The U.S. Centers for Disease Control (CDC) announced on Friday it will begin allowing cruise ships to restart cruises.

The CDC announced following the expiration of the No Sail order on October 31, the agency will take a "phased approach to resuming cruise ship operations in U.S. waters."

The Conditional Sailing Order for Cruise Ships will encompass a few phases:

1. Testing and additional safeguards for crew members
2. Simulated voyages to test cruise line ability to mitigate virus spread onboard
3. Phased return to cruise ship passenger voyages

These phases are subject to change based on public health considerations and cruise ship operator's demonstrated ability to mitigate COVID-19 risk.

In addition, the Conditional Sailing Order announced new requirements for initial phases relating to crew testing.

"The Centers for Disease Control and Prevention (CDC), a component of the U.S. Department of Health and Human Services (HHS), announces this framework for a phased resumption of cruise ship passenger operations. Considering the continued spread of COVID-19 worldwide and increased risk of COVID-19 on cruise ships, a careful approach is needed to safely resume cruise ship passenger operations. CDC is establishing requirements to mitigate the COVID-19 risk to passengers and crew, prevent the further spread of COVID-19 from cruise ships into U.S. communities, and protect public health and safety. After expiration of CDC’s No Sail Order (NSO) on October 31, 2020, CDC will take a phased approach to resuming cruise ship passenger operations in U.S. waters."

While the No Sail order expires on October 31, Royal Caribbean has already cancelled all of its sailings through November 30.

Ending the cruise ship ban

The announcement that the CDC will lift the cruise ship ban comes after 7 months of the No Sail order prohibiting cruise lines from operating in U.S. waters.

Royal Caribbean has been shutdown since mid-March, and the No Sail order has been a major obstacle to any restart plan in North America.

Royal Caribbean Group and Norwegian Cruise Line Holdings teamed up over the summer to come up with a comprehensive and multi-layered approach to allow cruise ships to operate safely, through the efforts of a blue ribbon panel of scientists.

The Healthy Sail Panel has developed its own set of 74 detailed steps to safeguard the health of guests, crew and communities.

Recommendations include testing, the use of face coverings, and enhanced sanitation procedures on ships and in terminals. 

Healthy Panel co-chair Governor Mike Leavitt, former U.S. Secretary of Health and Human Services, specified exactly how in-depth their recommendations go.

"This Panel undertook an ambitious, cross-disciplinary, public health examination to develop standards and guidelines that create the highest level of safety in the complex environment of a cruise ship. We studied the industry’s experiences combating the pandemic – and we then incorporated the many lessons learned and advances made by medicine and science over the past six months. The Panel’s recommendations are grounded in the best scientific and medical information available and are intended to meaningfully mitigate public health risks to those who sail."

When will Royal Caribbean restart cruises?

Royal Caribbean has not announced any firm restart plan yet, but it is clear based on comments from executives what to expect.

Just yesterday, Royal Caribbean Chairman and CEO Richard Fain shared details of the cruise line's general approach to restarting cruises during a call with investors.

1. Training crew
2. A series of non-revenue sailings to rehearse and validate the new protocols
   1. This process will be carefully evaluated by independent outside observers
3. Restart of cruises with a ship or two at first, the more ships later in a "gradual and methodical way".

The first sailings will be short cruises at first, with limited destinations and controlled shore excursions.

Apart from cruises in the United States, Quantum of the Seas will begin cruises in December from Singapore and offer short cruises with no port stops.

Royal Caribbean Group Chief Financial Officer Jason Liberty also gave investors a preview of what it expects for cruises in Spring 2021 that largely mirror what Mr. Fain shared.

Mr. Liberty expects "a very limited initial return and a gradual ramp up during the first half of 2021."

Royal Caribbean anticipates short sailings the be the cornerstone of their return, and to offer these cruises from key drive markets in both the U.S. and Asia-Pacific regions.

Royal Caribbean has changed a rule about how guests can use their future cruise credits (FCC) to make it much easier if you have leftover credit.

