Washington braces for losses from Alaska cruise cancellations, as fear grips travel industry

With the cruise industry reeling from two back-to-back coronavirus outbreaks on large passenger ships, Washington’s summer tourism industry is bracing for chaos in a critical part of the Pacific Northwest economy: ships bound for Alaska.

Officials at the Port of Seattle are scrambling to salvage a business that’s worth more than $890 million a year to the region. “We’re reviewing all options,” port spokesman Peter McGraw said Tuesday. “I would say it is a fluid situation.”

So far, McGraw said, none of the cruise lines have canceled any voyages out of Seattle. The port has tried to reassure visitors, announcing Monday that it has “implemented protocols to maintain the health, safety and well-being of our employees, travelers and community members.”

But with the cruise season out of Seattle set to begin April 1 — and the coronavirus outbreak showing no signs of easing — it’s clearly shaping up as a difficult cruise season.

Washington has reported 22 deaths from COVID-19, more than any other state. The State Department and Centers for Disease Control and Prevention have advised Americans to stay off cruise ships, “particularly travelers with underlying health issues.”

The industry has been hit with multiple public relations disasters. First, several hundred passengers were infected with coronavirus on the Diamond Princess as the ship was quarantined off the coast of Japan. On Monday came the dismal sight of the Grand Princess ship limping into the Port of Oakland with 21 confirmed cases of COVID-19.

On Monday, President Donald Trump said his administration is considering ways to help the cruise industry and airlines navigate the financial fallout from the outbreak. However, he offered no details.

Meanwhile, one of the most prominent members of the administration’s coronavirus task force urged healthy Americans to stick with their summer travel plans. “I think If you are a healthy young person, that there is no reason if you want to go on a cruise ship, to go on a cruise ship,” said Anthony Fauci of the National Institute of Allergy and Infectious Diseases.

Investors, though, are abandoning ship on the cruise industry. Publicly traded cruise companies have seen their stock prices cut by half in recent weeks.

In a note to investors Tuesday, analysts at Deutsche Bank said they expect cruise lines to soon begin scaling back their summer sailing schedules in the face of declining demand. It followed a Feb. 27 analyst report that painted a grim picture for the companies’ financial future.

“Simply put, while these stocks have already endured significant selloffs, we cannot realistically recommend buying them,” the analysts said. “There are too many unknowns, and we think multi-year earnings risk is becoming a greater threat.”

The ship operators, desperate to prop up a business that’s suddenly headed south, have announced deep discounts, free drinks and other promotions.

Norwegian Cruise Line is offering to pay customers’ airfare to port cities. Holland America Line is offering “onboard spending credits” of $100 per passenger for cruises longer than a week and $50 for shorter cruises. Most of the cruise lines have relaxed their cancellation policies, although instead of cash refunds they’re letting passengers take voyages in future years. Carnival is offering up to $200 in credits per cabin that can be used for drinks, spa treatments and onshore excursions, Bloomberg News reported.

None of the cruise lines contacted by McClatchy disclosed how many cancellations they’ve received.

Northwest port for Alaska cruises

Ten cruise lines serve Seattle, making more than 200 voyages a year. In a typical year, an estimated 1.2 million cruise ship guests pass through the Seattle port. They spend money in Seattle before disembarking and upon returning from their cruise — on hotels, restaurants and the like, totaling $467 million a year.

Cruise ships leaving Vancouver, B.C., contribute 7,000 jobs across Canada and $840 million to the national gross domestic product, according to the port’s statistics.

At the Bellingham Cruise Terminal, home to ferry boats and whale-watching excursions, operators are in a wait-and-see mode. Sean Berry, sales and marketing manager at San Juan Cruises in Bellingham, said the season won’t start for a few more weeks, and most customers don’t book until a few days in advance anyway.

“We’ve had a few cancellations but we’ve also been receiving new reservations,” he said. “We’re kind of keeping our fingers crossed that the situation subsides.”

The next scheduled ferry service from Alaska to Bellingham isn’t expected to arrive until mid-April, after mechanical issues canceled the Matanuska ferry. The loss of the ferry for several weeks now eaves many isolated Alaska communities stranded.

Anxiety already is high in Alaska, which depends on cruise ship passengers from the Pacific Northwest to spend $2.8 billion a year.

Two weeks ago the head of Visit Anchorage, the city’s tourism agency, said she believed the coronavirus outbreak would boost Alaska tourism by redirecting travelers who had been scheduled to visit Asia. “We just want people who were going to China to think of Alaska as a temporary replacement for a trip they can rebook to China in the future,” chief executive Julie Saupe told the New York Times.

Now that the virus has disrupted the entire cruise business, Alaska tourism officials are bracing for a tough year.

“Is this the year that people don’t travel,” said Visit Anchorage spokesman Jack Bonney. “It’s obviously something we’re watching very closely to see how and if we can adjust.”

Alaska Gov. Mike Dunleavy tried to calm the waters recently by saying there’s “time to work through the cruise ship issues” and salvage the season.

Chuck Slagle sure hopes so. Slagle is co-owner of Baranof Fishing Excursions, which operates 25 sportfishing boats out of the Ketchikan, one of the top cruise-ship destinations in southeast Alaska. The vast majority of his business comes from cruise ships.

“My gut feeling is, (the cruise lines) have so much to lose, they’ll figure it out,” Slagle said.

Slagle said his bookings “have dried up” this month, although he hasn’t had a lot of cancellations yet. That could change, though.

“If the news continues to get bad, if the cruise lines don’t get their arms around this … the cancellations will follow,” he said.

Rachel Roy, the executive director of the chamber of commerce in Sitka, Alaska, another favored cruise stop, said she remains optimistic. She recently attended a trade show in Vancouver sponsored by Holland America, where officials told her “the ships are about 90 percent full and they’re looking at a good season.”

Roy acknowledged, however, that some passengers might bail out.

“Obviously there … will be some folks who look at changing their plans,” she said.