https://gusskinnerconsulting.com/ Volume 4 – Issue #73 https://www.gphsconsulting.com/

The cruise industry has long acknowledged the cumulative negative impact of illness outbreaks. COVID-19 presents a frightful situation. From a public health perspective, though, we shift from Distress to Redress and Address. Leader-SHIP is the newsletter that interweaves media articles and cruise industry responses to provide guidance on actions being taken against the novel coronavirus. It negates forces of disruption and decline with measures for steadfastness ultimately having you enhance the practice of public health in your own life and of those around you.

PLEASE NOTE THIS ISN’T A COMPLETE LISTING OF MEDIA ARTICLES BUT A SNAPSHOT ONLY.

In this Issue:

- CLIA survey shows continuing interest in cruising - Norwegian Expects Delays in Newbuild Delivery - Setting Sail, Spreading Coronavirus: The Pandemic and The Cruise Industry - Three Norwegian cruise ships are docked in Portsmouth through June, but they have no passengers - Princess Cancels Remaining 2020 Summer Season - Here There’s A Will, There’s A Way Home - COVID-19 outbreak on the : estimating the epidemic potential and effectiveness of public health countermeasures - What the cruise-ship outbreaks reveal about COVID-19 - Norwegian Raises $2 Billion; Over 1 Year of Cash If Needed - Health Report was Updated to Show 128 Cases Before Ship Docked - The Economics of Cruise Ships (Full Article)

______

Click link below to subscribe to Leader-SHIP e-Newsletter Email: [email protected]

https://gphs-consulting.webflow.io/leader-ship-newsletter/newsletter-home

1 | Page

https://gusskinnerconsulting.com/ Volume 4 – Issue #73 https://www.gphsconsulting.com/

08 May, 2020: CLIA survey shows continuing interest in cruising Two-thirds of those who had cruised before indicated that were likely to do so again in the next two years New research from Cruise Lines International Association (CLIA) has found that interest in cruising continues to remain strong despite the Covid-19 outbreak. As part of CLIA’s twice-yearly research survey, 500 UK respondents who have taken an international holiday in the past two years were asked whether they were likely to take a cruise in the future. Among those who had already cruised, 75 per cent answered that they would be ‘very likely or likely’ to take a cruise again in the next two years, a marginal drop from 79 per cent since the autumn 2019 survey. For those who have yet to cruise, 66 per cent said they were also ‘very likely or likely’ to go on a cruise at some point in the future, again showing a minimal drop from 71 per cent last autumn. “Our findings show a remarkably small divergence in responses between these times and suggest a very modest shift in sentiment,” said Andy Harmer, director of CLIA UK and Ireland. “This could be largely due to cruise guests understanding the industry’s commitment to their health and safety. We will continue to work to earn that trust as we work through this global crisis, putting public health and safety at the heart of our response.” Source: https://www.cruiseandferry.net/articles/clia-survey-shows-continuing-interest-in-cruising-1

08 May, 2020: Norwegian Expects Delays in Newbuild Delivery Norwegian Cruise Line Holdings said it expects delays in newbuild deliveries due to the effects of COVID- 19 on shipyards. "We have nine newbuilds on order, scheduled to be delivered through 2027. We expect that the effects of COVID-19 on the shipyards where our ships are under construction (or will be constructed) will result in delays in ship deliveries, which may be prolonged," the company said, in a Tuesday morning SEC filing. Among the orderbook for the company, Norwegian Cruise Line is poised to get six Leonardo-class newbuilds with capacity for 3,300 guests each. Regent just took delivery of the ultra-luxury Seven Seas Splendor, with another 750-guest luxury ship following in 2023. Oceania, the line's upper premium brand, has two new ships on order with delivery dates in 2022 and 2025. The company's new ship orderbook, spanning nine ships, is approximately 23,000 new berths and a value of $7.0 billion, with all ships being built at . NCLH Orderbook: Cruise Line Ship Cost1 Tonnage Capacity Yard Sailing Delivery Norwegian Unnamed $850 140,000 3,300 Fincantieri TBA TBA 2022 Oceania Unnamed $660 67,000 1,200 Fincantieri TBA TBA 2022 Regent Unnamed $545 54,000 750 Fincantieri World Q4 2023

