Rare terrydtx Posted February 24, 2020 #1 Share Posted February 24, 2020 We made our final payment last week for our September Viking Sea cruise, our first with Viking. After looking over the terms in our travel insurance we are covered if this cruise is cancelled. However, there is an exclusion that in the event the travel provider (Viking) becomes insolvent we would not be refunded our cruise costs. Can VO survive financially if a number of cruises are cancelled and/or their ships sail empty to reposition because of the Corona Virus? Northern Italy is now reporting confirmed cases of the virus and 3 deaths so far. This could effect cruises sailing in and out of Venice. Link to comment Share on other sites More sharing options...
Jim Avery Posted February 24, 2020 #2 Share Posted February 24, 2020 Another good question. The cruise industry has been rather boom/bust in most times but has really been on a tear the last 10 years or so. Viking is, I think, well funded for now. But cruise lines are heading for some really rough times unless two things happen. There needs to be a vaccine developed quickly that can be distributed widely, and the vaccine needs to work well. According to my pharmacist, this years flu vaccine is only 15-18% effective. That won't do it for this other stuff. Already the cruise industry is heading into a period of heavy over capacity. Bookings are falling, cruises are cancelled for entire regions and it does not look better in the near future. The first step will be sailing with reduced passenger loads. I am pretty sure this would involve less crew onboard. This is with the idea that any income is better than none. Next would be vessel layups. This is not a simple thing. Ships are notoriously expensive things. Not only does there need to be a suitable safe place to dock, the infrastructure for ship maintenance needs to be there. Also, some level of crew onboard at all times is necessary. It costs a bunch of money to lay a ship up. Money that is a dead loss with no income at all. If it gets to that point some failures of companies will be soon to follow. You can see some precedent for this in the tanker market a number of years ago. Let's all hope for a quick solution to the vaccine. 1 Link to comment Share on other sites More sharing options...
Rare terrydtx Posted February 24, 2020 Author #3 Share Posted February 24, 2020 17 minutes ago, Jim Avery said: The cruise industry has been rather boom/bust in most times but has really been on a tear the last 10 years or so. Viking is, I think, well funded for now. But cruise lines are heading for some really rough times unless two things happen. With VO's policy of final payment 6 months or 12 months out, they should have more money on hand than other cruise companies, unless they experience a rash of cancellations and refunds before the 120 days out 100% refund dates. This could also devastate some airlines who have histories of financial problems like Alitalia. Link to comment Share on other sites More sharing options...
zalusky Posted February 24, 2020 #4 Share Posted February 24, 2020 Completely moving itineraries from here to there can not help the situation either. Nuking China and now maybe parts of the Mediterranean will increase oversupply in remaining regions. How many ships can Alaska and the Caribbean take? 2 Link to comment Share on other sites More sharing options...
Hanoj Posted February 24, 2020 #5 Share Posted February 24, 2020 2 hours ago, terrydtx said: With VO's policy of final payment 6 months or 12 months out, they should have more money on hand than other cruise companies, unless they experience a rash of cancellations and refunds before the 120 days out 100% refund dates. This could also devastate some airlines who have histories of financial problems like Alitalia. As an accountant, I doubt Viking is holding significant cash reserves. I expect they have been using the advance payments to finance expansion thereby reducing the need for external financing. So if they have a rash of cancellations, like a bank run, they may have financial distress at a time when external financing will likely be unavailable. This is conjecture, but the risks are real. Link to comment Share on other sites More sharing options...
TrulyBlonde Posted February 24, 2020 #6 Share Posted February 24, 2020 2 hours ago, Jim Avery said: Another good question. The cruise industry has been rather boom/bust in most times but has really been on a tear the last 10 years or so. Viking is, I think, well funded for now. But cruise lines are heading for some really rough times unless two things happen. There needs to be a vaccine developed quickly that can be distributed widely, and the vaccine needs to work well. According to my pharmacist, this years flu vaccine is only 15-18% effective. That won't do it for this other stuff. Already the cruise industry is heading into a period of heavy over capacity. Bookings are falling, cruises are cancelled for entire regions and it does not look better in the near future. The first step will be sailing with reduced passenger loads. I am pretty sure this would involve less crew onboard. This is with the idea that any income is better than none. Next would be vessel layups. This is not a simple thing. Ships are notoriously expensive things. Not only does there need to be a suitable safe place to dock, the infrastructure for ship maintenance needs to be there. Also, some level of crew onboard at all times is necessary. It costs a bunch of money to lay a ship up. Money that is a dead loss with no income at all. If it gets to that point some failures of companies will be soon to follow. You can see some precedent for this in the tanker market a number of years ago. Let's all hope for a quick solution to the vaccine. Jim, Like you, we are both lucky to have seen the world. No cruises for me now and no flying objects either. I would have to drink too much wine to either kill the virus or keep my sanity. Staying put in my little ski town. Link to comment Share on other sites More sharing options...
