We believe that when the health risk has passed, the same human dynamic that made travel and social gatherings important will still be there, and will perhaps be strengthened. We believe the event path for the cruise lines will move from approval for U.S. cruise restart, and then gradual ramp in occupancy and capacity in service. The pandemic will have lasting impact on the cruise sector long after safety concerns are behind us – with the 2 most significant impacts being (1) the impaired stock value due to equity dilution and debt carry resulting from the liquidity crisis; and (2) the permanent removal of supply from both company fleets and from broader worldwide capacity 

How much will ship removals reduce capacity? And how much will delays at shipyards further reduce capacity growth? And beyond that, how much will worldwide capacity come down due to cruise lines that didn’t survive the pandemic and ships that were scrapped? Below we quantify all these factors. We estimate global capacity is -5-6% lower in 2021 than originally expected, with North American berths -6-7% lower, European -6% lower, and AsiaPac relatively unchanged. While capacity growth has long been a concern for investors (despite yield growth of 3-4% in the years before the pause in cruising), this broad-based reduction in supply will leave a leaner inventory when demand returns. 

Our annual report looks at historic trends in revenues, costs, and overall returns of the cruise lines over time, including analysis on yields, passenger growth, on-board economics, newbuild order costs, and other fundamental dynamics. While capacity, brands and deployment will face unprecedented change, we look where the industry left off in North America, Europe, and Asia, and what we expect in a restart and going forward longer term.