Cruises Are Back

Hi, today we explore: The state of the cruise industry. TOGETHER WITH Today's Topics Hello! For this week’s Sunday Deep Dive, we’re heading out to sea to explore the state of the cruise industry after a crucial summer season. Whether you can think of nothing better than lying back and relaxing while sailing the big blue, or whether being stranded in the vastness of the ocean with a bunch of strangers is your idea of hell, join us as we examine what the post-pandemic world of cruises looks like. Today’s Deep Dive is brought to you by [Hedonova]( the SEC-regulated fund for all your alternative investments. [Hedonova]( top holdings span short-term vacation rentals to salmon farms — and the fund’s historical outperformance vs. the S&P 500 speaks for itself.* [Read this on the web instead]( All aboard! So, the headline is that cruises are back. Indeed, cruise tourism is expected to make a titanic comeback this year, with passenger volumes [forecast]( to exceed pre-pandemic levels by 6% — increasing at an even faster rate than overall international tourist arrivals in 2023, which are only estimated to have returned to 80-95% of the number of voyagers seen in 2019. Since travel restrictions have phased out, it appears that vacationers are rushing to try out their sea legs. Despite the dip in cruise passengers, as nightmare scenarios played out on Covid-stricken [stranded cruise liners]( around the world, the public’s enthusiasm for vacationing on the high seas clearly runs deep. Estimates from the CLIA see the number of ocean-going cruise passengers reaching nearly 40 million per year by the end of 2027. Indeed, this summer appears to have been a [bumper season]( for the industry. Operator [Global Ports Holdings]( which claims to be the world's largest cruise port operator, revealed almost 2x as many passengers across its network in the three months to June 30, translating to a quarterly revenue increase of 60%. Furthermore, the largest cruise operators in the world are showing little problem filling the rooms on their increasingly enormous fleets. Royal Caribbean experienced [record-breaking demand]( for its new flagship Icon of the Seas — set to be delivered in October — which is nothing short of a remarkable feat of engineering. Coming in at 1,196 feet, or nearly 4 Statues of Liberty laid end-to-end, Icon will offer its 5,600+ guests the choice of 6 waterslides, 7 pools, 19 floors to explore, and 40+ bars and restaurants. Not waving, but drowning That demand suggests that the industry is getting back on an even keel, with consistent profits likely to follow. Indeed, in the decade 2010-2019, Carnival Corporation — at the time the world’s largest cruise ship company — was a slick operation, raking in more than $24bn in operating profits across those 10 years, with ~$3.3bn coming in 2019 alone. But, the pandemic very nearly sunk the ship, kickstarting 3 cash-hemorrhaging years for the company and industry at large. Below deck As passengers have gradually started to don their deck shoes once again, Carnival’s revenues have crept up, but still not enough to match the costs that come with operating the floating hotels. Just fueling its fleet, for example, cost Carnival a whopping $2.2 billion in 2022. All told, Carnival Corp. reported an operating loss of $4.4 billion as passenger tickets and onboard sales failed to rebound sufficiently… and that was a significant improvement on the $7.1 billion loss the year before. [Sponsored by Hedonova]( The S&P 500 Vs. Alternatives The majority of institutional investors are now looking beyond the traditional 60/40 stock-bond mix, backing portfolios with 20% exposure to alternative assets — and hyper-diversified hedge fund [Hedonova]( is a case in point as to why. Since mid-2020, Hedonova has outperformed the S&P 500 by more than 200%. The idea behind [Hedonova]( is simple but effective: it’s a single access point to a vibrant portfolio of alternative assets, including media royalties, pre-IPO startups, wine and fine art. It’s SEC-regulated, and so far the fund has a net IRR of 43%. Alternative assets are typically hard to find and invest in. Hedonova changes that — [invest in Hedonova]( with a low minimum of $5k. [Learn more about investing in Hedonova]( Seas the day Interestingly, the more costly cruises seem to be the ones that are really setting sail, with the luxury cruise market expecting to carry [over 1 million]( guests in 2023, up from 600,000 in 2019. Customers appear willing to trade up for a voyage that’s a tad more bon, perhaps fitting the trend of what some have called "[revenge travel](. Some of the most [sophisticated ships]( even offer a personal butler service and access to the only Nobu at sea. But, apart from fine dining or particularly exotic locations, the biggest differentiator when you’re out at sea? How many crew members there are to help you have the time of your life. [Data from Cruisewatch]( reveals that most cruise ships have to maintain at least 1 crew member for every 2-3 passengers. More hands on deck The largest cruise ships in the world tend to fit right in that sweet spot between 2 and 3 passengers per crew member. Royal Caribbean’s [Oasis of the Seas]( hosts a crew of 2,395 for its 5,400 customer capacity, a passenger-crew ratio of 2.3. At the smaller end of the cruise ship spectrum, boats like the Crystal Esprit — a boutique, all-suite ship that was sold by Crystal Cruises in its 2021 offering — afford an unrivaled level of service, boasting 1.5x as many crew members as guests. Cruising back Although many had to take extraordinary measures to weather the storm, the share prices of the “big 3” — Carnival, Royal Caribbean and Norwegian Cruise Line — have all soared this year, up 92%, 100% and 37% respectively. Although not everyone's first choice of vacation, the combination of travel, entertainment and relaxation all rolled into one package was, in hindsight, probably a cocktail that would always be desirable. Reports of the death of cruises were greatly exaggerated. [Sponsored by Hedonova]( One fund, 16 alternative asset classes Alternative assets are soaring, and [Hedonova]( is simplifying the game. They’ve built a fund that consolidates the best of each asset into a single, stable fund — and it’s outperformed the S&P by 200%. Offering uncorrelated returns, no lock-ups and just a 1% management fee, [Hedonova]( ensures you get the most from your alternative assets. Accredited investors can [get started with a $5k minimum]( today. Like this deep dive? Are you on a cruise right now? If so, make sure to sign up the entire boat to Chartr... or just forward it to your friends and family. [Read or share this story on the web]( *Sponsored content from Hedonova. Thanks for reading. See you tomorrow! Have some [feedback](mailto:daily@chartr.co?subject=Feedback&body=Hi%2C%0A%0AI%20like%20the%20newsletters%2C%20but%20I%20had%20a%20thought%20for%20you...) or want to [sponsor]( this newsletter? Not a subscriber? Sign up for free below. [Subscribe]( Copyright © 2023 CHARTR LIMITED, All rights reserved. You are receiving this email because you opted in via our website. 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