eylarson Posted February 24, 2020 #7 Share Posted February 24, 2020 One other factor-- If I recall Viking financing relies heavily of Chinese sources. (Remember to 2018 World Cruise christening disappointment) So not only us there pressure on Viking, but also on their backers. 1 Link to comment Share on other sites More sharing options...
Ragnar Danneskjold Posted February 24, 2020 #8 Share Posted February 24, 2020 I wonder if the cruise lines can declare force majeure and put holds on any new ships on order? Thus chopping their future cash needs. Link to comment Share on other sites More sharing options...
TrulyBlonde Posted February 24, 2020 #9 Share Posted February 24, 2020 18 minutes ago, Ragnar Danneskjold said: I wonder if the cruise lines can declare force majeure and put holds on any new ships on order? Thus chopping their future cash needs. SeaDream really got lucky by cancelling their new big one. Could have been a world cruise to nowhere. Link to comment Share on other sites More sharing options...
Rare terrydtx Posted February 24, 2020 Author #10 Share Posted February 24, 2020 (edited) Well, I feel some what relieved, having just read our complete travel insurance contract, we are covered 100% in the event the airline or cruise line becomes insolvent and/or ceases to operate. That was my biggest fear after paying out $12,000 for our cruise last week. We are also covered in the event we are quarantined. Our $3700 for airfare from AA is also covered if the cruise line cancels the cruise. Since Viking has no mega parent company to back them up I was concerned about how deep their pockets might be to survive any large number of cruise cancellations. Now I have to hope the insurance carrier can also survive the number of claims that may come from this whole virus issue. Edited February 24, 2020 by terrydtx Link to comment Share on other sites More sharing options...
Baron Barracuda Posted February 24, 2020 #11 Share Posted February 24, 2020 At least VO ships can be relocated. If Coronna spreads from Italy to other European countries travel restrictions could very well shut down Viking River. Have FP due this weekend on a July Grand European river tour and am agonizing over whether to cancel. Link to comment Share on other sites More sharing options...
Jim Avery Posted February 24, 2020 #12 Share Posted February 24, 2020 47 minutes ago, Ragnar Danneskjold said: I wonder if the cruise lines can declare force majeure and put holds on any new ships on order? Thus chopping their future cash needs. Depends.... Most contracts have some sort of "escape" clause. Most I have seen would include some sort of cancellation penalty. SeaDream cancelled their "Expedition" ship easily enough. Link to comment Share on other sites More sharing options...
Ragnar Danneskjold Posted February 24, 2020 #13 Share Posted February 24, 2020 (edited) 9 minutes ago, Baron Barracuda said: At least VO ships can be relocated. If Coronna spreads from Italy to other European countries travel restrictions could very well shut down Viking River. Have FP due this weekend on a July Grand European river tour and am agonizing over whether to cancel. Just my 2 cents, but if a European river cruise in July, or a flight there from the US, is a danger because of the virus, we all will have much bigger problems than canceled cruises... Funny that the new season of The Walking Dead just started. Edited February 24, 2020 by Ragnar Danneskjold 1 Link to comment Share on other sites More sharing options...
Jim Avery Posted February 24, 2020 #14 Share Posted February 24, 2020 6 minutes ago, Ragnar Danneskjold said: Just my 2 cents, but if a European river cruise in July, or a flight there from the US, is a danger because of the virus, we all will have much bigger problems than canceled cruises... Funny that the new season of The Walking Dead just started. Ragnar, that show is bad for kids....... And dogs. Don't let Griffin watch it. Link to comment Share on other sites More sharing options...
Ragnar Danneskjold Posted February 24, 2020 #15 Share Posted February 24, 2020 (edited) We stopped watching it after that guy started bashing everyone with a baseball bat. Plus after each show Griffin started looking at us as snacks. Edited February 24, 2020 by Ragnar Danneskjold Link to comment Share on other sites More sharing options...
