The demand for a spot aboard a cruise ship is expected to outweigh supply

cruiseship coming

Demand for cruise travel is poised to rise significantly in the next year due to vaccine availability and people not having travelled during the pandemic, analysts at investment bank UBS predict.

UBS told investors in a note on Thursday that it was upgrading Carnival Cruise Lines stock to a "buy" rating, a reassuring sign for an industry that has been devastated by the coronavirus pandemic. Royal Cruise Lines was already at a "buy" rating from the bank, indicating confidence in the brand. And Norwegian Cruise Lines will remain at a neutral.

The report cites "pent-up demand for leisure travel generally" as a reason for Carnival's upgrade. While the firm anticipates 7% of capacity being used in the first quarter, by the third quarter it expects to see growth, and by the second quarter of 2022 capacity could reach 75%.

UBS also expects that demand for cruise travel will outweigh the available supply of cruise tickets, in part because of limited capacity for social distancing and also because of pent-up demand after over a year of very little cruise line activity.

UBS writes in the report that "we believe it will take more than 12 months after a restart for all ships to be in service and occupied," considering differing country and state regulations on leisure travel. UBS also writes that "it is not clear what vaccine requirements may be part of a restart."

According to reporting from Insider, some cruise lines, including Royal Caribbean, Norwegian, and Virgin Voyages, require vaccines. But not all of the cruise lines have announced their policies on vaccinations for crew and passengers.

Cruise ships took a major hit after the Diamond Princess coronavirus outbreak in February of 2020. But with vaccines becoming more available in many of the countries that comprise cruise lines' major markets, the outlook is trending upwards.

businessinsider.com