Cruise stocks are taking another hit on Monday thanks to the recent surge in Covid-19 cases. Carnival (NYSE:CCL) is the focus among many investors, with CCL stock down 1% on Monday. However, Royal Caribbean (NYSE:RCL) is also lower by 1.1% and Norwegian Cruise Line (NYSE:NCLH) is off by 2% on the day.
With the omicron variant thriving, fears of new shutdowns are in the back of everyone’s mind. That has a direct impact on the travel industry and in particular, on cruise stocks.
Although most cruise lines require passengers to be fully vaccinated (with some exceptions), there continue to be positive cases on ships. Importantly, early data suggest that while existing vaccines can prevent severe reactions to Covid-19, they may not be able to stop the spread of the omicron variant. That’s not helping the cruise situation when it comes to positive cases onboard, even if a majority of the passengers are vaccinated.
While investors remain optimistic on future demand for cruises, the stocks are taking a hit right now.
Cruise stocks struggled coming into the month, with CCL stock falling in four straight weeks. Amid the stretch, the stock shed 34% of its value. Royal Caribbean and Norwegian Cruise suffered similar fates.
That said, the group is doing better, even with Monday’s weakness. Last week, CCL stock led the charge, rallying about 16%, while RCL climbed 9.8% and Norwegian rallied 11.8%. We’ll see if the group can shrug off today’s declines.
Cruise Stocks Aren’t the Only Ones Struggling
Many airlines had to cancel thousands of flights over the holiday weekend due to Covid-19. Winter storms didn’t help matters.
The disruptions didn’t end over the weekend, though. Cancellations are continuing today with another 2,300 flights scratched globally, paired with more delays due to Covid-related issues. Those problems stem from staffing shortages and a lack of testing.
As a result, “Carriers have asked the CDC to lower its recommended quarantine period for fully vaccinated staff.” According to reports, United canceled 85 U.S. flights on Monday (or about 4% of its mainline schedule), while Delta cut 54 flights.
Due to rising case counts, one can reasonably expect other travel-related businesses to see slowdowns as well. That includes hospitality and restaurants while we push through another wave of infections.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.