If a guest uses their FCC for a sailing and has a leftover balance, they do not have to wait for the first sailing to complete before applying the remainder.

Prior to the change made this week by Royal Caribbean, guests had to wait until the first sailing was over before they could use any remainder credits from that voucher.

With this new change, Royal Caribbean allows guests to redeem a FCC on two active bookings.

Royal Caribbean alerted travel agents to this change this week:

"Enhancements have been made to the existing FCC process where any balance remaining on an FCC no longer has to await the return of the existing cruise vacation before applying the balance to a future/new reservation. That means the same FCC can now be redeemed on 2 active bookings! Once a portion of the FCC is applied to a reservation, the remaining balance FCC will be generated and, in turn, sent to your client for use as they wish. Please note that any FCC with a pending balance from the past few months will now be run through this process, with an anticipated completion date for all by end-of-October."

The old policy for only allowing an FCC to be used on one sailing at a time was a policy that originated well-before the current global cruise shutdown.

In fact, future cruise credits were fairly rare for guests to have before this year, but so many guests now have at least one FCC to use due to all the cancelled cruises in 2020.

Royal Caribbean has slowly changed some of the FCC rules because of all the cancelled cruises, including being able to use a FCC towards a deposit and even allowing guests to combine FCCs.

Future Cruise Credits are an option for guests who either choose to cancel their cruise up to 48 hours before the sail date via the Cruise with Confidence program, or have their cruise cancelled by Royal Caribbean. In either case, a voucher code is provided that can be redeemed for the value of the sailing.

When Royal Caribbean cancels the sailing, the Future Cruise Credit is worth 125% the value of the cruise fare that the guest paid.

Have more questions about a FCC? These stories will help:

• Royal Caribbean Future Cruise Credit: What you need to know
• Top ways you cannot use your Royal Caribbean future cruise credits
• What happens if I want to cancel my Royal Caribbean cruise?

Here is one last Odyssey of the Seas construction photo to share before the month of October ends.

Royal Caribbean's next new cruise ship is under construction in Hall 6 of Meyer Werft shipyard.

The photo was released by the Meyer Werft shipyard in Papenburg, Germany.

Odyssey of the Seas is scheduled to sail in Spring 2021, with newly added sailings in April from Southampton and Barcelona.

Once Odyssey completes these new sailings, she will spend her summer in Rome offering sailing Eastern Mediterranean cruises.

Finally, Odyssey will head to the United States for her North American debut in November 2021. There she will continue her inaugural year in Fort Lauderdale, FL with 8- and 6-night Caribbean itineraries.

Delivery still on schedule

Over the last few weeks, Royal Caribbean has confirmed that Odyssey of the Seas is on schedule for her 2021 delivery.

She was originally to debut in November 2020, but delays at the shipyard due to the global health crisis changed plans.

Nonetheless, her current delivery date appears to be accurate, as Royal Caribbean Group confirmed this week in its third quarter earnings report that Royal Caribbean Group has allocated funds for delivery of Odyssey of the Seas during the first quarter of 2021.

Some cruise fans have also noted the fact Royal Caribbean added earlier sailings from Southampton and Barcelona to be a positive sign that the ship is going to be delivered on time.

The Canadian Government has extended its cruise ship ban until February 28, 2021.

Canada's Minister of Transport, Marc Garneau, made the announcement it will continue banning cruise ships carrying more than 100 people from sailing in Canadian waters.

"As Canadians are doing their part to help reduce the spread of COVID-19, the Government of Canada is working hard to ensure Canada’s transportation system remains safe. The extension of these temporary measures for cruise ships and other passenger vessels in Canada reflects our ongoing work with all levels of government, transportation industry stakeholders, and Indigenous peoples to help ensure appropriate measures are in place."

Prior to today's announcement, Canada had closed off its borders to all cruise ships until October 31, 2020.

Royal Caribbean had no cruises visiting Canada between October and February, due to a combination of already cancelled cruises and the fact ships do not sail to Canada in the winter months.

Canada's ban on cruise ships was initially announced on March 19, 2020, and extended on May 30, 2020.

