US decision on Cuba hits cruise line shares

Shares in Norwegian Cruise dropped by 3.5% on June 5th, while Royal Caribbean and Carnival stock declined by 3%, in reaction to the sudden US decision earlier this week to ban US-based cruises from visiting Cuba. An estimated 800,000 passenger journeys will be affected.

Cuba accounts for about 4% of Norwegian Cruise’s sailings, 3% of Royal Caribbean’s and 1% of Carnival Corp’s.

A spokesman for Norwegian Cruise Line Holdings Ltd said the company had ceased all calls to Cuba and that the company was modifying previously scheduled sailings.

The US State Department stunned the marine leisure industry on Tuesday June 4th when it said that the US would no longer permit visits to Cuba via passenger and recreational vessels, including cruise ships and yachts, as well as private and corporate aircraft. The retail aviation sector was also likely to be affected, with flights to Cuba from anywhere in the US, bar Florida, likely to become uneconomic.

Carnival Corp and Royal Caribbean said they would stop at different non-Cuban ports and would offer compensation to travellers.

Carnival, which has three cruise lines that sail to Cuba said that “we are working as quickly as possible to secure alternative itineraries for the remainder of our Cuba voyages and expect to have information for sailings further out in the next 2-3 days”.

Royal Caribbean said that all cruises on its vessels Majesty of the Seas and Empress of the Seas this year would have alternative ports in the Caribbean. It is also working on alternate itineraries for voyages next year.

It said that guests could cancel their current booking for a full refund, or could keep their sailing date with a new itinerary and receive a 50% refund.