Coronavirus hits cruise lines: 'Every lost voyage' could cost $4 million in revenue

The exponential spread of the coronavirus is upending the travel industry with cruise operators being hit particularly hard.

“By our math, every lost voyage is $3 to $4 million of revenue, and about $0.02 of earnings,” James Hardiman, the managing director of equity research for Wedbush Securities, told Yahoo Finance’s On The Move on Tuesday.

Royal Caribbean International (RCL), the world’s largest cruise operator, canceled cruises from Shanghai while Carnival (CCL) canceled four of its scheduled trips in the region.  The cancellations will have a negative impact on earnings, according to Hardiman.

“I think with every passing day it is becoming a — it's creating a materially negative impact on the earnings at some of these cruise companies,” he said. 

A Royal Caribbean cruise is seen at a port in Dalian, Liaoning province, China, July 20, 2017. Picture taken July 20, 2017. REUTERS/Stringer

Hardiman, who focuses on travel companies, said hope rests with stabilization of the virus. But, he adds, “In the absence of that, I think they're going to have to be extra conservative in terms of how they guide 2020.” 

Nobody in the travel business is spared as people around the world curtail their travel, Hardiman noted. United Airlines (UAL), British Airways, and Finnair have suspended some flights to China, and other airlines are offering refunds for those who have booked travel.

How does coronavirus compare with SARS?

It’s difficult to assess the extent of harm caused by coronavirus, but analysts often cite the severe acute respiratory syndrome (SARS) outbreak of 2002-2003 as they try to make sense of how coronavirus will affect the markets.

SARS cost the global economy more than $40 billion, but Hardiman cautions that it’s not an accurate comparison, in part because companies today have far greater exposure to China.

“The only challenge with SARS from a stock perspective is the idea that back then, you know, early 2000s, most of these companies, whether it's the cruise names or the online travel names that we follow, neither of them had anywhere near the exposure that they have today with respect to China and broader Asia,” he said.

However, it may still be too early to determine the outcome of the virus. “I think that the impact is going to be widespread,” Hardiman said. “You know, a year from now, we're going to look back upon this and at some point there's going to be a buying opportunity. But as we sit here in the midst of it, it's hard to say when and where that is exactly.”