Will there be Alaska cruises in 2021?

While the extension of the ban has no short-term effect on Royal Caribbean cruises, the bigger question is will Canada allow cruise ships to visit in summer 2021.

The ban of cruise ships in Canadian waters makes operating cruises to Alaska or New England effectively impossible because U.S. cabotage laws require foreign-flagged vessels leaving from a U.S. port of call to first call on a "distant foreign port" before returning to the United States.

Along with the No Sail order in the United States, Royal Caribbean was unable to offer cruises to Alaska in 2020, but a ban from Canada would prevent any Alaska cruises from operating.

Those who do not comply with the prohibition could be subject to penalties: $5,000 per day for individuals and $25,000 per day for corporations.

There are two primary ports Royal Caribbean relies on for its Canadian cruises: Vancouver and Victoria.

Vancouver is where Radiance of the Seas and Serenade of the Seas homeport during the season, while Victoria is a port of call for cruises out of Seattle.

Without access to Canadian ports, it is impossible for Royal Caribbean to operate any cruises, since even sailings beginning in the United States require a foreign port stop at some point in order to be in compliance with U.S. laws.

Royal Caribbean could still sell a cruise ship during its shutdown, assuming it makes financial sense.

During an earnings call with Wall Street analysts on Thursday, Royal Caribbean Group executive vice president and Chief Financial Officer Jason Liberty spoke on the topic of supply growth, and what Royal Caribbean might do with existing and new vessels.

Mr. Liberty noted that Royal Caribbean Group would sell about one to two ships in a typical year, but with everything changing this year, anything is possible.

"We're being very opportunistic about the situation," Mr. Liberty said on the topic of selling or scrapping ships. 

In terms of when it makes sense to sell, it sounds like only if a particular cruise ship "does not fit strategically" within the brand would they then look at options.

New cruise ship capacity

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Selling or scrapping a ship may also come to offset new ships joining the fleet.

Right now, Royal Caribbean expects its cruise ships on order to continue ahead, although "delayed by probably eight to 10 months", according to Mr. Liberty.

Nonetheless, new ships growth will continue.

"I think we do expect that will be slower newbuild growth probably towards the latter part of four or five years from now....I think we expect to continue to try to come online."

Royal Caribbean International has a few ships on order, including Odyssey of the Seas and Wonder of the Seas.  Both ships have been delayed, but will debut in 2021 and 2022 respectively.

No change in Royal Caribbean's ship selling strategy

Today's comments on Royal Caribbean having no firm plans to sell any ships continues the company's general strategy since cruises shutdown in March.

In August, Mr. Liberty said Royal Caribbean Group was still evaluating options in selling ships, but had nothing firm to announce.

"This time we are evaluating opportunities to to sell ships or to take other actions with ships."

"We're valuating all all options, but of course, we've put a lot of money into these ships. These ships do exceptionally well, and so it's a difficult decision to depart with ship because they generate so much cash."

Why scrap or sell a ship?

The question of if Royal Caribbean will sell more ships or not is partly based in finances, and partly due to what competitors have been doing.

Carnival Corporation has been far more aggressive in selling ships of its brands, having announced a total of 18 cruise ships across its brands will be sold soon (if not already).

Royal Caribbean Group chose to scrap its fleet of Pullmantur Cruises ships, including the former Monarch and Sovereign of the Seas, when that cruise line went into bankruptcy.

Besides getting rid of ships and the overhead they bring, new cruise ships tend to break-even with less guests and are more efficient with generating onboard revenue.

Royal Caribbean International President and CEO Michael Bayley spoke about demand the cruise line is seeing for cruises during a call with Wall Street analysts.

One question raised was if Royal Caribbean will have to wait for them to prove cruises can sail safely before substantial demand returns.

Mr. Bayley talked about the pent-up demand customers have, even before the cruise line is ready to restart.

Surprised by the level of demand

A great example of this demand comes from the newly added Quantum of the Seas cruises from Singapore, which will begin in December.

Despite the fact Quantum will offer cruises to no where, with no port stops at all, demand has been very strong.

