Carnival Cruises In Danger Of A Complete Collapse
After years of grappling with pandemic-induced struggles, vacation giant Carnival Cruises may be in danger of completely collapsing.
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It’s no secret that the travel industry took a massive blow to due the paralyzing effects of the pandemic. All non-essential travel was effectively halted for years. And it’s only now that the industry is beginning to rebound in a big way. Cruise lines though arguably fared far worse than airlines. This was likely due in part to just how non-essential cruise travel is. That has put many cruise companies in a pretty precarious predicament, even as travel starts to look close to normal once again. Carnival cruises, in particular, is straddling a very fine line. One sudden move in the wrong direction and the company could come crashing down for good.
To illustrate just how dire Carnival’s situation is, Wall Street analysts are predicting that the cruise titan’s stock could bottom out to $0. Morgan Stanley’s Jamie Rollo predicted that this scenario is a likely outcome for Carnival Cruises should the United States enter into a recession. With the occurrence of recession looking more likely by the day, Rollo explained that should that economic circumstance actually come to pass, consumers will consequently adjust their spending in order to save money and protect themselves financially. Expensive leisure expenditures like cruises are typically the first budget concessions people make.
Even though Rollo’s outlook for Carnival Cruises seems pretty ominous, there still may be hope for the cruise giant. Even though the pandemic served to stifle its business, ironically, the pandemic’s after-effects could serve to protect it. The current hyper-inflated economy has not been enough to slow travel just yet. Many speculate that this is because, after years of being unable to, folks are willing to fork over any amount of money just to get away. This is in direct contradiction to what historically happened in times when inflation ran rampant. Additionally, despite the current state of inflation and the looming risks of a recession, the job market has remained consistently strong.
This unique pair of circumstances has given Carnival Cruises the confidence in its ability to weather the potential storm that is brewing. “While not recession-proof, our business has proven to be recession-resilient time and again,” asserted Carnival CEO Arnold Donald. The CEO also made a point to highlight the unique situation that erupted in the wake of the pandemic. “[T]here is pent-up demand for travel globally which is a powerful tailwind,” said Donald. Donald’s sentiments were echoed by the cruise giant’s CFO David Bernstein who noted that it’s important to realize that not every recession is exactly the same. Bernstein also emphasized that it would be wise not to underestimate the power of people actually needing a vacation. The pandemic took a toll on everyone, not just businesses, and people are tired and more deserving than ever of a break. “And remember, vacations are no longer a luxury, they’re a necessity in today’s world,” said Bernstein.
The ultimate fate of Carnival Cruises is something that remains to be determined. However, if the public’s current resiliency is any indication, the company just may be able to keep its head above water long enough to curtail any blows a potential recession may fling toward it.
