Skift Travel News Blog

Norwegian Cruise Line Holdings Ltd reported a net loss of $509.3 million for the second quarter of this year, as the company benefits from relaxed Covid protocols and navigates through inflation and higher fuel costs. The company reported a reported a net loss of $1 billion in the last quarter.

Revenue was $1.2 billion, up from $4.4 million in the second quarter of 2021. Onboard revenue has risen over 30 percent from the same quarter in 2019. Load factor was 65 percent, up from 48 percent from in the last quarter.

Total cruise operating expenses rose year over year. Inflation and continued Covid-19-related costs including testing were major contributors. Fuel prices per metric ton rose to $836, up from the second quarter of $673 in 2021. The impact of the labor shortage has been limited to Norwegian Cruise’s U.S. operations, according to Norwegian Cruise President & CEO Frank Del Rio.

Looking ahead, Norwegian’s advance ticket sales balance rose $0.3 billion in the quarter to $2.5 billion, an all-time record high for the company. Sales for 2023 tickets are 40 percent higher than they were in 2018 for 2019 tickets, according to Del Rio.

Recent events are boosting the cruise line’s recovery in the months ahead. Del Rio cited President Joe Biden lifting the testing requirement for incoming travelers, the Center for Disease Control retiring its Covid outbreak tracking program for cruise ships and Norwegian Cruise’s recent protocol relaxation around vaccination and testing requirements. “Each one had a positive impact on booking,” he said. “Each of those events triggered an improvement in bookings.” 

The company expects a net loss for the next quarter due to the effects of the Russia-Ukraine conflict and current macroeconomic conditions.

Norwegian Cruise Line Holdings Ltd will no longer require vaccinated travelers to take a Covid test before sailing on its cruises, effective September 3. Unvaccinated travelers will have to provide proof of a negative Antigen or PCR test no more than 72 hours prior to boarding.

“The relaxation of protocols coupled with continued easing of travel restrictions and the reopening to cruise in more ports around the globe are meaningfully positive for our business as it reduces friction, expands the addressable cruise market, brings variety to itineraries and provides additional catalysts on the road to recovery,” said Norwegian Cruise Lines President and CEO Frank Del Rio in the announcement.

Norwegian will become the latest major cruise line to drop the Covid testing requirement. Royal Caribbean and Carnival dropped theirs in August. The requirement removals follow the CDC’s announcement last month to stop tracking Covid outbreaks on cruise ships. 

Around 4.3 million international visitors came to the United States in May, amounting to 64 percent of its May pre-pandemic volume, according to the National Travel and Tourism Office. This volume was reported for May, the last month before the U.S. lifted its testing Covid requirement for inbound international travelers.

Canada (1.3 million), Mexico (1 million), UK (327,000), India (149,000) and Germany (130,000) were the U.S.’s top source markets in May. These source markets accounted for 67.2 percent of total international arrivals. 

The top 20 source markets in May 2022 saw a change in their makeup compared to pre-pandemic May 2019.  Chile, the Dominican Republic and Peru placed in the top 20, while China, Taiwan and Switzerland did not.

Outbound international travel totaled 6.9 million, up 87 percent from May 2021 and amounting to 80 percent of its May pre-pandemic volume. Mexico was the top travel destination for U.S. citizens with 2.7 million visits. Combined year-to-date, over 60 percent of departures were for Mexico and the Caribbean, according to the National Travel and Tourism Office.

In a marked change of sentiment, China has vowed to strengthen efforts to open international travel, by resuming and increasing passenger flights in an orderly way and by steadily improving visa and Covid testing policies.

China will make Covid control measures more targeted and well-calibrated under the premise of ensuring safety against Covid infections, Chinese premier Li Keqiang said. This is the first time an official from the top Chinese leadership has commented on relaxation of international travel.

He said the country would also look to facilitate cross-border travel for labor services in a prudent and orderly manner. “All international students may return to China to continue their studies should they wish so,” Keqiang added.