"We were really quite surprised by the level of demand that came into the product of the winter season that we've got it open," Mr. Bayley shared during the call with investors.

"Within the first two weeks, we had literally the triple demand that we were expecting at rates above what we were expecting."

In addition to Singapore, Mr. Bayley said despite COVID increases in Europe, "there is demand in the marketplace and it's coming quite naturally."

A look at the American cruise market

Mr. Bayley also touched upon demand for cruises in the American cruise market, which he sees tied to how Americans feel about the nature of the pandemic.

Royal Caribbean is conducting a great deal of market research to get a sense of what consumers are thinking.

"About three or four months ago, most people believed that COVID would be kind of moving behind us by the end of 2020. Of course, that shifted now. And the belief from most consumers is that as you move through '21, COVID will move behind us with vaccine, therapeutics, etc."

"You very much see a correlation between what people are believing and how they're booking."

To that point, the data shows Royal Caribbean that people want to vacation again once things start to settle down.

"We kind of see that in the booking behavior out of the American market for our products through '21, with a particular emphasis on Summer 21, " Mr. Bayley described. "It feels and it looks as if customers are thinking this is going to be behind us and we're going to have a summer vacation."

Of course, the No Sail order looms large in the United States, and while a lifting of that prohibition would be helpful for bookings, Mr. Bayley believes ultimately consumers want to see cruises begin before booking in large numbers.

"I do believe that if there is a change in the No Sail order and a pathway is created for the safe return to cruising, there will be an uptick in demand. But I think people will naturally wait and see."

During Royal Caribbean Group's third quarter earnings call with investors on Thursday, the company provided a preview of what its early return to service might look like.

While Royal Caribbean is very cautious about expectations related to restarting, but it did provide more insight into its plans for a very limited initial return.

Jason T. Liberty, executive vice president and CFO, spoke on restart plans during his opening statement, "The situation regarding our return to service is fluid, but we are currently planning for a very limited initial return and a gradual ramp up during the first half of 2021."

Mr. Liberty emphasized that the first cruises back will be focused on short sailings, "Deployment of spring is expected to be highly focused on short sailings from key drive markets in both the U.S. and Asia-Pacific regions."

Typically, "key drive markets" references cruises that depart from ports where most of the customers can drive to the cruise ship, as opposed to guests who fly to their cruise ship.

In addition, the first sailings will be highly focused on Perfect Day at CocoCay.

"We will also make the most out of our incredible private destination in the Bahamas. Perfect Day at CocoCay."

Cruises restarting will be slow

Royal Caribbean Group Chairman and CEO Richard Fain reiterated the restart plans that have been the plan for months, with a slow and methodical restart.

Mr. Fain spoke of the work the Healthy Sail Panel has done to provide a roadmap for cruises to restart, "the panel has recommended that this process be carefully evaluated by independent outside observers and we will do that.

"And then only on a ship or two it first and in a gradual and methodical way, we expect to start sailing again."

"There'll be short cruises at first with limited destinations and controlled shore excursions. But as we learn and as the science continues to improve, we will expand."

A scientific approach to cruising safely

Prior to cruises starting again, Mr. Fain reminded investors that they intend to test out their new protocols with a series of test sailings.

"We propose to start slowly by training our crew and embarking on a series of non-revenue trial sailings, where we can rehearse and validate the new protocols."

Mr. Fain was confident that the Healthy Sail Panel recommendations can serve as a foundation for a gradual and methodical, healthy return to service.

"We intend to make our ships and environment a bubble, if you will, that presents less risk of transmission than our guests would find on land."

If all of this sounds frustrating, Mr. Fain remains optimistic about the future, "I am optimistic that we will soon have a path that we all see as a pathway back to resuming operations. It will be slower than I would wish, but faster than many are assuming."

Announcement coming soon?

While Royal Caribbean Group executives were hesitant to provide any insight into what the CDC might do, travel advisors are being told to expect a change.

In an email to travel advisors sent on Thursday morning, Royal Caribbean told travel agents to expect something "very soon".

