Cruise stocks, including Norwegian (NCLH-4.47%), Royal Caribbean (RCL-6.46%), and Carnival (CCL-3.95%), are taking on water. Royal Caribbean shares tumbled 6% on Tuesday.
Cruise lines have been hit by multiple waves of bad news recently. First, in February, Commerce Secretary Howard Lutnick vowed to pursue foreign-flagged cruise lines and require them to start paying more taxes in the U.S.
“You ever see a cruise ship with an American flag on the back?” Lutnick said in an appearance on Fox News (FOXA-0.53%) (FOX-0.35%).
“None of them pay taxes … every supertanker. None pay taxes … all foreign alcohol. No taxes. This is going to end under Donald Trump,” said Lutnick.
Another issue cruise lines have faced is last month reports surfaced that cruise giant Royal Caribbean almost failed a Center for Disease Control inspection, which highlights the health concerns that can quickly turn paradise into a petri dish.
Among the many violations cited in the report were improperly stored food, crew member hygiene issues, and failure to appropriately handle several vomiting and diarrhea incidents in the ship’s Adventure Ocean kids’ club. Royal Caribbean has vowed to correct the issues.
Then, travel industry stocks, in general, have seen shares slipping as consumer confidence has caused consumers to retrench amid a barrage of bad news.
Still, Mariano Torres, chair and professor of economics at Adelphi University, thinks the bigger issue buffeting the cruise industry now is macroeconomic. He is not surprised by the sector’s stock tumbles.
“It is without doubt, a symptom of recent fear and instability caused by the dramatic political and economic changes of the past two months, most recently the president’s statement that an economic recession might not be a bad thing,” Torres says, adding that the economic climate is chilling consumer discretionary spending.
“The cruise line stock reaction is more to a perceived systemic risk than to anything happening within the industry itself,” Torres says.
The post Royal Caribbean and other cruise stocks are sinking right now appeared first on Quartz.
