What happened

Royal Caribbean (NYSE:RCL) shareholders trailed the market by a wide margin last year. Their stock dropped 44% in 2020 compared to the 16% increase logged by the S&P 500, according to data provided by S&P Global Market Intelligence.

Shares had at one point fallen by over 80%, though, and Royal Caribbean also ended the year with more modest declines than its cruise ship peers, Carnival and Norwegian Cruise Line Holdings.

IMAGE SOURCE: GETTY IMAGES.

So what

Royal Caribbean, like its rivals, operated under uniquely difficult conditions thorough most of 2020. A global halt of sailings began early in the COVID-19 pandemic and ensured revenue declines of near 100% in some periods. Sales through the first three quarters of 2020 were $2.2 billion, down from $8.4 billion a year earlier.

That slump, combined with massive fixed costs related to maintaining a global fleet of cruise ships, forced Royal Caribbean to take on lots of debt. And, with the business completely dependent on the ending of the COVID-19 virus threat, the stock swung wildly with changing investor sentiment about the pandemic.

Now what

Those major clouds were still present as Royal Caribbean entered 2021. It's unclear when the cruise ship giants will be free to book packed voyages again. The pace of the rebound is a big question, too, as it could take several years for these companies to start setting annual revenue records again.