Very soon – potentially as early as next week - we’ll be announcing our return to service. 

Royal Caribbean Group reported a $1.3 billion loss for the third quarter of 2020 as part of its financial results, and also provided a business update.

The cruise company is still in the midst of a global shutdown due to the health crisis. While limited cruise operations outside of the U.S. have been able to restart with its TUI cruises and Hapag Lloyd brands, the company is still dealing with being mostly shutdown.

Royal Caribbean highlighted the fact Quantum of the Seas will be able to restart operations in Singapore in December after receiving approval to sail from the Singaporean Government.

These initial cruises will most likely take place with reduced guest occupancy, modified itineraries and enhanced health protocols developed in collaboration with governments and health authorities.

In addition to the financial results, Royal Caribbean Group provided a business update to investors.

Healthy Sail Panel recommendations

Royal Caribbean's blue ribbon panel of health experts submitted 74 recommendations for how cruise ships could safely operate.

On September 21, 2020, the HSP submitted its recommendations to the Centers for Disease Control and Prevention (CDC) in response to a CDC request for public comment that will be used to inform future public health guidance and preventative measures relating to travel on cruise ships. 

"The work of the Healthy Sail Panel has been thorough and comprehensive. We are grateful for its enormous dedication and passion, which has resulted in what has quickly become the seminal document in this arena. We are also grateful for the time the CDC and their observers have spent on this important topic with the Healthy Sail Panel," said Richard D. Fain, Chairman and CEO. "We understand the importance of getting this right and are preparing to put these plans to the test with a gradual and methodical return to service in the near future."

Cash on hand

In order to remain operational throughout the shutdown, Royal Caribbean Group made additional moves to bolster its financial situation.

Since the last earnings call, Royal Caribbean Group has taken further actions to enhance its liquidity, preserve cash and obtain additional financing. 

• $700M increase in liquidity through a 12-month commitment for a senior guaranteed 364-day facility
• Approximate $1.15 billion increase in liquidity through a combination of a convertible bond issuance and a common stock public offering

The current cash burn is on average in the range of approximately $250 million to $290 million per month during a prolonged suspension of operations. This range includes all interest expenses, ongoing ship operating expenses, administrative expenses, hedging costs, expected necessary capital expenditures (net of committed financings in the case of newbuilds) and excludes cash refunds of customer deposits, commissions, debt obligations and cash inflows from new and existing bookings. 

Cash burn will increase once cruises are able to start up again as a result of:

• Bringing ships out of their various levels of layup
• Returning the crew to the vessels
• Taking the necessary steps to ensure compliance with the recommended protocols
• Restarts sales and marketing activities

Jason T. Liberty, executive vice president and CFO said, "We are optimistic that with the gradual resumption of cruise operations, our cash flow from operations will sequentially improve, driven by an increase in the inflow of customer deposits."

As of September 30, 2020, the Company had liquidity of approximately $3.7 billion, including $3.0 billion in cash and cash equivalents and a $0.7 billion commitment from the 364-day facility, compared to $4.1 billion as of June 30, 2020.

The total cash spend for the third quarter was approximately $1.1 billion, mainly driven by ship operating expenses. 

Odyssey of the Seas

For those wondering about the fate of Royal Caribbean's next new cruise ship, Odyssey of the Seas is very much on the radar.

Royal Caribbean Group has allocated funds for delivery of Odyssey of the Seas during the first quarter of 2021.

2021 Bookings

Booking activity for the first half of 2021 is aligned with the Company's anticipated staggered resumption of cruises.

The cumulative booked position for sailings in the second half of 2021 is within historical ranges with prices that are down slightly year-over-year when including the negative yield impact of bookings made with future cruise credits ("FCCs") and about flat when excluding them. 

Since Royal Caribbean Group's last business update, more than 65% of the 2021 bookings are new and the rest are due to the redemption of FCCs and the Lift & Shift program. 

As of September 30, 2020, the Company had $1.8 billion in customer deposits of which approximately 50% are FCCs and $180 million correspond to fourth quarter 2020 sailings.

