It has sure been quite the week for the cruise line industry. On Monday, Carnival (CCL) announced that Cuba has agreed to let the company begin cruises to the island country starting May 1, the first time in more than 50 years that an ocean liner from the U.S. has been allowed there. President Obama said two years ago that the U.S. would begin rebuilding diplomatic relations with Cuba, which collapsed during the Cold War. The U.S. embassy there reopened in 2015.
"There are a lot of reasons it's taking longer to get the approval, some of which are way beyond the cruise industry," said Royal Caribbean International president and COO Adam Goldstein. Chief among the reasons is getting Cuban officials to trust Americans after years of being kept at bay.
Goldstein said, "The consideration on how to engage with a U.S. economy that is trying to be more approachable and active with the Cuban economy presents the Cuban leadership with tremendous questions that they are trying to work through."
Even once Cuba opens up to the likes of Royal Caribbean and Norwegian Cruise Line, investors shouldn't expect a meaningful lift to profits.
"There is literally not enough capacity in Cuba to host cruise ships to make a meaningful economic difference in the performance of the public cruise companies," said Goldstein, who pointed out that right now there is only one pier in Havana Harbor that could host cruise ships.