Competition From Cruises May Increase
By Larry Mogelonsky | July 14, 2020
Cruise lines were probably impacted the worst of all industries from COVID-19. Not only did the lockdown force nearly all ships out of operation, but the media drove home the damaging narrative of several cases of onboard outbreaks to thereby label all vessels as floating petri dishes.
It would be a bit too hasty to believe that the cruise industry will suffer indefinitely from the pandemic, though. In fact, their dire state of affairs may force them to be even more aggressive in winning back their core audiences, and therein potentially cannibalizing hotel guests.
For the remainder of summer and early fall, traditional hotels have the advantage. Staycations will be in vogue until such time as all international travel restrictions are lifted. Once the all clear is given for international voyages, however, cruise lines will likely come out swinging with very attractive promotions and heavily-promoted cleaning measures. They will be forced to take draconian measures to eliminate their current petri dish narrative. One potential outcome in this regard that has been floated around is the deployment of highly intensive disease screenings for guests prior to disembarking.
Suppose instead of the standard same-day turnaround for each ship, the cruise provider takes an additional 24 hours to fully sterilize each cabin and common space as well as complete a dockside virus check of every passenger prior to boarding. A positive test means no entry and perhaps a partial refund, all part of a new waiver each guest must sign at booking.
While the additional day in turnaround time is a huge cost increase, even combined with a public relations blitz it will restore customer confidence. As more contiguous operations, traditional hotels cannot provide this same feeling of hygienic protection despite the 24-hour or even 72-hour room booking buffers that many brands have temporarily setup. Hotels are rarely afforded any such intervals when a full-building deep clean can be performed without any guests in-house.
Matters of law aside, what’s significant in this scenario is how safe customers feel in choosing one travel option versus the other. The pandemic will inevitably subside but the fear will remain for years after. Our hypothesis is that a fearful leisure traveler will be more inclined to opt for a cruise in lieu of a well-trafficked hotel or resort because the former industry (once their advanced prescreening and sanitization protocols are in place) will be deemed as the safer choice. On a macro-level, this could result in many hotel customers transitioning to cruises, cajoled even further in that direction by price discounts designed to fill ships to the brim and get the cruise lines back in the black as soon as possible.
This cruise surge scenario implies that hotels must act offensively lest each property finds itself unable to compete in terms of modern cleanliness features. While many housekeeping departments have already put in place new SOPs to help stop the spread of COVID-19, these will likely have to remain in place for quite some time to satisfy anxious travelers. Moreover, hoteliers will have to think of other ways to dispel fears of unsanitary places—including the possibility of guest prescreening—so that customers feel safe and so hotel brands can compete on a feature-to-feature basis with cruises.
The tricky part is that all this has a cost and hotels will have to weigh heightened cleanliness initiatives with the potential for new customers and the ability to increase the room rate. Whereas before the pandemic guests may have selected you over others due to a new restaurant or a renovated lobby, now they will have a much keener eye for amenities that protect them from microscopic invaders, so such investments will be in demand. The real question, though, is whether hotels can properly adapt and regain travelers’ trust before the cruise lines return with a vengeance.