______

Click link below to subscribe to Leader-SHIP e-Newsletter Email: [email protected]

https://gphs-consulting.webflow.io/leader-ship-newsletter/newsletter-home

2 | Page

https://gusskinnerconsulting.com/ Volume 4 – Issue #73 https://www.gphsconsulting.com/

Norwegian Unnamed $850 140,000 3,300 Fincantieri TBA TBA 2023 Norwegian Unnamed $850 140,000 3,300 Fincantieri TBA TBA 2024 Norwegian Unnamed $850 140,000 3,300 Fincantieri TBA TBA 2025 Oceania Unnamed $660 67,000 1,200 Fincantieri TBA TBA 2025 Norwegian Unnamed $850 140,000 3,300 Fincantieri TBA TBA 2026 Norwegian Unnamed $850 140,000 3,300 Fincantieri TBA TBA 2027 1. In Millions Source: https://www.cruiseindustrynews.com/cruise-news/22887-norwegian-expects-delays-in- newbuild-delivery.html

08 May, 2020: Setting Sail, Spreading Coronavirus: The Pandemic and The Cruise Industry The Diamond Princess cruise ship was an early coronavirus hot zone. We hear the story of what happened on the ship from medical first responders who hopped on board. Listen to the podcast…. https://www.wbur.org/onpoint/2020/05/06/spreading-a-virus-grand-princess-cruise-ship

08 May, 2020: Three Norwegian cruise ships are docked in Portsmouth through June, but they have no passengers Three Norwegian Cruise Line ships are docked at Portsmouth Marine Terminal and will stay through the end of June, according to officials from the Port of Virginia. The three ships — the Norwegian Bliss, Norwegian Spirit and Norwegian Encore — will take berth space during the cruise industry’s voluntary suspension of U.S. operations. None of the ships has had passengers since March 24, and each has 175 or fewer crew members, about 10% of the usual amount. They will be required to stay aboard the ships while in Portsmouth, under Centers for Disease Control and Prevention regulations. “Cruise ships don’t necessarily have a home where they go and tie up and get ready,” said Joe Harris, a spokesman for the Port of Virginia. That means they’re searching for a place to park until the suspension is lifted. Harris said the cruise lines call and inquire at ports, like Portsmouth’s, see if it would be a good fit. He said they don’t have a lot of berth space, so it depends on a ship’s needs.

The contract with Norwegian for the three ships is through the end of June, but could be extended. Though the berth space is pretty full now, he said, there’s a possibility of more ships coming. To be accepted in Portsmouth, Norwegian had to submit crew manifests and a plan of operation during their stay for review to the CDC, the U.S. Coast Guard and the Virginia Department of Health, according to a news release from

______

Click link below to subscribe to Leader-SHIP e-Newsletter Email: [email protected]

https://gphs-consulting.webflow.io/leader-ship-newsletter/newsletter-home

3 | Page

https://gusskinnerconsulting.com/ Volume 4 – Issue #73 https://www.gphsconsulting.com/

the port. All three approved the plan before the ships arrived in Virginia waters. Any costs associated with the vessels tying up in Portsmouth, such as getting fresh water and restocking food, are covered by Norwegian. Norwegian pays the port essentially a parking fee for each ship, a number that was not immediately available. “We’re providing a temporary home, and if you think about these ships just being out at sea, it makes sense to put them on berth somewhere and give them a space where they can sit quietly until it’s time to go back to work,” Harris said. Source: https://www.pilotonline.com/news/vp-nw-norwegian-cruise-ships-20200504- uluoakfomjczziyteuks2nu64y-story.html

08 May, 2020: Princess Cancels Remaining 2020 Summer Season Citing reduced air flight availability, the closure of cruise ports in regions around the world and other factors impacting international travel, is extending its pause of global ship operations and has therefore made the decision to cancel select cruises through the end of the 2020 summer season, according to a press release.

