Skift Take

Cruise lines have spent most of the year dealing with economic and geopolitical crises in Europe, so they're prepared to make a profit regardless of continued chaos in the Mediterranean. A worst-case scenario is a messy incident involving a cruise ship and migrant vessel, however, that could scare the public away from European cruises.

Migrants and refugees fleeing chaos in the Middle East have become a major geopolitical challenge to countries in the European Union, and cruise lines have shifted itineraries away from affected ports in order to avoid the crisis.

Lines sailing the region have pulled ships from port calls at the Greek island of Lesbos, which has received more than 20,000 refugees in the last few months. Lesbos has become a de facto entry point for migrants into Greece, due to its location six miles off the coast of Turkey.

If the migrant crisis continues and begins to affect the navigability of the Mediterranean, the public could move its bookings away from European cruises. Cruise ships are required to help vessels in distress according to maritime law, and a messy incident involving a migrant ship could create negative publicity for cruise lines.

Two Carnival ships assisted migrant vessels earlier this year, and at least one Royal Caribbean vessel has rescued migrants in the Mediterranean as well.

But considering the overall scope of the cruise industry, with about 300 total cruise ships in the world and dozens of Mediterranean itineraries sailed on a weekly basis, these incidents are not widespread.

Cruise lines already have pricing problems in Europe, regardless of the migrant crisis.

“When you think about all of the economic difficulties, geopolitical issues and the growing refugee concerns, [continental Europe is] the area that has had the most challenges in terms of pricing for 2016, but we’ve had these challenges all year in 2015 to some extent,” said Carnival Corp. CFO David Bernstein on the company’s most recent earnings call last week.

Cruise lines sailing itineraries that include Lesbos have replaced the port call with another city. Regent Seven Seas has replaced Lesbos with stops in Mytilene and Kavala. Holland America vessels will visit Kusadasi and Mykonos instead.

Port calls in Turkey have also been cancelled, primarily due to concerns over the conflict close to the border of Turkey and Syria. Costa Cruises cancelled all its stops in Turkey for the rest of the cruise season, while Celebrity Cruises cancelled all stops in Istanbul on the Celebrity Equinox, Celebrity Reflection, and Celebrity Constellation.

Cruise lines are wary of committing to ports with the threat of danger, especially following the terrorist attack in Tunis earlier this year that killed 17 cruisers from MSC Cruises and Costa vessels. The cruise lines pulled out of Tunisia following the incident.

But the big cruise companies have already been moving ships around to avoid the economic weakness in Europe, so the deterioration of the Syrian migrant situation does not have the impact it could have had if the rest of Europe was performing strongly.

“Expectations for the Eastern Mediterranean product… are softer than our previous forecast as booking levels were further affected during recent events in the region,” said Jason Liberty, Royal Caribbean Cruises’ CFO, on the company’s Q2 earnings call in July. “Although demand is now back to typical levels, pricing is a bit lower than we were previously expecting for this high-yielding product.”

The Mediterranean represents about 20 percent of the overall global cruising bed days, the second largest region behind the Caribbean (26 percent). If things get worse in the Mediterranean, expect more ships to head to the Caribbean and Asia.


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Tags: greece, turkey

Photo credit: Ruby Princess in Mykonos, Greece. Raging Wire / Flickr

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