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Ban on Cuban Port Calls Hits Carnival's Bottom Line

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Sierra Maestra cruise terminal, Havana (file image)

By The Maritime Executive 06-20-2019 07:41:49

Carnival Corporation announced Thursday that its earnings will be lower this year due to the Trump administration's decision to ban travel to Cuban ports. Earnings per share will take a hit of about four to six cents, or roughly one percent, according to the line's quarterly report. 

In 2016, the Obama administration opened the door to tourism in Cuba for the first time in decades, sparking interest within the cruise industry for a new and desirable Caribbean destination. However, the Trump administration clamped down again beginning in November 2017, citing lack of reform within Cuba's authoritarian government. On June 4, the White House ended most forms of non-family travel to the island altogether. 

According to the Cruise Lines International Association, the decision affected almost 800,000 passenger bookings scheduled or under way at the time of the announcement. Multiple cruise lines with Cuban port calls on their schedules were forced to offer passengers alternative destinations, discounts or refunds for the inconvenience.

"While [we were] able to quickly adjust itineraries to provide guests with attractive alternative vacation experiences, the suddenness of the regulatory change to this high yielding destination has led to a near-term impact on revenue yields," Carnival said. 

Carnival also faces headwinds related to the Carnival Vista's propulsion problems, which have created scheduling issues, and to slowing ticket sales in its European brands. "Recent booking trends have been impacted by ongoing geopolitical and macroeconomic headwinds affecting our Continental European brands," said CEO Arnold Donald in a statement. "We continue to expect higher yields in our North America and Australia brands offset by lower yields in our Europe and Asia brands for the remainder of the year."