Approximately 50% of the guests booked on cancelled sailings have requested cash refunds.

Royal Caribbean Group's legal team was busy this week with a variety of new trademarks that sound like it could be names for new venues on its cruise ships.

Trademark registrations may not end up being used by the cruise line, but it does provide insight into what may be currently planned.

Four new trademarks have been filed with the United States Patent and Trademark Office earlier this week:

Vue Bar

On October 23, a trademark was made for "Vue Bar" under the category of "cruise ship services".

Cask & Clipper

Another registration made on October 23 is for the "Cask & Clipper", which is filed under two categories:

• Cruise ship services
• Restaurant and bar services

Royal Caribbean's English-style pubs on its cruise ships tend to have names that combine two words in a similar style to Cask & Clipper.

Wonder Playscape

The trademark filing for "Wonder Playscape" sounds a lot like the name of a new play area on Wonder of the Seas cruise ship.

Wonder of the Seas will be Royal Caribbean's fifth Oasis Class cruise ship, which is set to debut in 2022 and sail from China.

The description for Wonder Playscape says, "Entertainment services in the nature of children's dry playscape attractions".

The trademark might correlate to a series of renderings for a newly imagined concept for families that popped up online. Or it could be something completely unrelated.

Cantina Fresca

The last trademark filing was made for something called "Cantina Fresca" and is described as "restaurant and bar services".

The name infers a Mexican inspired venue, of which Royal Caribbean has targeted this particular cuisine in the past with Sabor Modern Mexican and El Loco Fresh.

What do these trademarks mean?

Trademark applications are usually quite vague and do not indicate exactly how the cruise line will utilize them, if at all.

In fact, a lot of trademarks never get used for many reasons.

It is also worth noting these registrations are filed on behalf of the Royal Caribbean Group, which means they could be intended for a subsidiary cruise line that is not Royal Caribbean International.

Read more: Who owns Royal Caribbean?

Royal Caribbean has two cruise ships under construction set to debut in the next few years, Odyssey of the Seas and Wonder of the Seas. With new ships comes new opportunities to potentially introduce new venues that will help market a ship and differentiate it from other vessels.

In addition, the Icon Class cruise ships are also on the horizon in the next few years.

Royal Caribbean has released the deployment schedule for initial 2022-2023 sailings.

The opening deployment for summer 2022 will include Alaska, Europe and 7-night Caribbean sailings.

The deployment schedule corresponds to when certain itineraries will go on sale to the public.

• Week of November 9, 2020 Alaska Summer 2022
• Week of November 9, 2020 Europe Summer 2022
• Week of November 16, 2020 7-Night Caribbean Summer 2022

Royal Caribbean says the remainder of the deployment will be "coming soon"

All itineraries are subject to change without notice.

What does a deployment schedule mean?

The deployment schedule is when Royal Caribbean intends to put certain sailings on sale to the public.

It is important to note the key words, "week of", which means it could actually go on sale on any day that particular week.

A common mistake is for guests to read the date, and assume that will be the first day the sailings on on sale.

Moreover, Royal Caribbean's booking system tends to lag, where the new sailings get entered into the booking system first, and the website second. This means in some cases cruises are bookable earlier if booked over the phone or with a travel agent, even if they do not appear on the website.

What should you do now to prepare?

If you are in the market for a cruise during one of these new deployments, you will want to keep an eye out for once cruises go on sale.

Royal Caribbean typically allows Crown and Anchor Society members a 24 hour head start on the general public, but since anyone can sign up for Crown and Anchor Society, there is no excuse for waiting.

Talk with your travel agent in the days leading up to the new deployments coming online so you can jump on specific bookings and book them.  

One of the best strategies for the lowest prices is to book a cruise as soon as it goes on sale.  Hard-to-find staterooms are also available during this period, so now is the time to lock in a studio room or a suite.

Planning on booking a cruise in 2022-2023? These stories will help:

• What is the best time to cruise to the Caribbean?
• 7 tips for a great Mediterranean cruise
• What is the best time to cruise to Alaska?
• What is the cheapest month to go on a cruise?