According to China’s education ministry, until the end of 2018, at least 492,185 international students from 196 countries and regions were studying in China. International students have repeatedly petitioned the Chinese government to lift the nearly two-year ban on their return. From June onwards, China has been gradually allowing students from some Asian nations to return.

Amid anger over the fallout from China’s commitment to zero-Covid policy, Keqiang, a trained economist, had recently urged local government officials to immediately take action to stabilise the situation.

Promoting stable growth of the world economy is a common and urgent task for all, the Chinese premier said while speaking at the World Economic Forum’s special virtual dialogue.

On the state of the Chinese economy, he noted that in the second quarter this year, under the impacts from a new round of Covid flare-ups and other factors beyond expectation, downward economic pressure rose steeply, and major indicators tumbled in April. In May, the decline in major economic indicators slowed. In June, the economy stabilized and rebounded.

“That said, we are keenly aware that recovery of the economy is not yet firmly established, and painstaking efforts are required to keep overall economic performance stable,” he added.

Highlighting China’s development potential, he said, the country would effectively coordinate Covid-19 response and economic and social development.

“We will continue to take development as the basis of and key to overcoming all challenges China faces, and work hard to bring the economy back to a normal track as soon as possible,” he added.

The Center for Disease Control has retired its Covid-19 Program for Cruise Ships, effective Monday. Under the program, the CDC monitored Covid outbreaks on cruise ships. Under the program’s color-coding system, cruise ships were coded with colors indicating the number of positive Covid-19 tests among the crew who boarded within a 14-day span. 

“While cruising poses some risk of COVID-19 transmission, CDC will continue to publish guidance to help cruise ships continue to provide a safer and healthier environment for crew, passengers, and communities going forward,” the agency said on its website.

Travelers can contact the cruise line directly about outbreaks occurring aboard their ship.

Earlier this year, the CDC removed its Covid-19 notice against cruise travel.

Investment in the hotel sector in Asia Pacific continued to recover as investment volumes totaled $6.8 billion in the first six months of 2022, according to real estate brokerage firm JLL’s report.

Capital deployment into the region’s hotels sector showed a return to pre-pandemic levels, registering a 12 percent increase compared to 2019.

Countries in the Asia-Pacific region are expected to experience a fast pace of recovery in the second half of 2022, Skift Research noted recently in its Asia Pacific Accommodation Sector Market Estimates 2022.

In terms of investment volume Japan received the maximum capital —  $1.8 billion, followed by Korea’s $1.7 billion, and Greater China, including Hong Kong ($1.6 billion).

A strong domestic and international tourism demand and the recent devaluation of the Japanese Yen would drive investors to acquire hotel assets in Japan, JLL noted.

JLL also expected further price reductions of hotel assets and forecasts China’s hotel transaction volume to total approximately $2 billion in 2022.

Strong recovery was witnessed in countries like Singapore ($899.7 million), Maldives ($205.5 million), and Indonesia ($159.6 million).

The activity was more subdued in Australia ($145.5 million) and Thailand ($37.7 million), however, JLL noted that these countries would witness greater investment in the second half as numerous marque deals would be closing.

More hotels are entering the Thai market as sellers are under pressure to sell, noted JLL and forecast that transaction volumes would reach close to $300 million this year.

While the 75 transactions in the first half of 2022, were down 33 percent compared to the first half of 2019, the 19,822 rooms transacted during the first half of 2022 was 30 percent higher compared to the first half of 2021 and 9.4 percent compared to 2019.

“The increase in deal activity was influenced by a spike in portfolio transactions as institutional investors sitting on dry powder seek to deploy their capital more efficiently,” the report noted.

However, according to JLL, ongoing momentum will likely be challenged by growing macroeconomic and geopolitical headwinds in the second half of 2022.

“We remain steadfast in our conviction that total Asia Pacific hotel investment volume will cross the $10 billion mark despite the scarcity of assets coupled with macro and geopolitical headwinds that will continue to influence capital activity,” said Mike Batchelor, CEO, Asia Pacific, JLL Hotels and Hospitality Group. 