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China coronavirus outbreak spreads across regions
A traveler wears a face mask as he sits in a waiting room at the Beijing West Railway Station in Beijing, Tuesday, Jan. 21, 2020. A fourth person has died in an outbreak of a new coronavirus in China, authorities said Tuesday, as more places stepped up medical screening of travelers from the country as it enters its busiest travel period. (AP Photo/Mark Schiefelbein)
A girl wearing a face mask sits among suitcases at Hong Kong International Airport in Hong Kong, Tuesday, Jan. 21, 2020. Face masks sold out and temperature checks at airports and train stations became the new norm as China strove Tuesday to control the outbreak of a new coronavirus that has reached four other countries and territories and threatens to spread further during the Lunar New Year travel rush. (AP Photo/Ng Han Guan)
Travelers wearing face masks gather at Hong Kong International Airport in Hong Kong, Tuesday, Jan. 21, 2020. Face masks sold out and temperature checks at airports and train stations became the new norm as China strove Tuesday to control the outbreak of a new coronavirus that has reached four other countries and territories and threatens to spread further during the Lunar New Year travel rush. (AP Photo/Ng Han Guan)
Staff in biohazard suits hold a metal stretcher by the in-patient department of Wuhan Medical Treatment Center, where some infected with a novel coronavirus are being treated, in Wuhan, China, Tuesday, Jan. 21, 2020. Heightened precautions were being taken in China and elsewhere Tuesday as governments strove to control the outbreak of the coronavirus, which threatens to grow during the Lunar New Year travel rush. (AP Photo/Dake Kang)
Peatones con máscaras de protección en una zona comercial de Tokio, el jueves 16 de enero de 2020. (AP Foto/Eugene Hoshiko)
Health workers wear protective gear Wednesday, Aug. 27, 2003, in Ward E3 of the Alice Ho Miu Ling Nethersole Hospital in Hong Kong's New Territories, where 24 patients were quarantined after seven of its health workers developed flu-like symptoms, although none have tested positive for SARS. According to a hospital spokesperson five nurses and two health care assistants working in the hospital's Ward E3 developed symptoms such as coughs, sore throats and fevers on Friday. Hong Kong's health chief, Dr.Yeoh Eng-kiong, said that preliminary test results showed patients' samples did not contain coronavirus that causes SARS and researchers are trying to identify the cause of the illness. (AP Photo/Anat Givon)
WUHAN, CHINA - JANUARY 21 2020: Workers monitor screens for fever signs on passengers detected by infrared detectors at Hankou Railway Station in Wuhan in central China's Hubei province Tuesday, Jan. 21, 2020. A new type of coronavirus has infected hundreds of people in the city.- PHOTOGRAPH BY Feature China / Barcroft Media (Photo credit should read Feature China / Barcroft Media via Getty Images)
WUHAN, CHINA - JANUARY 21 2020: Passengers wearing protective masks walk inside Hankou Railway Station in Wuhan in central China's Hubei province Tuesday, Jan. 21, 2020. A new type of coronavirus has infected hundreds of people in the city.- PHOTOGRAPH BY Feature China / Barcroft Media (Photo credit should read Feature China / Barcroft Media via Getty Images)
WUHAN, CHINA - JANUARY 21 2020: Passengers wearing protective masks walk outside Hankou Railway Station in Wuhan in central China's Hubei province Tuesday, Jan. 21, 2020. A new type of coronavirus has infected hundreds of people in the city.- PHOTOGRAPH BY Feature China / Barcroft Media (Photo credit should read Feature China / Barcroft Media via Getty Images)
WUHAN, CHINA - JANUARY 21 2020: Passengers wearing protective masks walk inside Hankou Railway Station in Wuhan in central China's Hubei province Tuesday, Jan. 21, 2020. A new type of coronavirus has infected hundreds of people in the city.- PHOTOGRAPH BY Feature China / Barcroft Media (Photo credit should read Feature China / Barcroft Media via Getty Images)
BEIJING, CHINA - JANUARY 21: Chinese travellers wear protective masks as they arrive to board trains at Beijing Railway station before the annual Spring Festival on January 21, 2020 in Beijing, China. The number of cases of a deadly new coronavirus rose to nearly 300 in mainland China Tuesday as health officials stepped up efforts to contain the spread of the pneumonia-like disease which medicals experts confirmed can be passed from human to human. The number of those who have died from the virus in China climbed to six on Tuesday and cases have been reported in other parts of Asia including in Thailand, Japan, Taiwan and South Korea. (Photo by Kevin Frayer/Getty Images)
YICHANG, CHINA - JANUARY 21 2020: Travelers wearing protective masks walk outside a railway station in Yichang in central China's Hubei province Tuesday, Jan. 21, 2020. China has stepped up the measures to control the spread of the new coronavirus that has infected hundreds of people in China.- PHOTOGRAPH BY Feature China / Barcroft Media (Photo credit should read Feature China / Barcroft Media via Getty Images)
BEIJING, CHINA - JANUARY 21: A Chinese girl wears a protective mask as her mother pushes her on a suitcase to board a train at Beijing Railway station before the annual Spring Festival on January 21, 2020 in Beijing, China. The number of cases of a deadly new coronavirus rose to nearly 300 in mainland China Tuesday as health officials stepped up efforts to contain the spread of the pneumonia-like disease which medicals experts confirmed can be passed from human to human. The number of those who have died from the virus in China climbed to six on Tuesday and cases have been reported in other parts of Asia including in Thailand, Japan, Taiwan and South Korea. (Photo by Kevin Frayer/Getty Images)
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Yvette Killian is a producer for Yahoo Finance’s On The Move.

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