriate to do at this time but I am
0:14
doing lots and lots of questions and if
0:15
you do have a question please send it to
0:17
me and I'll try and do my best to answer
0:18
it if I possibly can one of the things
0:21
that are getting a lot of questions
0:22
around at the moment is linked to the
0:25
last video did around refunds cash or
0:29
future cruise credits and a lot of
0:30
questions around our Cruise Lines are
0:32
going to go bankrupt and are they going
0:35
to get a bailout so I thought I'd touch
0:37
on that today and share what I do know
0:39
and kind of some assumptions that I've
0:41
got I think one of the things we can be
0:43
absolutely sure of based on the current
0:46
public and also the view of the
0:48
politicians is it's pretty much unlikely
0:52
that the cruise lines are gonna get a
0:54
bailout or much help from the government
0:57
so let me just run through the things
0:58
that I'm seeing the arguments against
1:00
the cruise industry certainly getting a
1:02
bailout or help well first of all the
1:04
view overall of course is that cruising
1:07
is not a strategic industry unlike
1:10
perhaps you could argue the airline's as
1:11
in the railways with cruising is
1:13
completely and utterly a leisure
1:15
activity so it's not seen as strategic
1:16
so it's not seen as being something that
1:18
should be high on any bailout or help
1:21
perspective secondly when the US
1:23
politicians are looking at what help
1:25
they should or shouldn't give for the
1:27
cruising industry you've got to bear in
1:28
mind that those companies are actually
1:31
incorporated and registered not in the
1:33
United States of America so they may be
1:35
in more tax haven places like Panama
1:38
Bermuda or Liberia so they're not
1:42
actually true US companies although they
1:44
are quoted on the US stock exchanges
1:47
so the view is these are not actually US
1:49
companies and that's really important as
1:50
you think about the way the public and
1:52
also politicians will be thinking first
1:54
of all when it comes to tax because of
1:57
the way that they're structured they
1:59
don't pay as much tax as they would if
2:01
they were really domiciled in the United
2:02
States so what a lot of people who
2:05
arguing against Cruise Lines getting any
2:07
sort of help would argue if you take
2:08
Carnival Corporation which is a huge
2:10
corporation their effective tax rate in
2:12
the United States for
2:13
corporate tax is only about 3% also if
2:16
you take Marriott which is much more
2:18
incorporated in the United States their
2:19
effective tax rate is much higher around
2:22
about the 20% so there's a view actually
2:24
these corporations are not and have not
2:26
historically come to be a lot it
2:28
specifically in the United States also
2:30
when you look at that most of their
2:31
employees are non-us so if you take
2:34
carnivals just the cruise line carnival
2:36
specifically they have around about
2:37
12,000 employees in the United States
2:39
but they have like 80,000 non-us
2:43
employees through crew and all that kind
2:45
of stuff and also in a recent interview
2:48
the head of the Carnival Corporation was
2:52
talking about the fact the actual
2:54
corporation employs about a hundred
2:56
fifty thousand employees in the US if
2:59
you take a look at the airline industry
3:00
in the United States for example the
3:02
staff that I saw said this around about
3:04
seven hundred and sixty thousand full of
3:06
part-time employees so certainly if
3:08
you're a politician or the public
3:09
looking at which corporation you're
3:11
gonna help the cruise lines off will
3:13
form much lower down then of course you
3:15
get other people who argue the cruise
3:16
line shouldn't be supported for other
3:18
reasons like they are bad for the
3:22
environment or there's lots of concerns
3:25
of course which keep bubbling up but
3:27
people who not very keen on the cruising
3:29
industry that they kind of petri dishes
3:30
and they're a bad for public health all
3:32
those kind of reasons that people would
3:35
argue cruising is a bad thing to do
3:37
so that is also part of the whole
3:39
lobbying against any help so I think
3:41
it's pretty certain and we've always
3:42
seen in some of the initial packages
3:44
which have been put together that
3:46
corporations which are fully
3:47
incorporated in the United States and in
3:49
put a lot of you in the United States
3:51
are the only ones that are likely to get
3:52
a balance I think it's very unlikely
3:53
that the cruise industry itself will get
3:55
a bailout however when you start to look
3:58
at the whole ecosystem that's a
4:00
different thing altogether so what we're
4:02
seeing much happening much more is in
4:05
some interviews which the cruise line
4:07
associations are clear have done we've
4:09
also seen in some interviews in the
4:11
press where the head of the Carnival
4:12
Corporation Group the CEO Donald Arnold
4:16
has said what they're not really looking
