Saturday, March 19, 2016

Cruise Prospects

Here Is What Cruise Line CEOs Think About Finally Sailing to Cuba

A potentially hot new market is about to open up for profit-seeking publicly traded cruise lines.

The interesting thing about this new market? It's actually a body of well-known land close to Florida. On Thursday, the U.S. said it would remove Cuba from its list of countries deemed to have insufficient security in their ports, removing a major obstacle standing in the way of the flow of ships in the Florida Straits.
The shift in policy clears the path for U.S. cruise ships, cargo vessels and even ferries to travel back and forth with far less hassle.  All ships will not have to wait to be boarded by the U.S. Coast Guard for inspections.

Suffice it to say, the major cruise lines are waiting in the wings to cash in on Cuba at long last.

Provided it could receive the required permits from the Cuban government, Carnival Cruise Line (CCL - Get Report) is scheduled to set sail to Cuba on May 1-7.  Carnival's new "fathom" brand will be the one headed to Cuba, focusing on what it calls "social-impact travel." For $2,990, over the course of seven days cruise-goers will be immersed in purpose-oriented experiences, such as teaching kids in a local village how to read and write English.

It would be the first time a cruise ship has sailed directly between the U.S. and Cuba since the two countries broke off relations in 1961.

Said Carnival CEO Arnold Donald to TheStreet about the potential of Cuba, "There's so much pent-up demand in the U.S. -- over time, Cuba is going to be a tremendous asset, not only to us, but to the industry overall."

Meanwhile, Norwegian Cruise Line (NCLH - Get Report) said in August that it applied for licenses from the U.S. Treasury and the U.S. Department of Commerce to offer direct sailings to Cuba. The company signaled the first vessel that it may send to Cuba would be under its Oceania line, but it has not disclosed specific plans.  To say Norwegian Cruise Line's CEO Frank del Rio is bullish on Cuba is an understatement.

"God put that body of land [Cuba] in the right place for the cruise industry given its proximity to Florida," Del Rio told TheStreet last year, adding, "Cuba is exciting for other reasons, too -- it's the pent-up demand, it has history, it has culture, it has multiple ports, too."

So far, Royal Caribbean (RCL - Get Report) has not disclosed its intentions for the Cuban market. 

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