- Cruise lines have been hit hard,
as you know bookings and earnings estimates
are dropping right along with the stocks.
- In California, officials are reporting 21 cases of coronavirus
aboard the Grand Princess cruise line.
- Yeah, this obviously, Jennifer, is not the cruise,
the vacation that the signed up for.
- It's no surprise that the cruise industry
has been one of the hardest hit through the coronavirus pandemic.
Not only have cruises lost a lot of money due to canceled trips,
they've also lost quite a bit of consumer trust,
leading to a lot of uncertainty over the future of the industry.
In an effort to retain some cash
as well as have a second chance at winning back that consumer trust,
many cruise lines are offering generous incentives
for those customers that choose to get a future cruise credit
instead of a full cash refund.
If your cruise was canceled due to the coronavirus outbreak,
you likely faced the choice between accepting this future credit
or requesting a full refund.
My name is Megan, and in today's video, I'll be breaking down these two options
and hopefully helping you in making the decision.
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There are some pretty enticing offers being thrown around
with cruise lines trying to preserve cash as their revenues plummet.
If you don't ask for an immediate refund,
you may be getting a significant FCC, or future cruise credit,
worth much more than what you originally paid for your canceled trip.
Most lines are offering credits that range between 125% to 200%
of what you paid for your cruise.
That could be thousands of dollars towards future cruise travel
allowing you to upgrade your vacation or even book multiple shorter trips.
An FCC, or future cruise credit,
is essentially a gift card that can be used for any future travel
with the same cruise line that you originally booked with.
The credit you receive will be for the base fare only,
so you'll still receive a cash refund for the taxes, fees, upgrades,
or any additional purchases like on-shore excursions.
Many cruise lines are also throwing in additional incentives
like 20% off the new booking rate, on-board extras like room upgrades,
drink packages, and even hundreds in on-board credit.
In most cases, having a credit issued is going to be the default option,
so receiving it is as simple as doing nothing
and then checking your inbox withing a few weeks
for the credit that will be emailed to you.
For frequent cruisers, as in those that already know they love cruising,
it can be pretty tempting to have an offer like this,
where you could be receiving much more in future credit
than what you originally paid for for your trip.
It's also fun to have something locked-in that you can plan for
and look forward to when travel does open up again.
Finally, if you're loyal to one specific cruise line,
opting to take this credit as opposed to asking for a refund
is a way to support them in avoiding bankruptcy.
So it may be a win-win for you and for the cruise line
if you are someone who knows you will be using this credit.
Despite all of these incentives,
many cruisers are opting for a full refund instead.
Next I'll be giving you the reasons why I too, personally,
would opt for a full refund and resist the temptation of one of these credits.
The first reason why I would opt for a full refund
is because the credit can only be used towards the base fare of your next trip.
That means that the FCC will likely not cover future charges
such as port taxes and fees, initial deposits, pre-paid gratuities,
on-shore excursions, on-board spending,
and yes, as I mentioned before, you are going to be refunded for this now,
from the trip that you didn't take,
but we don't know how these fees are going to be affected
and how they'll change when cruising resumes.
There's just so much uncertainty.
Port fees and taxes could end up skyrocketing
as new regulations and restrictions are put in place,
or the opposite could happen and fees and taxes could plummet;
we just don't know.
Regardless of if these extra fees end up increasing,
staying the same, or decreasing, one thing that we do know for sure
is that you will be needing to pay more money out of pocket
when you go to book this next cruise.
The next reason I would take a full refund
is because you may be getting a significant amount in FCC
but you may not actually be able to use it all before it expires.
It's looking like when cruising resumes
there's going to be some pretty epic deals out there,
meaning that cruises are going to be cheaper
than they ever have been in the past
and likely cheaper than the trip that you originally booked.
Predictions also show that once cruising opens up
trips are going to be shorter in length and domestic,
also driving down the prices.
It's likely that your future cruise credit
is going to exceed the cost of the future booking,
which means that you'll have a little bit left over.