Cancellations: • All remaining Alaska cruises on the and Ruby Princess. • All remaining and Transatlantic cruises on the , , , and Island Princess. • Summer cruises and all Canada & New England cruises on the and Sky Princess. • Summer to Fall cruises departing from Japan on the Diamond Princess. • Australia-based cruises on the and Sea Princess through August • July cruises sailing from Taiwan on the . • Fall cruises sailing to Hawaii and French Polynesia on the through November. "As the world is still preparing to resume travel, it is with much disappointment that we announce an extension of our pause of global ship operations and the cancellation of cruise vacations for our loyal guests," said Jan Swartz, president of Princess Cruises. "Among other disruptions, airlines have limited their flight availability and many popular cruise ports are closed. It saddens us to think about the impact on the livelihood of our teammates, business partners and the communities we visit." Source: https://www.cruiseindustrynews.com/cruise-news/22904-princess-cancels-remaining-2020- summer-season.html

______

Click link below to subscribe to Leader-SHIP e-Newsletter Email: [email protected]

https://gphs-consulting.webflow.io/leader-ship-newsletter/newsletter-home

4 | Page

https://gusskinnerconsulting.com/ Volume 4 – Issue #73 https://www.gphsconsulting.com/

08 May, 2020: Here There’s A Will, There’s A Way Home Our teams have been working around the clock to get each and every one our crew members home as safely and quickly as possible. This is an ever-changing situation as we work with U.S. authorities and more than 60 countries around the world. Our repatriation plans must abide by the travel restrictions in place by each nation, so we have been working with all local and international government entities to stay compliant within these guidelines. As of April 27, 2020, 13,847 crew have been repatriated home and we will not stop until we get everyone home safely. Of course, crew who choose to stay onboard will continue to have a home on our ships. Our crew continue to be strong, positive, and work together to keep each other safe. Each day brings us closer to being through with this unfortunate chapter in our history, and one day closer to better times. We are a family, and we are in this together! Read more… https://www.rclcorporate.com/where-theres-a-will-theres-a-way-home/

08 May, 2020: COVID-19 outbreak on the Diamond Princess cruise ship: estimating the epidemic potential and effectiveness of public health countermeasures Originally published 28 February, 2020 Cruise ships carry a large number of people in confined spaces with relative homogeneous mixing. On 3 February, 2020, an outbreak of COVID-19 on cruise ship Diamond Princess was reported with 10 initial cases, following an index case on board around 21-25th January. By 4th February, public health measures such as removal and isolation of ill passengers and quarantine of non-ill passengers were implemented. By 20th February, 619 of 3700 passengers and crew (17%) were tested positive.

Methods We estimated the basic reproduction number from the initial period of the outbreak using SEIR models. We calibrated the models with transient functions of countermeasures to incidence data. We additionally estimated a counterfactual scenario in absence of countermeasures, and established a model stratified by crew and guests to study the impact of differential contact rates among the groups. We also compared scenarios of an earlier versus later evacuation of the ship. Results The basic reproduction rate was initially 4 times higher on-board compared to the R0R0 in the epicentre in Wuhan, but the countermeasures lowered it substantially. Based on the modeled initial R0R0 of 14.8, we estimated that without any interventions within the time period of 21 January to 19 February, 2920 out of the 3700 (79%) would have been infected. Isolation and quarantine therefore prevented 2307

______

Click link below to subscribe to Leader-SHIP e-Newsletter Email: [email protected]

https://gphs-consulting.webflow.io/leader-ship-newsletter/newsletter-home

5 | Page

https://gusskinnerconsulting.com/ Volume 4 – Issue #73 https://www.gphsconsulting.com/

cases, and lowered the R0R0 to 1.78. We showed that an early evacuation of all passengers on 3 February would have been associated with 76 infected persons in their incubation time.

Conclusions The cruise ship conditions clearly amplified an already highly transmissible disease. The public health measures prevented more than 2000 additional cases compared to no interventions. However, evacuating all passengers and crew early on in the outbreak would have prevented many more passengers and crew from infection. Read more…. https://academic.oup.com/jtm/advance-article/doi/10.1093/jtm/taaa030/5766334

08 May, 2020: What the cruise-ship outbreaks reveal about COVID-19 Originally published 26 March, 2020 Close confines help the virus to spread, but closed environments are also an ideal place to study how the new coronavirus behaves. When COVID-19 was detected among passengers on the cruise ship Diamond Princess, the vessel offered a rare opportunity to understand features of the new coronavirus that are hard to investigate in the wider population. Some of the first studies from the ship — where some 700 people were infected — have revealed how easily the virus spreads, provided estimates of the disease’s severity and allowed researchers to investigate the share of infections with no symptoms. Information gleaned from such outbreaks is crucial for people making decisions on how to manage the epidemic, say researchers. “Cruise ships are like an ideal experiment of a closed population.

