Asia's cruise sector has been wiped out almost overnight by the coronavirus outbreak that began in China and is now spreading across the region.
A total of 11 large cruiseships are out of work, one is in quarantine in Japan, while another is stuck at sea looking for a port of refuge.
With little end in sight, cruise majors are beginning to count the cost of the coronavirus to their bottom lines.
Carnival Corp is arguably the worst affected as its 115,900-gt Diamond Princess (built 2004), operated by its Princess Cruises brand, has been at the centre of the world's attention over the past week with thousands of passengers and crew being held aboard in Yokohama following an outbreak of the illness on board.
Another of its ships, Holland America-operated, the 82,900-gt Westerdam (built 2004), has become a seagoing pariah as it has been denied entry into most Asian ports over unfounded fears that it too has the potential to become a plague ship.
Reputational damage aside, Carnival expects the coronavirus will impact 2020 earnings per share (EPS) by $0.03 to $0.05 by forcing Chinese guests that must fly to their cruises to cancel voyages outside China amid air travel bans.
The Miami-based cruise major cancelled nine cruises on four ships operated by its subsidiary Costa Crociere after suspending operations from Chinese ports from 25 January through to 4 February.
That target date for the resumption of cruise operations has come and gone, and with the outbreak worsening in China, it is unlikely cruises will resume at any point in the near future.
"If the travel restrictions in China continue until the end of February, we estimate that this will further impact our financial performance by an additional $0.05 to $0.06 per share," the Arnold Donald-led company said in a regulatory filing.
China was initially forecast to account for 5% of the New York-listed owner's cruise capacity for the year, Carnival said in the US Securities and Exchange Commission document.
"If these travel restrictions continue for an extended period of time, they could have a material impact on our financial performance," the company said.
Carnival has also adjusted itineraries with other brands that are scheduled to visit China, spokesman Roger Frizzell said.
"The safety of our guests, along with protecting the environment and compliance are the top priorities for Carnival Corporation and each of our brands," he told TradeWinds.
Richard Fain-led Royal Caribbean Cruises did not return calls seeking comment but said the virus will cost about $0.25 EPS for fiscal 2020, if not more, during last week's fourth-quarter earnings call.
More cancellations likely
"It seems likely that we will have to cancel more, but we don't yet know how many," Fain said.
"We also expect that there will be an impact on future bookings in China, especially in the immediate aftermath of the illness but again we just don't know."
His company has cancelled some sailings and changed some itineraries extending through to 4 March, he said.
Excluding the coronavirus impact, Royal Caribbean forecasts fiscal 2020 EPS to range from $10.40 to $10.70.
Royal Caribbean's strong performance in the US and European markets and a "very robust" start to the first-quarter wave season should help offset any coronavirus downside, UBS analyst Robin Farley said.
"Strength in Royal Caribbean's core product has more than compensated for negative impact from events like Australia bush fires and MidEast unrest," she wrote in a client note.
Norwegian Cruise Line Holdings will disclose coronavirus' impact on earnings this coming week in its fourth-quarter earnings report, spokeswoman Andrea Demarco said.
The report is scheduled for 20 February.
The company, which is more focused on Europe and the Mediterranean, does not send ships to or from China.
Cruise companies are indeed being cautious around coronavirus, but it has not become widespread throughout the sector since being identified in December, Tigress Financial Partners analyst Ivan Feinseth said.
"The situation is more dangerous on the plane than on the ship because planes have confined air," he told TradeWinds.
"It's more negative for the airline industry."
Hong Kong-listed Genting Hong Kong, Asia's largest home-turf player via its Genting Cruise Lines subsidiary that controls Asia-focused cruise player Dream Cruises and Star Cruises, has yet to disclose any coronavirus impact on its earnings.
The impact is likely to be significant as four of the six cruiseships that are based in Hong Kong, China and Taiwan have been idled and, according to schedules on both companies' websites, will only resume service in April.