Cienfuegos Posted February 24, 2020 #16 Share Posted February 24, 2020 I suspect travel insurance companies and their reinsurance companies are watching the situation very closely. Our neighbors filed after their Diamond Princess cruise from Japan to Alaska was cancelled. That, plus business air to/from Florida, is going to be a significant claim. Link to comment Share on other sites More sharing options...
Jim Avery Posted February 24, 2020 #17 Share Posted February 24, 2020 17 minutes ago, Baron Barracuda said: At least VO ships can be relocated. If Coronna spreads from Italy to other European countries travel restrictions could very well shut down Viking River. Have FP due this weekend on a July Grand European river tour and am agonizing over whether to cancel. The problem with relocation is that every cruise ship operator out there is looking to relocate. The Caribbean and Alaska are already near saturation. Not sure where they can all go as infrastructure also plays a role in relocation. All well and good to send ships to the Antarctic (just to pick a spot) but where will you put them?? Link to comment Share on other sites More sharing options...
Ragnar Danneskjold Posted February 24, 2020 #18 Share Posted February 24, 2020 Anagada and Monserrat are under-utilized... Link to comment Share on other sites More sharing options...
Jim Avery Posted February 24, 2020 #19 Share Posted February 24, 2020 2 minutes ago, Ragnar Danneskjold said: Anagada and Monserrat are under-utilized... No real infrastructure for large ships. Quite a few (including SeaDream) already call there by tender. I was wondering where to put a few hundred large cruise ships...... Link to comment Share on other sites More sharing options...
Jim Avery Posted February 24, 2020 #20 Share Posted February 24, 2020 2 hours ago, TrulyBlonde said: Jim, Like you, we are both lucky to have seen the world. No cruises for me now and no flying objects either. I would have to drink too much wine to either kill the virus or keep my sanity. Staying put in my little ski town. Right you are. We consider ourselves very very fortunate to have seen as much as we have. Link to comment Share on other sites More sharing options...
zalusky Posted February 24, 2020 #21 Share Posted February 24, 2020 Maybe they turn the ships into tendered hotels near big cities. 1 Link to comment Share on other sites More sharing options...
OnTheJourney Posted February 24, 2020 #22 Share Posted February 24, 2020 2 hours ago, Hanoj said: As an accountant, I doubt Viking is holding significant cash reserves. I expect they have been using the advance payments to finance expansion thereby reducing the need for external financing. So if they have a rash of cancellations, like a bank run, they may have financial distress at a time when external financing will likely be unavailable. This is conjecture, but the risks are real. Well, they certainly spent a bundle on compensating and otherwise financially taking care of the March Sky guests. Link to comment Share on other sites More sharing options...
Ragnar Danneskjold Posted February 24, 2020 #23 Share Posted February 24, 2020 1 hour ago, Jim Avery said: No real infrastructure for large ships. Quite a few (including SeaDream) already call there by tender. I was wondering where to put a few hundred large cruise ships...... A perfect solution to the homeless crisis! The ships can be appropriately renamed: Oasis of the Sewer Edge.... of the Toilet Crystal Meth Allure of the Soup Line Etc. 3 2 Link to comment Share on other sites More sharing options...
NordicPrince Posted February 24, 2020 #24 Share Posted February 24, 2020 Viking is considered a more upscale travel choice than your mass-market main stream cruise lines. They don't have a heavy concentration of ships in any one market and are not driven by concerns of large amounts of cabins to fill. I would think they are pretty well positioned to weather any particular downturns in the overall scheme of the travel market. I think it's important to not fall into the trap of becoming overly hysterical and illogical about the whole idea of the coronavirus being the downfall of western civilization as we know it. There have been other outbreaks of viral infections (SARS, MERS) in recent years but in time the travel industry has weathered that and come back. Let's everybody keep their heads about them and not lock themselves into their basements yelling "The end is coming". In the words of FDR "the only thing we have to fear is fear itself". In the meanwhile stay calm, keep our calendars open and wait for the current hysteria to subside. I have a cruise scheduled for next April (Medieval Trade Routes) that I am not worried about at all. Just exercise reasonable caution. 2 Link to comment Share on other sites More sharing options...
Ragnar Danneskjold Posted February 24, 2020 #25 Share Posted February 24, 2020 Well, Celebrity just announced you are persona non grata on their ships if you have been in Venice in the last 15 days.... I’m *guessing* they will be rerouting their cruises scheduled to visit Venice. info over on the Celebrity boards. Link to comment Share on other sites More sharing options...
Recommended Posts
Please sign in to comment
You will be able to leave a comment after signing in
Sign In Now