You know exactly who is there and at risk and you can measure everyone,” says John Ioannidis, an epidemiologist at Stanford University in California. This is very different from trying to study the spread in a wider population, where only some people, typically those with severe symptoms, are tested and monitored. Read more… https://www.nature.com/articles/d41586-020-00885-w

08 May, 2020: Norwegian Raises $2 Billion; Over 1 Year of Cash If Needed Norwegian Cruise Line Holdings today announced it successfully secured over $2 billion of additional liquidity in response to impacts of the COVID-19 global pandemic on the company. The company announced last week it expected a cash burn of $100 to $150 million per month with most of its

______

Click link below to subscribe to Leader-SHIP e-Newsletter Email: [email protected]

https://gphs-consulting.webflow.io/leader-ship-newsletter/newsletter-home

6 | Page

https://gusskinnerconsulting.com/ Volume 4 – Issue #73 https://www.gphsconsulting.com/

fleet in cold lay-up, giving the company over a year of cash on hand for a worst-case zero-revenue scenario. Read more… https://www.cruiseindustrynews.com/cruise-news/22898-norwegian-raises-2-billion-over-1-year-of- cash-if-needed.html

08 May, 2020: Ruby Princess Health Report was Updated to Show 128 Cases Before Ship Docked Princess Cruises has moved to refute suggestions the Ruby Princess did not update documents to show how many passengers had signs of illness when she docked on her last cruise to Sydney in March. A reporting system on the vessel, which was accessible to all authorities, was updated at 7.21 pm on the night before her docking, and it showed 128 people were showing signs of illness. “The information supplied by the Department of Agriculture, Water and Environment in an answer to a question on notice shows that the ship updated the Maritime Arrival Reporting System (MARS) at 7.21pm on March 18, which was seven hours prior to the ship berthing at the Overseas Passenger Terminal. It reported that 128 people on board had reported illness,” said a Princess Statement.

A previous report, submitted at 8.54am on March 18, showed 110 people onboard were sick or showed signs of sickness. At the special inquiry into how 2,700 Ruby Princess passengers were allowed to disembark without screening was told last week the ship’s doctor had not sent an updated health report to the shore because she had too much to do. Said Princess in their statement: “As the answer to the question on notice confirmed, in the case of NSW, relevant health officials have direct access to information contained in MARS submissions including vessel pre-arrival and human health reports. “Princess Cruises has noted the information given to the Senate committee because it shows that the ship had continued to update the official MARS health status of the ship. It also shows that an increase in the number of passengers and crew who were ill had been reported to the official human health reporting mechanism.”

The significance of the figures, according to reports of how the protocols work in NSW, is that if there are less than one per cent of passengers reported sick, the vessel is considered low risk. At 128 passengers ill, the vessel was over 3 per cent and all passengers should have been checked. The move came after the Prime Minister, Scott Morrison, expressed concern after NSW Health Epidemiologist Kelly-Ann Ressler wept after being questioned about the procedures used on the day the ship docked. Ms Ressler said: ““All I can say is that I’m very sorry it turned out the way it did. It was not our intention. Myself and my

______

Click link below to subscribe to Leader-SHIP e-Newsletter Email: [email protected]

https://gphs-consulting.webflow.io/leader-ship-newsletter/newsletter-home

7 | Page

https://gusskinnerconsulting.com/ Volume 4 – Issue #73 https://www.gphsconsulting.com/

colleagues at the public health unit were working very hard on this. We did what we could. And if we could do it again, it would be very different.” The PM asked the inquiry chairman Bret Walker SC to “reflect” on his questioning of the health official. Lawyers for Carnival Cruises reportedly told the inquiry they wished to ask Ms Ressler whether she had access to the updated information. Today’s hearing was also told the Austrian Border Force knew of the sick passengers on the ship. Cruise line agent Dobrila Tokovic said she met three ABF officers at Circular Quay to discuss quarantined passengers. “They asked me about the people in isolation, they were aware of them already,” Ms Tokovic told the inquiry, adding the officers were wearing protective clothing. Source: https://cruisepassenger.com.au/ruby-princess-official-health-report-was-updated-to-show-128-cases- before-ship-docked/

08 May, 2020: The Economics of Cruise Ships Originally published on the 15th March 2020 In the wake of coronavirus and tanking stocks, cruise companies have sought assistance from the US government. But for decades, the industry has done everything in its power to avoid paying into the system.

