How Has Coronavirus Impacted Disney Cruise Line?
More than one out of every fifty cruise guests sets sail on a Disney vessel. It’s a remarkable statistic for an industry Disney didn’t even join until 1998.
For several consecutive years, Disney has relied on its fleet of massive cruise ships as a steady source of income. Unfortunately, that statement is no longer true in 2020.
The Coronavirus pandemic has destroyed the cruise industry, at least for the short term. And this leads to a logical question. How has Coronavirus impacted Disney Cruise Line?
The Facts about Disney Cruises
When The Walt Disney Company enters a new industry, the company does it right. Back in 1994, then-CEO Michael Eisner decided to build some massive cruise ships.
Eisner announced this several years before Disney Cruise Line would sail for the first time. Rather than purchasing existing cruise ships, Disney constructed its own…and they were titanic in size.
The scale of Disney’s vessels is difficult to comprehend until you’ve stood near/on one. The Disney Magic, the first Disney cruise ship to set sail, runs 984 feet in length. That’s more than three football fields long.
Disney ambitiously constructed some of the largest cruise ships ever at the time. In fact, the construction crew had to build the vessels in two parts and then weld them together afterward.
The Disney Magic’s first cruise occurred in July of 1998 while the Disney Wonder followed roughly one year later in August of 1999.
The two ships proved so successful that Disney ordered two more in 2007. By March of 2012, Disney operated four cruise ships capable of carrying 2,700-4,000 guests.
In less than 20 years, Disney went from being a curiosity in the travel industry to a significant factor. In 2015, the company claimed 2.8 percent of global cruise market share.
Disney’s 2018 Ambitions
During quarterly and annual fiscal reports, executives have repeatedly praised the lucrative financial aspects of Disney Cruise Line. The numbers rarely get reported individually but get lumped into the Parks, Resorts and Experiences division.
However, we can infer the success of the division due to a 2018 announcement. Disney believed that its market share had fallen back to 2.3 percent due to improvements among competitors.
Starting in 2009, Royal Caribbean International prioritized mega-cruise ships. Over a nine-year period, the corporation built the four largest vessels of their type in the world.
Disney felt the need to keep up with the Joneses. At the start of 2019, Disney Cruise Line commissioned three new Triton class ships. That’s not an official nautical term but rather a Disney one.
We know from the drawings that these three ships will be 1,119.19 feet long and 127.95 wide, making them the largest vessels in the Disney fleet thus far, albeit only marginally. The Disney Dream is 1,115 feet by 121 feet.
Still, these plans suggested that Disney wanted to become a more significant player in the cruise industry. The three new vessels would expand Disney’s maximum cruise occupancy from 13,400 to 25,400. I’m presuming that the Triton vessels have the same capacity as the Disney Dream in this scenario.
So, Disney basically wanted to double its number of cruise passengers. This new batch of ships would sail on their first voyages in 2022, possibly even 2021 if things went well. One of them would have a permanent home at Port Canaveral, becoming the third Disney vessel there.
These expansions would allow Disney cruises to service more than one million customers annually.
The Cost of Disney Cruises
Here’s where things take a turn. Disney needed to improve its ports of call to host more cruise ships. So, the company announced that it would spend $46 million to improve both landside and seaside operations at these harbors.
Simultaneously, construction began on the three new cruise ships, which won’t be cheap. During the mid-1990s, Disney spent $350 million each on the Disney Wonder and Disney Magic. That’s the equivalent of $1.15 billion today.
Prices increased dramatically for the Disney Dream and Disney Fantasy, which cost a combined $1.84 billion to construct. After inflation adjustment, those are billion-dollar cruise ships. It’s an expensive business.
You can see where this is going. Like many companies, Disney is currently cash-strapped due to the Coronavirus pandemic. Despite this, they’ve asked a company to build three new vessels, each of which should cost $1 billion. That’s $3 billion in capital on an industry that has just taken on water at an alarming rate.
Let’s Talk about the Bad Stuff
On April 22nd, the last remaining active cruise ship returned home after a 113-day voyage. Yes, a (non-Disney) cruise set sail at the end of 2019. Suffice to say that a LOT has happened since then.
While these people have sailed around the world, every other cruise ship has canceled its full itinerary. And several different cruises have garnered headlines for becoming the modern equivalent of plague ships.
For the longest time, Worldometer’s Coronavirus monitor listed a cruise ship ahead of almost all countries. This happened when people first started paying attention to the pandemic. As such, cruises have gained a stigma that probably won’t go away anytime soon.
I’ve spoken with travel writers who believe that the industry won’t recover for several years. The Titanic/iceberg analogies are everywhere.
How Coronavirus Impacts Disney Cruise Line
From Disney’s perspective, it doubled down on the cruise industry right before the whole thing collapsed. The worst part is that Disney’s hygienic practices are the gold standard in the industry. The company will suffer because of something that others did.
We already know that some changes have happened because of the pandemic. Seatrade Cruise News posted a translation of part of this video:
In this clip, representatives for Meyer Werft shipyard outlined the challenges that the industry will face in the coming years. One official indicates that production may not return to pre-Coronavirus levels until 2030.
How does this impact Disney? Those Triton-class ships I mentioned are under construction at Meyer Werft. While the shipyard officials didn’t mention any names, they hinted that some projects are on hold for now.
I strongly suspect that Disney has asked Meyer Werft to defer work on the Triton-class ships. That is pure speculation on my end, but there are legitimate questions about whether Disney can fill its existing cruise ships right now. The company definitely shouldn’t spend more money building others right now.
And that brings us to sunny point number two.
Canada has banned all cruise ships from port through July 1st. While it’s slightly more flexible, the United States government has closed all cruise ports until July 20th.
Right now, the North American cruise industry is on pause. Even worse, the perception of cruises is uniformly negative. The Disney brand largely counteracts that aspect, but it’s important to note.
Many people swear that they will never go on a cruise again. Now, most of the folks saying that haven’t ever gone on a cruise or haven’t set sail for years. Still, the negative perception is an ongoing concern.
The Cloudy Future of Disney Cruise Line
Disney Cruise Line has always differentiated itself as a cash cow for Disney. It’s easy money, as people travel on a Disney cruise ship with Disney stores and then sail to ports set up by Disney.
Like Walt Disney World and Disneyland, the structure of Disney Cruise Line assures the company of keeping the overwhelming majority of a guest’s travel budget.
Disney would love to have that revenue back during a brutal stretch for its overall business. Alas, it’s not up to them. Federal governments have stopped cruises through the middle of the summer. That date may get pushed back even more.
One cruise expert is stuck in the same place that I am with Disney theme parks. He can’t even name a season for sure, and I feel his pain there. People keep asking for exact dates when Coronavirus concerns will be over. There’s no finite answer to that question.
Still, he believes that cruises are more likely than not to return in July/August. At that point, Disney will fight an uphill battle to restore the confidence of cruise fans. In some ways, it’ll be even harder than persuading people to come back to the theme parks.
I think it’s reasonable to assume that Disney Cruise Line will struggle mightily through the end of 2020 and possibly even into 2021. The entire cruise industry just received a savage wake-up call about the importance of sanitary measures.