Heavily-understaffed European hotel brands are now scrambling to hire workers, left with applicants with no experience or even no track record, according to Reuters.

Accor needs 35,000 employees in the 110 countries that it operates in. The hotel brand has been conducting trial initiatives to recruit people who have never worked in the industry, Reuters quoted CEO Sebastien Bazin as saying.

Accor had also announced that it would be recruiting 12,000 overseas temporary employees to operate its temporary housing units for the Qatar World Cup.

IHG Hotels & Resorts faces a 20 to 25 percent staff shortage, according to Keith Barr its CEO.

Widespread job vacancies and upward pressure on labour costs in UK’s hospitality sector had been highlighted by a CGA survey in April. The survey cited staffing issues as a major reason for impeding hospitality’s recovery from Covid-19.

Hospitality staff, who had been furloughed or terminated during Covid, have found better paying jobs in other industries and are no longer keen to return, aggravating the staffing crisis.

Further afield in the U.S., nearly all hotels are experiencing staffing shortages, and half report being severely understaffed, according to a new survey by the American Hotel & Lodging Association. Some 97 percent of respondents are experiencing a staffing shortage, 49 percent severely so. The most critical staffing need was housekeeping, with 58 percent ranking it as their biggest challenge.

As travel comes back with a bang, airports and airlines have also been struggling with staffing issues contributing to the chaos for travelers.

In a bid to address the labor shortage at airports, the UK is speeding up national security checks for new airport workers. German airports, on the other hand, will be filling staff shortages by hiring temporary workers from Turkey.

Theaters in New York’s Broadway district can get rid of rules requiring theater-goers to wear masks beginning July 1, the Broadway League announced Tuesday. All 41 Broadway theaters will become “mask optional.”

Lifting the pandemic-era restriction wasn’t an easy judgment call.

“There are more people that want masks off than on, but plenty still wants them on,” said Charlotte St. Martin, the president of the Broadway League. “We’re encouraging people that have any concerns to wear their masks.”

The policy may be revised if hospitalization rates in New York City spike again.

We’re witnessing an unusual moment. Travel demand typically marches in lockstep with the economy, growing during booms and falling in downturns. Yet data from Kayak, the price-comparison search company, suggests travel demand remains above pre-pandemic levels regardless of any possible weakening of the U.S. economy

A look at Kayak’s data shows that on Sunday, total searches were up 22 percent compared with 2019 levels. International searches were up 8 percent, while domestic searches were up 33 percent. On Saturday, total searches were up 11 percent, compared with pre-pandemic levels.

The data represents indexed flight search volume in Kayak, compared to pre-pandemic travel behavior.

Europe is predicted to make a full domestic tourism recovery in 2022, and internationally by 2025.

That’s according to a new report from the European Travel Commission. While domestic travel is projected to make a complete recovery this year, international arrivals to Europe are forecast to be 30 percent below 2019 volumes, due to the war in Ukraine.

A recent survey conducted by MMGY Travel Intelligence indicated 62 percent of US travelers planning to visit Europe stated concerns about the war in Ukraine spreading to nearby countries as a factor impacting plans.

Western Europe is expected to be the best performing region globally this year, according to the latest quarterly European Tourism Trends & Prospects report, published Wednesday. But it will still be 24 percent below 2019 levels.

Eastern Europe’s recovery has been pushed back to 2025 due to the war in Ukraine, with arrivals now forecast to be 43 percent lower in 2022 compared to 2019.

“The sector is steadily recovering from Covid-19 and there is cause for optimism,” said Luis Araujo, president of the commission. “Nevertheless, European tourism will have to maintain this fortitude throughout the year as Europe continues to deal with the significant fallout from the ongoing Russo-Ukrainian conflict.”

The U.S. remains among the best performers of all long-haul source markets.

Meanwhile, there were “no immediate signs” Chinese tourists were returning to pre-pandemic levels any time soon.