Cruise ships are often called “monsters” of the sea. If you’ve ever seen one in action, you’ll understand why: A vessel like Royal Caribbean’s Symphony of the Seas is longer than 12 blue whales. At 228k gross tons, it is 5x the size of the once-formidable Titanic. It can hold 6,680 passengers and 2,200 crewmembers, the population of a small American town. In 2018, 28.5m passengers — the bulk of them from America — spent more than $46B on cruises globally. The biggest players see annual profits in the billions. But cruise companies have done more to earn the “monster” moniker than churning out huge ships and market gains. For decades, these companies have utilized century-old loopholes to avoid paying corporate taxes. They’ve gone to great lengths to bypass US employment laws, hiring foreign workers for less than $2/hour. They’ve sheltered themselves as foreign entities while simultaneously benefitting from US taxpayer-funded agencies and resources. Now, in the wake of a coronavirus crisis that has sunk cruise stocks by double digits, these companies are lobbying for federal assistance. To better understand the dynamics of this wild industry, we spoke with maritime lawyers, legislators, and cruise experts in 3 countries.

______

Click link below to subscribe to Leader-SHIP e-Newsletter Email: [email protected]

https://gphs-consulting.webflow.io/leader-ship-newsletter/newsletter-home

8 | Page

https://gusskinnerconsulting.com/ Volume 4 – Issue #73 https://www.gphsconsulting.com/

The cruise industry at large Before we get into how cruise companies circumvent US taxes and regulations, let’s take a quick look at the major players, the money they make, and how they make it. The global market comprises dozens of cruise lines and more than 250 ships. But 3 players — Carnival Corporation & PLC, Royal Caribbean Cruises LTD, and Norweigan Cruise Line HLD — control roughly 75% of the market.

Zachary Crockett / The Hustle These companies, which preside over an empire of subsidiary cruise lines, collectively raked in $34.2B in revenue in 2018. Cruise ships make this money through two channels: Ticket sales and onboard purchases (e.g., alcoholic drinks, casino gambling, spa treatments, art auctions, and shore excursions), which passengers pay for with pre-loaded cruise cards and chip-equipped wristbands. On average, tickets account for 62% of total revenue and onboard purchases make up the remaining 38%. Though tickets represent a majority of revenue, onboard purchases account for the lion’s share of the profit, according to several experts. As a high fixed-cost business, a cruise ship relies on getting as many passengers as possible on the ship — even at fire-sale rates. The major cruise lines will often fill each ship to 105%-110% capacity, then upsell its captive consumers on additional services. “They have mastered the ability to get ______

Click link below to subscribe to Leader-SHIP e-Newsletter Email: [email protected]

https://gphs-consulting.webflow.io/leader-ship-newsletter/newsletter-home

9 | Page

https://gusskinnerconsulting.com/ Volume 4 – Issue #73 https://www.gphsconsulting.com/

their hands into people’s pockets and to take out every last dollar,” says Ross A. Klein, a professor at Memorial University of Newfoundland, who has closely studied the cruise ship industry. “They can almost give a cabin away for free and still make a profit.” Despite sizeable overhead costs — which include travel agent commissions, fuel, marketing, and payroll — these large crowds yield handsome profits. Industry-wide, cruise lines enjoy net margins of 17%, nearly double the average of some comparably large hotel chains: Carnival: $3.2B net profit (17% margin) Royal Caribbean: $1.8B net profit (19% margin) Norwegian: $955m net profit (16% margin) To make these figures a bit more relatable, here’s what this works out to on a per-passenger level for a 7- day cruise:

Zachary Crockett / The Hustle On average, a passenger will spend $1,060 ($151/day) on a ticket and $650 ($92/day) on onboard purchases. After subtracting overhead costs, a ship will make out with roughly $291 in net profit per passenger, per cruise. That means that at full capacity, a single ship like Royal Caribbean’s Symphony of the Seas might make $9.8m in revenue ($1.7m of which is profit) during one 7-day excursion. That’s $239k in profit per day at sea. As 50% of this money comes from American travelers, one might ______

