Cuba Restrictions Hit Cruise Lines At The Start Of Summer
The Trump administration's new restrictions on travel to Cuba will sting the cruise industry, taking away a new and increasingly popular destination at the start of the critical summer vacation season.
Major cruise lines on Wednesday immediately began dropping stops in Cuba from their itineraries and hastily rerouting ships to other destinations including Mexico.
The changes affect thousands of passengers already on cruises or booked for future trips, according to the Cruise Lines International Association, an industry trade group.
At docks in Florida and aboard ships at sea, frustrated travelers vented over wrecked vacation plans. In New York, shares of cruise line companies tumbled.
"We have a ship full of disappointed and angry people," said Darcy Van Zijl of Cape Coral, Florida, who had planned to celebrate her 45th birthday with a cruise to Havana.
The U.S. Commerce Department announced the new regulations Tuesday to take effect a day later. Cruise lines that carried passengers under a government policy that permitted "people-to-people" travel to Cuba were told they could not continue. The restrictions effectively made it illegal to cruise from the U.S. to Cuba, according to the industry group.
"This is going to have a noticeable impact on the cruise lines' earnings this quarter and the rest of this year and likely into 2020," said Henry Harteveldt, a travel analyst with Atmosphere Research Group.
Cuba trips represented a relatively small percentage of passenger cruises — about 3% or 4% for Norwegian Cruise Line Holdings and even less for Royal Caribbean Cruises and Carnival Corp., according to UBS analysts. But Cuban itineraries commanded prices up to 20% higher than cruises to the Bahamas, according to UBS analysts.
Cruise lines will face refunds for passengers who booked just for Cuba and aren't interested in other destinations, and they are offering discounts to rebook on non-Cuba itineraries. Those costs are not yet clear, said UBS analyst Robin Farley.
The Buckingham Research Group downgraded Norwegian from "buy" to "neutral" on Wednesday. Analyst Daniel McKenzie noted that it will be challenging to swap a premium destination like Cuba for less-lucrative routes.
Shares of Norwegian fell 3.5%, Royal Caribbean closed down 3%, and Carnival fell 2.7%.
After their first stop in Key West, Florida, Van Zijl and her daughter, sister and brother-in-law learned that the ship would sail for Nassau in the Bahamas instead of Havana.
"We paid a lot of money for this cruise ... way more than a cruise to the Bahamas," she texted to The Associated Press while her ship was at sea.
For Samantha Arceneaux and her husband, Nick, a cruise from Port Canaveral, Florida, to Cuba was to be their first trip alone since the birth of their daughter eight years ago. The Orlando woman arranged a camp for her daughter and picked a ship room with no view, thinking that she and her husband would spend most of their two days wandering around Havana.
Now the only stop by the Norwegian Cruise Line boat may be in Key West.
"I live in Florida. I could drive to Key West if I wanted to," Arceneaux said. "That's not why I'm paying thousands of dollars. It's quite disappointing."
Passengers booked to depart Wednesday showed up at Florida ports, only to learn that they weren't going to Cuba.
At the dock in Fort Lauderdale, a Royal Caribbean employee tried to disrupt a reporter's interviews with unhappy passengers, saying it wasn't the company's fault that the U.S. government had suddenly barred trips to Cuba.
Cruising from the United States to Cuba started in May 2016, as President Barack Obama moved to improve relations with the country.
Whether by boat or air, Cuba quickly became a romantic and slightly exotic destination that was just a short hop from Florida. The nation's hotels and many other facilities are dated and not yet on par with other tourist stops in the Caribbean. That added to its appeal.
In the first four months of this year, nearly 143,000 people arrived in Cuba by ship, an increase of more than 300% over the same period last year.
"It has grown immensely in the past two years, especially the luxury and premium lines," said Michael Consoli, an Atlanta-area agent for American Express-affiliated Cruise Planners. Most of his customers have been first-time Cuba visitors who wanted "to check it off their bucket list."
Nearly all the major cruise lines introduced Cuban itineraries that range from an overnight stay in Havana to visits to three ports over several days. For many passengers, it was their first cruise.
As cruising to Cuba became easier, the ship lines continued to add the island to their itineraries, with new ships planning to arrive into next year, according to Colleen McDaniel, editor in chief of Cruise Critic, a website that posts reviews of cruises.
Speculation about tighter travel restrictions grew in recent months, as President Donald Trump imposed new sanctions that led Cuba to begin food rationing last month. The administration aims to cut off the flow of tourist dollars to the island.
Travelers returning from Cuba wondered how stopping the flow of American visitors will affect ordinary Cubans.
"I feel sorry for the people," said Marsha Booth, a nurse from West Virginia, who returned Wednesday from Havana on board Royal Caribbean's Majesty of the Seas.
"Our tour guide, when we took the classic car tour, he was so friendly — spoke wonderful English and was a Cuban native," Booth said. "I just keep thinking about him. What is he going to do for a living now? How is he going to survive?"