On the surface, cruise ships these days might seem like dream boats – to obsessive-compulsives. They’ve been scrubbed down and disinfected from stem to stern. That includes daily attention to touchables – door knobs, elevator buttons, hand rails, light switches.
Ships tell well-heeled passengers to wash their hands often and avoid shaking hands with shipmates. More advice: Wipe casino chips and press elevator buttons with your elbows.
Since October, about 1,500 passengers on a half-dozen cruise ships in the Caribbean have been felled by a stomach bug thought to be a Norwalk-like virus. Most left from Florida and Louisiana ports.
It’s a common and highly contagious gastrointestinal ailment. The first strain was identified in 1968 in Norwalk, Ohio. Symptoms include diarrhea, cramps and nausea and last a couple of days.
Inspectors from the Centers for Disease Control and Prevention have ruled out infected on-board food and water.
“We’re dealing with something predominantly transmitted from people moving around,” said Dave Forney, chief of the vessel sanitation program for the CDC.
Several Ships Hit
The hardest-hit in terms of number of sick passengers have been Carnival Corp., parent of stricken boats Fascination, Conquest and Holland America’s Amsterdam; Disney Cruise Line’s Magic; and P&O Cruises’ Oceana. Norwalk virus also struck Celebrity Cruises’ Constellation.
Last week, 70 guests and 10 crew members on Royal Caribbean’s Majesty of the Seas ship became ill. The ship, docked in Miami after a four-day trip to the Bahamas, carried 2,605 passengers.
Until late December, cruise bookings had stayed buoyant. But then Carnival, the world’s largest cruise company, warned that bookings for future travel had slowed, possibly over virus concerns.
Its stock sank nearly 10%. It had already dropped 10% since the first week in November.
Shares of other cruise lines have also sunk, including Royal Caribbean, which fell 10% after Carnival’s warning. Since Nov. 29, the stock had already dropped 20%.
But Carnival officials say the financial impact on revenue and earnings has been minimal, affecting total per-share earnings by only a penny.
“We believe this is a temporary issue,” Chief Operating Officer Howard Frank told analysts in a conference call.
The cruise industry had been on the mend since business went overboard after 9-11. For example, Carnival earned 33 cents a share in the fourth fiscal quarter ended Nov. 30, up 64% over the post-Sept. 11 quarter. Revenue grew 8% to $1.04 billion, due in part to added capacity.
But if the virus continues to afflict cruise vacationers, firms could feel wobbly during the busy wave season between January and March, industry watchers say.
“Clearly, any news story involving the word ‘gastrointestinal’ is not good marketing for the cruise lines,” wrote analyst Robin Farley in a report for UBS Warburg.
The recent outbreaks weren’t the first to occur in 2002. A handful of ships in Alaska suffered from full-scale outbreaks between May and August. One vessel, the Holland America’s Ryndam, was taken out of service in August.
But after 450 passengers on four Amsterdam sailings out of Fort Lauderdale, Fla., fell ill and a Thanksgiving cruise was canceled, media coverage exploded.
Health officials can’t explain the rise in cases this year.
In 2002 through late December, 24 outbreaks on cruise ships leaving from U.S. ports were logged. That is four times greater than the number (seven) in all of last year. But not all were known to be caused by a Norwalk-like virus. Several were of unknown origin.
Researchers indicate that the number of infections in 2002 probably breaks years of a downward trend, if all raw data were to be tabulated. More stringent reporting methods began in 2001, so under-reporting likely occurred before.
The Captain’s Log
Cruise ships are required to log all visits to on-board medical units. When the number hits 2% of everyone on board, the incidents must be reported to the CDC. The agency considers it an official outbreak when the number reaches 3%.
Since the outbreaks in the fall, booked-to-go passengers on sick ships were offered the option of canceling or taking an alternate cruise. “The vast majority have sailed anyway,” said Jennifer de la Cruz, a Carnival Cruise spokeswoman.
From a public health perspective, that reluctance to stay home is part of the problem, Forney says. Since they paid and prepared months in advance, many didn’t want to abort the trip even if they didn’t feel well.
“They’ll pick up medicine from the pharmacy and say, ‘I’m going!’ ” Forney said. “They spread virus to whatever they touch. So you could see how quickly this spreads on a ship where you have all these people touching all these surfaces.”
Put In Context
Cruise lines complain they’ve been unfairly singled out as virus hot spots. They say the number of sick passengers in proportion to the total number of passengers is minuscule. Seven million people cruised this year. Carnival carried more than a third.
They point out that outbreaks have been occurring in other places in the mainland U.S., Canada and Europe where people also congregate in confined quarters and spread germs, such as hospitals, nursing homes and theme parks.
“I got a note from a nurse in Ireland saying: ‘Don’t take anyone from here. Everybody in Ireland has it,’ ” Jerry Cahill, Carnival’s chief financial officer, told analysts last week.
Forney agrees the Norwalk-like virus is “everywhere” this year. He said, “They’re literally shutting down hospital wards in the U.K. The Boy Scouts Jamboree had a big outbreak of Norwalk last summer.”
Some analysts say the number of sick passengers is beginning to abate. But the virus could have a lingering impact even if it clears up soon. Lawyers have filed two class-action lawsuits against Holland America on behalf of passengers on infected voyages.
War Fears Greater
Some analysts are more concerned about the impact of a war with Iraq than on the perils of the bug.
Most U.S. cruise lines have operations in Europe, a market that would be most affected by a war in the Middle East. They’d likely shift ships to Caribbean and Alaskan waters.
“Should the U.S. go to war with Iraq (possibly around February), the timing could be very unfortunate for the cruise industry,” said analyst Joseph Hovorka in a report for Raymond James & Associates. “This would be in the middle of the wave period. The disruption in bookings and the potential itinerary changes would likely have a negative impact on net yields.”
He says Royal Caribbean’s net yields following the 1991 Gulf War declined 8%.
Hovorka figures the impact of the virus will be short term. “As soon as the press forgets about it, everybody else will forget about it.”
By Marilyn Alva, Investor’s Business Daily