Click link below to subscribe to Leader-SHIP e-Newsletter Email: [email protected]

https://gphs-consulting.webflow.io/leader-ship-newsletter/newsletter-home

10 | Page

https://gusskinnerconsulting.com/ Volume 4 – Issue #73 https://www.gphsconsulting.com/

expect the cruise industry to be a substantial contributor to the US tax system. But there’s a catch: These companies aren’t technically American. And they harbor what one legal expert calls a “dirty little secret.” How cruise companies avoid paying US taxes Carnival, Royal Caribbean, and Norwegian all have headquarters in Miami, Florida, a city that brands itself as the “Cruise Capital of the World.” With this homeland base, a large foundation of US customers, and red, white and blue logos, these cruise lines have manufactured an identity as authentically American corporations. President Trump has even called them a “great US business.”

Legal paperwork tells a different story. International law requires every ship to register with a country and fly its insignia in open waters. A ship is only subject to the laws of the country it is registered in. Under an obscure, 99-year-old section of the US tax code, cruise companies are able to register their ships with countries that have more lenient laws than the US — an act called flying a “flag of convenience” — and avoid paying into the US tax system. It’s a tax loophole big enough to drive a cruise ship through.

The cruise industry isn’t alone in avoiding Uncle Sam: US companies use offshore accounts to avoid paying an estimated $90B-per-year in taxes. But it is especially adept at the practice: Carnival is incorporated in Panama and flies the flags of Panama and the Bahamas; Norwegian is incorporated in, and flies the flag of, the Bahamas; Royal Caribbean has been incorporated in Liberia since 1985, and flies the flags of the Bahamas and Malta. These impoverished countries often compete with each other to offer cruise lines the cheapest services, much like many US cities groveled for Amazon’s HQ2 by offering large tax cuts. “Cruise lines want to register somewhere where they pay no taxes, are exempt from labor and wage statues, and don’t have to follow health and safety codes,” says Jim Walker, a Miami-based maritime lawyer. “They’re looking for a place that will leave them alone, not oversee their operations.” For the most part, that’s what cruise companies have gotten: According to annual report filings, the major cruise lines pay an average tax rate of 0.8% — for below the 21% US corporate tax rate.

The benefits of such arrangements are nominal for the countries that register the ships.

______

Click link below to subscribe to Leader-SHIP e-Newsletter Email: [email protected]

https://gphs-consulting.webflow.io/leader-ship-newsletter/newsletter-home

11 | Page

https://gusskinnerconsulting.com/ Volume 4 – Issue #73 https://www.gphsconsulting.com/

Zachary Crockett / The Hustle

Cruise lines will generally pay a small head tax ($4-$15 per passenger) to call on a port. According to Klein, these countries often spend more on maintaining facilities for cruise ships than they make through the fees. They might also promise a boost to the economies they frequent. But Klein says they work out deals with local vendors where they take up to 70% of the onshore revenue — and studies have shown that local populations in foreign ports don’t get much out of such partnerships.

Registering ships abroad also shelters cruise companies from US employment and safety laws. Cruise ships hire crew members from Southeast Asia, Eastern Europe, and “anywhere else you can find people willing to work for nothing,” and demand grueling workloads in exchange for comparatively paltry wages. The standard contract for a crew member like a cleaner or dishwasher requires a mandatory 308 hours per month — 11 hours a day, 7 days a week, for as long as 8-10 months, with no days off — for the equivalent of $400-700 per month, or $1.62 to $2.27 per hour. Unprotected by labor laws and regulations, crew members who get injured on the job are swiftly replaced, like “fungible goods.” In its latest report, the ______

Click link below to subscribe to Leader-SHIP e-Newsletter Email: [email protected]

https://gphs-consulting.webflow.io/leader-ship-newsletter/newsletter-home

12 | Page

https://gusskinnerconsulting.com/ Volume 4 – Issue #73 https://www.gphsconsulting.com/