4:17
for is bailout specifically what they
4:20
are hoping the that will help is that
4:22
whole ecosystem of cruising so you've
4:24
got people who work in the port or the
4:26
various
4:27
transfer companies the taxi drivers
4:28
catering hotels all that stuff that
4:31
happens around cruising that does happen
4:34
in the United States so looking for ways
4:36
to make sure the government helps those
4:38
people kind of survive and get past this
4:41
whole period of shutdown within there's
4:44
no chance of them earning income and of
4:46
course this quarantine becomes more and
4:47
more so I think it's extremely unlikely
4:49
that the cruising industry itself will
4:51
get any specific help bearing that in
4:55
mind what does the situation do I think
4:57
which is what people ask me that Cruise
4:59
Lines will go bankrupt of course I don't
5:01
know whether they they are or I'm going
5:04
to go bankrupt I'll tell you my
5:05
perspective if you look at the three
5:06
biggest corporations of a carnival group
5:08
which of course includes Carnival Cunard
5:11
princess Holland America Seaborn Aida
5:14
and a whole bunch of other cruise lines
5:16
you look at all Caribbean which is of
5:18
course Royal Caribbean they have
5:19
celebrity they have Azamara they also
5:22
have lots of relationships they have
5:24
joint ventures which create things like
5:26
tui they have Pullman tours are lots and
5:28
lots of companies in you have Norwegian
5:30
which is Norwegian Oceania region seven
5:32
seas so these are very big corporations
5:34
which because they have assets with
5:36
their ships etc and they do have quite a
5:39
lot of cash but of course there will be
5:41
burning through of cash at the moment a
5:43
couple of things I think we're starting
5:44
to see that's happening first of all
5:46
we've seen the cruise lines looking more
5:48
and more at trying to encourage people
5:50
to take future cruise credits rather
5:52
than cash when they can so what happens
5:54
at the moment and I covered it in my
5:55
other video about refunds is if the
5:57
cruise line cancels your cruise they do
6:00
have to offer you I guess under consumer
6:03
protection laws did you have to offer
6:04
you a cash alternative so what I've been
6:07
recommending often is wait for the
6:09
cruise line to cancel so that you do get
6:11
that option what did all the cruise
6:13
lines have done though is they doing
6:15
lots and lots of incentives to encourage
6:16
people not to take the cash so it
6:18
doesn't pull cash out of the corporation
6:20
and to take a future cruise credits
6:21
we're seeing anything from 125 percent
6:23
up to 200 percent being offered to get
6:26
people to take future cruise credits the
6:28
other thing we're seeing increasingly
6:29
and I do follow a site which is called
6:32
cruise center for them both online and
6:35
on Facebook and it's really clear what's
6:37
happening is the cruise lines are
6:38
starting to get a lot of the cruise
6:40
of the ships and sending them home and
6:41
there's lots of discussion also that the
6:43
cruise lines are kind of indicating that
6:45
once people's contracts ends they will
6:47
stop paying them they won't be paying in
6:49
anymore when some contract ends and
6:51
that's really important because those
6:53
cruise lines as long as they have crew
6:54
on board are having to spend money and
6:57
so we're seeing more and more crew being
7:00
sent home and of course that's becoming
7:01
more and more difficult but I'm seeing
7:03
lots and lots of threads increasingly
7:05
with crew being sent home and the other
7:07
thing we're starting to see I've seen
7:09
lots of indications of some cutbacks
7:11
sure sites so the most dramatic of those
7:13
are the most notable of those virgin
7:15
voyages which of course is now even
7:17
sailed yet I've seen on those groups and
7:20
I've also seen in the press that they
7:21
have made some cutbacks on people's
7:23
shore side they've certainly terminated
7:25
some contracts of people on the ships
7:27
and sending them home to stop burning
7:29
through cash I've also seen some reports
7:31
that some of the cruise lines are going
7:32
to shorter hours you know in four day
7:34
weeks and I have seen certainly in some
7:36
of the smaller offices people that I
7:37
perhaps know or have dealt with I'm
7:39
seeing them sort of being furloughed or
7:41
you know some contracts being ended so
7:44
the clear they're trying to reduce the
7:45
burn through from cash in all the ways
7:47
they can to protect the cash the other
7:49
thing I've also seen them doing is a lot
7:51
of them have the ability to call in
7:53
loads bring in loans and being in more
7:55
cash in for business a lot of those are
7:57
calling on those loan credits that they
7:59
have to bring more cash into the
8:00
business now of course you can only go
8:02
through burning cash for so long I think
8:05
those three big companies probably have
8:06
a lot of resources and our suspect
8:08