Then the balance will be reissued as another voucher,
but it's likely going to have the same expiration date.
Any unused portion of the credit will be forfeited after that expiration date.
The unused portion will likely fall short
of the entire cost of booking a second cruise,
meaning you'll need to pay the remainder out of pocket
or just opt to forfeit the voucher altogether.
The next thing to consider would be the terms and conditions.
Just like the amount that you get in an FCC is going to vary by cruise line,
the terms and conditions on how you can use this credit is also going to vary.
Most cruise lines are offering credit that can be redeemed
for trips up until the end of 2021
while some cruise lines are offering trips that can be redeemed
up until the end of 2022.
Some give you time to think about when you want to make your new booking
while others require you to have the future booking locked in
by the end of April.
Terms and condition wording can always be a little bit funny,
so sometimes that expiration date may mean you need to cruise by that date
or it may just mean you need to have a cruise booked by that date.
I definitely recommend that if you have any questions
regarding the terms and conditions of your particular refund,
to get in touch with the cruise line directly and clarify.
You'll also probably notice that the fine print indicates
that the credit is non-transferable.
For many, the possible age and health restrictions
that might be required by cruise lines
are creating uncertainty about the ability to actually book a future cruise.
For example, those with chronic illnesses or seniors over the age of 70
are being required to show a certificate
proving that they are medically fit to travel.
There is a lot of uncertainty around whether or not
these new restrictions are going to ease up when cruising does return
as well as what "medically fit to travel" means
in regards to booking a cruise.
In uncertain times - which I think we can all agree we are in right now -
I would say it's definitely better to have cash on hand
than to have cash tied up with a particular cruise line.
We don't yet know how the cruise industry as a whole is going to be affected,
how the particular cruise line you booked with is going to be affected,
or how you, personally, may be affected in the future.
Could you be losing a significant amount of invested money?
Will your income return on schedule as planned?
Will your health be in the same condition when you are down the road?
There is so much that we still don't know about how this coronavirus pandemic
is going to affect economies around the world,
how it's going to affect different industries,
and how it may end up affecting us personally.
We can definitely make predictions around what we think is going to happen
but there are no guarantees.
Now may also be the only time
that you even have the option to receive a cash refund.
With most payments, not just with the cruise industry,
you're usually refunded by your original method of payment;
so, if you paid with a credit card,
you can often get cash back on that credit card.
However, this future cruise that you end up booking
is going to be booked with your future cruise credit, your FCC,
which means that, if that trip gets canceled
and you have to have it refunded,
it's likely going to be given back to you
in the form of a new voucher with the expiry date extended as well.
But still, you probably won't have the option
to receive that amount in cash at that point;
your only option will be a voucher.
And while it's very unlikely for major cruise lines,
it's also important to consider the possibility of bankruptcy,
rendering your credit worthless.
It's probably not something to worry about if you booked with a larger cruise line,
but still worth mentioning.
Choosing to accept a credit over a cash refund
is also going to limit your flexibility on future travel.
I am willing to bet that when all of this blows over
there are going to be many, many, many different travel deals out there,
whether it's with cruise lines, all-inclusives, tour companies, airlines,
you get it.
When all of these deals come out, you're going to want to have
as much flexibility in what you can do and when you do it as possible,
that means having cash, not credits.
If you accept an FCC, you're locking yourself into a trip
within the next year or two with one particular cruise line.
If you take the cash, you'll have access to a whole world of opportunity.
Finally, even when cruising does resume,
there is still a lot of uncertainty about what these trips are going to look like,
especially in the short term,
which is when you would be using your credit anyway.
Cruise ships may start running again as early as June,
but it could be a very different experience in regards to who can book,
health screenings, trip lengths and destinations
as well as the overall on-board experience.
I'll cover more on my predictions to how cruising as we know it
may be forever changed in another video.
For now, I'd love to know down in the comments
what credit your cruise line offered you
and if you decided to or if you're planning to take it.
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Thanks for watching. Bye.