Cruise Lines International Association, an influential trade group, argues that the cruise industry has a $52.7B “total economic impact” on the US economy and “supports” 421k American jobs. But Klein says it’s unclear what goes into calculating these figures. The Hustle asked several major cruise lines to comment on the concerns raised in this article. None of the companies responded. There is one thing the cruise industry has been expeditious about doing on US soil: Lobbying to keep its exemptions in place. According to the nonprofit Open Secrets, the cruise industry spent $66.2m in lobbying fees between 1998 and 2019. It also made contributions of at least $1.1m to candidates in cruise ship states, including $29.5k to a US representative from Florida who chairs the Panama Caucus, and $23.5k to a senator who fought to blockade a cruise tax. $813,807 for a single taxpayer-funded rescue effort

While cruise ships avoid paying US taxes, they simultaneously benefit from the services of taxpayer- funded federal agencies. Professor Klein, who has testified before Congress on matters of cruise ship safety, says that in the past 25 years: 361 passengers have fallen overboard on cruise ships (14 per year) 353 gastrointestinal/norovirus outbreaks have broken out on cruise ships 500+ environmental violations have been charged to cruise ships

In many of these cases, US agencies have to intervene — and taxpayers, not cruise companies, usually eat the cost. Klein has filed open-records requests and obtained documents on the companies, which he shared with The Hustle. They show that a single cruise ship passenger rescue effort can cost the US Coast Guard and the US Navy from $500k to $1m+. One 2009 search for a woman who fell overboard off the coast of Florida set the Coast Guard back $813,807. When ships go dead in the water — as was the case with Carnival’s Splendor fire in 2010 and its Triumph disaster in 2013 — these costs can balloon to $5m+. Walker, the maritime lawyer, adds that, in certain cases, cruise ships also require the resources of taxpayer-funded agencies like the US Public Health Service, Centers for Disease Control and Prevention, United States Citizenship and Immigration Services, and US Customs and Border Protection.

What does this all mean in the context of coronavirus? In the wake of a COVID-19 pandemic that has infected more than 157k and killed at least 5.8k people worldwide (as of March 14), the hospitality industry is reeling. Cruise ships — often called “floating petri dishes,” for their adeptness at spreading illnesses — have been hit especially hard. After at least 21 passengers tested positive for COVID-19 aboard Carnival’s , the State Department urged

______

Click link below to subscribe to Leader-SHIP e-Newsletter Email: [email protected]

https://gphs-consulting.webflow.io/leader-ship-newsletter/newsletter-home

13 | Page

https://gusskinnerconsulting.com/ Volume 4 – Issue #73 https://www.gphsconsulting.com/

the public to “not travel by cruise ship.” Customers clamored to cancel trips and cruise stocks fell by 60% — the worst stock performance on record for the industry. Initially, some cruise lines attempted to weather the storm by selling tickets at all costs. According to emails obtained by the Miami New Times, salespeople at Norwegian were instructed to respond to coronavirus-inquiring customers with scripted one-liners, like “The only thing you need to worry about for your cruise is do you have enough sunscreen?” When we called the company’s booking hotline last week, a salesperson told us that coronavirus doesn’t exist in tropical climates.

Zachary Crockett / The Hustle

Some major lines have since self-imposed suspensions on cruise trips to and from US ports for up to 60 days — a move that further imperils their revenue. The Trump administration has hinted at a potential bailout, and the Cruise Lines International Association is urging its 43k travel agent partners to call the White House to express their support for the industry. Critics like Klein aren’t having it. “They pay no taxes and now they want taxpayer support?” he says. “What happened to laissez-faire capitalism?” But as federal aid begins to look unlikely, some cruise operators have shifted their pleas to a different set of ears.

______

Click link below to subscribe to Leader-SHIP e-Newsletter Email: [email protected]

https://gphs-consulting.webflow.io/leader-ship-newsletter/newsletter-home

14 | Page

https://gusskinnerconsulting.com/ Volume 4 – Issue #73 https://www.gphsconsulting.com/

In a video posted to Twitter, Jan Swartz, the President of Carnival’s Princess cruise line, called on the American public to help guide the company through dark waters. “We ask you to book a future Princess cruise to your dream destination as a sign of encouragement for our team,” she wrote. “With your support we will emerge from this time of trial even stronger.” Source: https://thehustle.co/the-economics-of-cruise-ships/

______

Click link below to subscribe to Leader-SHIP e-Newsletter Email: [email protected]

https://gphs-consulting.webflow.io/leader-ship-newsletter/newsletter-home

15 | Page