Royal Caribbean CEO, after months of cajoling, praises CDC’s new path to resume U.S. cruises

Key Points
  • Royal Caribbean CEO Richard Fain told CNBC the CDC's new Covid policies for cruise operators are "achievable, practical and safe."
  • The cruise industry has been pressuring the CDC for months to get more clarity on when its Covid halt will be lifted.
  • The CDC said in a letter Wednesday that it is "committed" to restarting cruises from U.S. ports by midsummer.

In this article

Royal Caribbean Group CEO on return to cruises: 'We're feeling pretty good'
Royal Caribbean Group CEO on return to cruises: 'We're feeling pretty good'

Royal Caribbean CEO Richard Fain on Thursday cheered the Centers for Disease Control and Prevention's updated coronavirus policies for resumption of cruises from U.S. ports.

"We're really very pleased and very excited because it really does set forth a pathway that we think is achievable, practical and safe," Fain said on CNBC's "Squawk on the Street."

Asked specifically if the CDC guidance means Royal Caribbean and other cruise operators will be back sailing from the U.S. this summer, Fain replied, "I think it may."

In a letter to the industry Wednesday, a CDC official said that while cruising "will never be a zero-risk activity," the health agency is "committed" to getting passenger operations in the U.S. restarted by midsummer.

The industry has been pressuring the Biden administration and the CDC for months to provide more specifics on a path back to departing from American ports. The state of Florida earlier this month sued the federal agency over the cruise halt, as well.

While cruises have started back up in other parts of the world, they have been paused in the U.S. since March 2020 over coronavirus concerns. Ships were home to high-profile Covid outbreaks in the early days of the global health crisis.

Among the most critical components to the CDC's new guidance is around vaccination levels for passengers and crew. In order to restart sailing, the CDC had said previously that cruise operators would need to complete a simulated trip to demonstrate their Covid safety protocols. However, the CDC now says that test trip can be skipped if a ship shows that 95% of its passengers and 98% of its crew have been fully vaccinated against Covid. That likely represents the simplest way to return to the water.

"Eighty percent of our guests already say they intend to get the vaccines regardless, so one way or the other, we think this provides a route — actually two routes," Fain said, referring to the option of doing a simulated cruise. Both pathways, he added, "are feasible to be done by July, so yeah, feeling no pain today."

The CDC also said it will modify testing and quarantine requirements related to restarting sailing to "closely align" with the agency's latest policies for people who have been vaccinated, as well as for those who have not.

As cruise operators look to ramp up sailings in the months, experts say a labor shortage could challenge the industry. About 15% of crew comes from India, a country dealing with a horrific Covid surge. Fain told CNBC he doesn't see India's coronavirus situation resulting in a staffing shortage, at this time, but conceded it will make it more challenging.

Earlier this year, Fain told CNBC that Royal Caribbean was surprised by the strength of its early booking data. "Some of the things we thought [were] going to happen aren't happening. They're better than we thought," he said in late February.

Shares of Royal Caribbean closed down 2.9% Thursday afternoon, giving up earlier gains in the session. Rival cruise operator Carnival's shares fell 2.1%, while Norwegian Cruise Line closed modestly higher. All the cruise stocks were up double-digit percentage points in 2021 as investors bought in on hopes for resumptions of U.S. cruising.

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