because those big companies will find in
8:11
the private sector a way to keep going
8:13
because I'm pretty sure whether it's
8:14
venture capital or even the banks at
8:17
some point if they things get really
8:18
tight they're probably going to see
8:20
those as an opportunity to kind of take
8:22
cash and take equity and kind of move
8:24
things forward so I my sense is that
8:26
certainly those are probably more secure
8:28
but if you're feeling notice what I'm
8:30
saying to people is if you are nervous
8:31
and you have the ability to then get a
8:34
cash refund of course that's what you
8:36
should be doing of course you're going
8:38
to get cash really at the moment if the
8:40
cruise line that does actually cancel
8:42
one thing is really really important
8:43
though is what the cruise lines are also
8:45
doing is they've introduced a thing
8:47
called cruise with confidence which of
8:49
course is great on the one degree
8:50
because it does offer very short
8:52
cancellations you can count
8:53
up to 48 hours before a trip however if
8:56
you're booking a new cruise under the
8:58
cruise with confidence
8:59
it also means and says that if you
9:02
cancel you will only get future cruise
9:05
credits so I would also say if you're
9:06
nervous or you're worried about your
9:08
finances you know think really carefully
9:10
before booking a cruise with the cruise
9:13
with confidence because you won't have
9:15
the option of taking your cash also very
9:17
important although I'm not a finance
9:18
expert is one of things that I'm always
9:20
told Sydney when I'm buying things and
9:23
all the financial people say to me that
9:25
says you know make sure you pay with
9:27
your credit card because often built-in
9:29
within the whole credit card process is
9:31
a really important protection if things
9:34
go bust or companies go bust in terms of
9:36
getting your money back or they don't
9:37
deliver obviously your first port of
9:39
call is always their provider so
9:41
certainly my sense is those really big
9:43
companies are probably quite strong I
9:44
once had a company people ask me about
9:46
MSC Cruises and also about Crystal
9:49
Cruises now MSC Cruises is a European
9:52
owned company they biggest part of the
9:55
operations actually cargo and it's a
9:57
very wealthy family so again they
9:59
probably have a lot of resources they
10:00
have all those cargo operations to go to
10:03
also help balance those out and
10:04
obviously obviously I guess as things
10:07
get tied to my biggest cargo around but
10:08
they probably have a lot of resource
10:10
available to them
10:11
crystal is an interesting one because
10:13
crystal is part of the Genting Group out
10:16
of Hong Kong
10:16
Genting is a really large big financial
10:20
operation they actually used to own the
10:21
bulk or all I think of Norwegian cruises
10:24
they sold that eventually of course now
10:26
a Norwegian cruises part on the stock
10:28
exchange but getting is again a big
10:31
operation they have Star Cruises and
10:33
dream cruises which is really really big
10:35
in Asia so they again have lots of
10:37
resources once you get into other cruise
10:39
lines which are not part of the bigger
10:41
groups of course it's really hard to
10:42
know all of those will depend on how
10:44
strong their balance sheets are or
10:45
aren't because if you have any concerns
10:47
you need to do what you think is right
10:48
and if you have the option of
10:50
counselling and taking cash out if that
10:52
makes you feel most comfortable or
10:53
you're going through really tough
10:54
Financial Times that's what you need to
10:56
do but certainly my gut feeling is that
10:58
the big companies well in some wake keep
11:00
moving along I think it's really really
11:03
unlikely we're gonna see any kind of
11:04
bailouts or
11:05
helped public pressure political
11:07
pressure is going to mean that the
11:08
cruise lines are going to have to figure
11:10
and fed them their way out through this
11:12
that's my take in my perspective on the
11:15
questions that have been getting around
11:16
do I think cruise lines will survive do
11:18
I think they'll go bankrupt or do I
11:20
think they'll get a bailout that's my
11:21
perspective it's only a really really
11:23
hot topic and I am sure that lots of
11:25
people watching this will have very
11:26
strong views - those people are against
11:28
the cruising industry but that's my
11:29
perspective that's my thoughts because
11:31
if you have anything to add to the
11:32
discussion please feel free to leave it
11:34
in the comments but at this time it
11:36
really also great if you try to keep it
11:37
nice and friendly and we have enough
11:40
going on without things being traumatic
11:42
and rude at the best of times so please
11:44
stay indoors stay safe stay and look
11:46
after yourself
11:47
and here's dreaming of the day we can go
11:50
back cruising again
#Financial Planning & Management
#Travel & Transportation
#Cruises & Charters