With all cruise lines in the United States shut down for a minimum of 30 days, it has caused some to contemplate whether to cancel upcoming cruises. As it stands now, most cruise lines in the United States have a tentative date to resume travel in May. One notable exception is Princess Cruises which has declared a firm 60 day hold on cruising. If you look on other cruise line websites, you’ll see that sailings occurring in July or later are still scheduled to go. So, it does beg a serious discussion: Should you cancel a future cruise now or hold onto it? What advantages are there to making either decision? And a question we’d like to get your thoughts on: What caused you to make your choice?
Listen, it’s ok if you disagree with our position that we’ll get into in a minute. Just take a look at some of these Facebook posts. There are a LOT of people who are against the cruise industry right now. But as you’ll see on Facebook, we welcome their comments. It allows us to get a more rounded, accurate view of how the public feels about cruising since this pandemic erupted.
To Cancel or Not to Cancel?
There are good reasons to land on either side of this question. Let’s start with why you might decide to cancel an upcoming cruise. And before we get started, please note that we aren’t married to either option. Everyone’s circumstances are different.
Reasons to Cancel an Upcoming Cruise
If you have booked a cruise that is scheduled to sail after the expected lockdown period, you might consider asking for a refund. Cruises aren’t cheap, even in lower priced interior staterooms. And depending on the duration of the voyage, your price can go up from there. And since most staterooms are billed based on double occupancy, your costs can mount quickly.
Because of this, you might want to get all that money returned. The stock market has been falling like a meteor from space. Some days it recovers a bit. But it still on a downward trend. The President of the United States said he expects a recession to come from this. That remains to be seen. However, this pandemic is having an effect on the lives of individuals.
Some states are reporting that their unemployment websites crashed with so many applying for benefits. Some states like California has implemented a “shelter in place” policy. Which means the only people going to work are those in banks, pharmacies and grocery stores. This is creating a heavy burden on many people.
If you have booked a cruise, this might be a good time to get that money back. Even if you still have your job or your employer is paying while the business is closed, no one knows how long this will last. With that amount of uncertainty, it’s also unclear the impact these measures will have on individual businesses. Taking your money out now and saving it for the unexpected might be a good idea.
Other Things to Do with Your Refund
Assuming you have enough saved so you can comfortably ride this out, you might be able to put that money to good use. We want to state for the record, we are not financial planners. Nor are we investment advisors. Speak with your financial professional before investing of any kind.
With that out of the way, there may be a unique opportunity here if you like cruising. Many cruise lines will give shareholders a discount on their cruise. As an example, Carnival Cruise Line will give you onboard credit if you are a shareholder. The amount can vary depending on the duration of the voyage. Nonetheless, you’ll still get free money to spend onboard if you own Carnival stock. Most of the other publicly traded cruise lines will offer a similar program.
The implication here is to use your refunded money to purchase cruise stock. The investing adage is to “buy low, sell high”. Again, check with your financial planner/advisor before making any decisions.
Just to show how this investing mantra would play out, look at these numbers from these three cruise lines:
I’ve highlighted the 52-week low stock price. Compare that to what each was trading at the moment of the screenshot. All the prices have gone up. Now, look at the line right above the red circle. The current stop price is still considerably lower than the 52-week high. Assuming the stock price rises back to those levels, one could make a large profit after this blows over.
That being said, it would be irresponsible not to point out the potential downside to all of this. We are in uncharted waters (no pun intended). No one knows how long this will last. Will some of these cruise lines still exist when the dust clears? That is uncertain. If you put your dollars into one of these companies and they don’t survive this pandemic, you could lose a lot of money.
We want to stress it again, speak to your financial planner/adviser before making any moves regarding stock. However, this is one of the subjects you should bring up with him or her so that you are informed of your options.
Reasons Not to Cancel an Upcoming Cruise
Those are some reasons you might want to consider canceling a cruise and getting your money back. But there are reasons to let the cruise line hold onto your money.
Assuming you haven’t been frightened away from cruising because of some of the stories in the media, you could stand to benefit greatly down the line.
In the wake of COVID-19, cruise lines really don’t want to return your money. Letting the tens of thousands of dollars each ship gleaned from bookings will help tremendously during this dry period. Therefore, to incentize you to let them hold onto your hard-earned cash, they’ve come up with some creative measures.
‘Please Stay with Us!’
The first thing every cruise line does to get you to leave your money with them is to offer a “future cruise credit”. This means in exchange for not demanding a return of your money, you will be allowed to cancel the current booking and select another one for a future date, even on another ship. Keep in mind, only the cost of the room will be applied to the future sailing. Taxes and fees, unfortunately, do not get applied.
In most instances, the cruise line will offer 100% of the fee to be applied to future cruises. Because of the suddenness of this outbreak, some cruise lines are going way beyond that.
For example, NCL is offering 125% of your fee toward another cruise! In the case of Carnival Cruise Line, they’ll still only give you 100% of your fee to apply on another cruise. But they’ll give you a whopping $600 of onboard credit if the cruise is 6-days or longer! If it’s 5 days or less, you’ll get $300 to spend on your next cruise.
That is unheard of. But it shows the lengths cruise lines are willing to take to let your money sit in their banks. Don’t feel too bad for the cruise line, though. They know that you will spend money with them on souvenirs, drinks, specialty dining, spa treatments and more. But like any other sale, it’s better to make a smaller profit than no profit at all.
What Will You Do?
These are some of our thoughts regarding the option to cancel an upcoming cruise or not. As we said in the beginning, we aren’t married to either choice. There are sound reasons for selecting either one.
But what do you think? Sound off in the comment section below. You can also share your thoughts on our Facebook Group page as well. Surprisingly enough, there is still a lot of cruise news happening. And that’s where we’re talking about it.
Hope to see you there!