Cruise stocks were one of the hardest-hit sectors during the coronavirus crash. Carnival Corporation (CCL  ) dropped by more than 80%. Since the low on March 23, they have bounced along with the rest of the market but remain more than 70% off their highs. In contrast, the S&P 500 (SPY  ) is about 15% off its late-February levels.

This shows that the stock market's gains are not about the anticipation of the economy "returning to normal" with output gaps being filled like what marked previous major market bottoms that marked the nadir of corrections. Instead, it shows that the stock market's gains are more a reflection of the Fed stepping in and removing immediate default risk by opening up credit markets and fiscal policy to bridge lost wages and help small businesses survive.

Cruise Ship Industry Status

Therefore, the stock market remains pessimistic on the cruise ship industry, and it makes sense that people would be hesitant to go on cruises under these conditions. Further given high-profile incidents of the virus spreading all over the ship, it might permanently dampen people's enthusiasm for cruising.

While this makes logical sense, real-world data isn't confirming this picture. Even despite this experience, people are still booking cruises. Carnival announced it would resume operations in August, and the company was flooded with people booking cruises with a 600% increase over the same period in the previous year. Some of this is pent-up demand, but it shows that the demand for cruises is resident.

Cruising Trends Before the Pandemic

High-profile incidents in the past haven't hurt the industry like the Costa Concordia capsizing in 2012 which killed 32 people or the Carnival Triumph being stranded in 2013 due to an engine fire that resulted in passengers being stranded for multiple days with no plumbing.

Before the pandemic, cruising was growing in popularity. The number of cruise ship passengers globally was increasing at an impressive rate from 25.8 million in 2017 to over 30 million in 2019. Some reasons for its popularity are its affordability relative to other travel options, simplicity, and a wide variety of options for different tastes. Additionally, it's a convenient way to travel for families with children, senior citizens, and handicapped people.

It could also be argued that compared to other travel options, cruise ships have the best chance of creating a safe and insulated environment especially if testing is abundant and available. Cruise ships are a closed environment. All passengers and employees could be tested before they get on the ship. Compare this to going to airports, sitting on a plane, and going to a hotel, where people are constantly going in and out.


The cruise industry's resilience and popularity should be noted. The consensus seems to be that until the coronavirus is contained and treatment is developed that the cruise industry will be impaired due to the closed nature of its ships. However, it's possible that the closed nature of its ships in concert with aggressive testing could make it the safest travel option.