Cruise Giant Carnival Works to Manage Deepening Coronavirus Crisis

The arrival of the Westerdam cruise ship in Cambodia seemed like cause for celebration.

After days of circling in the sea, hundreds of elated passengers disembarked in the Cambodian city of Sihanoukville on Feb. 14, amid assurances the ship was free of the coronavirus. President Trump broadcast the news on Twitter, thanking the Cambodian government for its hospitality and tagging Micky Arison, the chairman of the vast multinational cruise company, Carnival Corporation, that owns the Westerdam.

But the joy was short-lived. Over the weekend, an American passenger who had been on the Westerdam tested positive for the virus, raising concerns that infected passengers were dispersing across Asia.

Now the situation is fast becoming a crisis for Carnival. Thousands of miles away, another Carnival ship, the Diamond Princess, has been moored outside the Japanese port city of Yokohama with hundreds of coronavirus cases reported on board. Passengers who tested negative began leaving the ship on Wednesday. American officials had already evacuated some passengers.

“We have protocols, standards and practices for every possible issue you might imagine, including coronavirus,” said Roger Frizzell, a spokesman for Carnival. “But this virus is so new and unknown that everyone, including the medical profession, is learning on the job.”

Carnival serves nearly 11.5 million travelers a year, or roughly 50 percent of the global cruise market. It runs some of the best-known cruise brands in the industry, including its flagship Carnival Cruise Line, the Princess Cruises brand and the Holland America Line, whose fleet includes the Westerdam.

In the coming months, industry analysts say, the coronavirus crisis could take a financial toll on Carnival, potentially hurting its efforts to make inroads into China, a fast-growing market in the cruise industry.

  • Updated Feb. 10, 2020

    • What is a Coronavirus?
      It is a novel virus named for the crown-like spikes that protrude from its surface. The coronavirus can infect both animals and people, and can cause a range of respiratory illnesses from the common cold to more dangerous conditions like Severe Acute Respiratory Syndrome, or SARS.
    • How contagious is the virus?
      According to preliminary research, it seems moderately infectious, similar to SARS, and is possibly transmitted through the air. Scientists have estimated that each infected person could spread it to somewhere between 1.5 and 3.5 people without effective containment measures.
    • How worried should I be?
      While the virus is a serious public health concern, the risk to most people outside China remains very low, and seasonal flu is a more immediate threat.
    • Who is working to contain the virus?
      World Health Organization officials have praised China’s aggressive response to the virus by closing transportation, schools and markets. This week, a team of experts from the W.H.O. arrived in Beijing to offer assistance.
    • What if I’m traveling?
      The United States and Australia are temporarily denying entry to noncitizens who recently traveled to China and several airlines have canceled flights.
    • How do I keep myself and others safe?
      Washing your hands frequently is the most important thing you can do, along with staying at home when you’re sick.

“That is a very negative initial impression for an awful lot of Chinese consumers,” said James Hardiman, a travel industry analyst at Wedbush Securities.

Since the outbreak began in January, the coronavirus has disrupted virtually every major industry, from cruise lines to technology companies. Before the Westerdam docked in Cambodia last week, Carnival said it was expecting a “material impact” on its finances.

It is not the first time the company has faced an international crisis. In 2012, one of its ships, the Costa Concordia, ran aground off the coast of Italy, killing 32 people. The following year, thousands of passengers and crew members were stranded aboard a Carnival ship that was called “the poop cruise” after it drifted for four days without air conditioning or working toilets.

In 2016, Carnival’s Princess cruise line agreed to pay a $40 million penalty for illegally dumping oil-contaminated waste into the sea and trying to cover it up. In June, Carnival acknowledged violating probation terms from that case and was ordered to pay an additional $20 million penalty.

And over the years, many cruise companies, including Carnival, have experienced outbreaks of the norovirus on board their ships.

Given its size, experts say, Carnival regularly becomes a lightning rod for problems afflicting the industry.

“It’s the biggest cruise company in the world by an order of magnitude,” Mr. Hardiman said. “If you’re going to have bad luck on a ship, it’s 50-50 at least that it’s going to be a Carnival ship.”

The cruise brands owned by Carnival have their own leadership structures, but the parent company’s chief executive, Arnold Donald, has been heavily involved in the response to the coronavirus outbreak. In the last few days, he has visited the Princess headquarters in California and Holland America’s offices in Seattle to participate in crisis-response meetings where company officials have held conference calls with colleagues in Japan and Cambodia.

Mr. Donald became the chief executive of Carnival in 2013, replacing Mr. Arison, who now serves as the chairman of the company’s board.

Mr. Trump’s message tagging Mr. Arison on Friday was not the first time the two have interacted on Twitter. Over the years, Mr. Trump has also praised Mr. Arison’s management of the Miami Heat basketball team, which Mr. Arison took over in 1995.

In 2012, for example, Mr. Trump saluted Mr. Arison after the Heat won the N.B.A. championship. “@MickyArison is a tremendous owner & has done wonders for Miami,” he wrote.

The two have also spoken directly with each other on occasion, according to a person familiar with the matter who spoke on condition of anonymity to discuss private conversations. Still, Mr. Arison has donated to both Democrats and Republicans, including giving $500,000 to a political action committee supporting Jeb Bush during the race for the Republican presidential nomination in 2015.

In recent days, Carnival has taken a series of steps to mitigate the business impact of the coronavirus crisis, redeploying ships that were scheduled to sail in Asia to other parts of the world. Princess Cruises has canceled 17 trips and one of it ships, the Sapphire Princess, is redeploying from Shanghai to Australia. Another Carnival brand, Costa Cruises, has canceled 12 voyages in China.

“This is a big issue that’s being handled at the corporate level at Carnival,” said Ross Klein, a sociologist who studies the cruise industry. “They won’t want to redeploy a Princess ship on the same itinerary at the same time as a Holland America ship or another Carnival ship.”

The problems for the cruise operator began early this month, when the Diamond Princess was stranded in waters off the coast of Japan with hundreds of passengers reported to have the virus. At the same time, the Westerdam struggled to find a country willing to let its passengers disembark. Ports in Taiwan, the Philippines and Thailand denied the ship entry over concerns about the coronavirus.

Throughout the crises, Carnival Corporation has received help from the State Department and other American officials. On Monday, the U.S. government evacuated hundreds of passengers from the Diamond Princess, putting them on charter flights to the United States.

After the Westerdam docked in Sihanoukville, the U.S. ambassador to Cambodia, W. Patrick Murphy, brought his own family to greet the passengers streaming off the ship.

But then an American who had been on the Westerdam tested positive for the coronavirus after traveling to Malaysia. Now many Westerdam passengers who had remained in Cambodia are stuck there as local health officials look to prevent anyone else infected with the virus from leaving.

Ninety-two American citizens remained on board the Westerdam, while another 260 were in hotels in the Cambodian capital, said William Walters, the managing director of operational medicine at the State Department. About 300 American citizens have left the country after being tested for the coronavirus by Cambodian health officials.

“Everyone is very concerned about the safety of all of the American citizens and all of the other passengers on the Westerdam,” Mr. Walters said. “Every step is being taken on an international basis to collaborate on contact tracing and in staying in very close contact with the passengers of that ship.”

Tariro Mzezewa and Edward Wong contributed reporting. Susan Beachy and Kitty Bennett contributed research.




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