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Cruise Operators Raising Prices as Travel Demand Is Surging

Summary:
In 2024, the prices are expected to further go up. According to a Wall Street analyst Brandt Montour, the rise in ticket prices for 2024 sailings will be set 20% to 30% higher than 2019 levels. The 2023 cruise industry is booming, it has significantly surpassed pre-pandemic 2019 levels and broken sales records in a rapid comeback. Revenue in the cruise market is expected to reach as much as .14 billion this year. Amid a strong and increasing travel demand, cruise operators are raising ticket prices. The top cruise operators, Carnival Corporation & PLC and Royal Caribbean Cruise Ltd (NYSE: RCL), are already setting some ticket prices at a higher level. In particular, the average price of a five-night cruise in the Royal Caribbean for December 2023 is 6, which is about 37% higher

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In 2024, the prices are expected to further go up. According to a Wall Street analyst Brandt Montour, the rise in ticket prices for 2024 sailings will be set 20% to 30% higher than 2019 levels.

The 2023 cruise industry is booming, it has significantly surpassed pre-pandemic 2019 levels and broken sales records in a rapid comeback. Revenue in the cruise market is expected to reach as much as $25.14 billion this year. Amid a strong and increasing travel demand, cruise operators are raising ticket prices.

The top cruise operators, Carnival Corporation & PLC and Royal Caribbean Cruise Ltd (NYSE: RCL), are already setting some ticket prices at a higher level. In particular, the average price of a five-night cruise in the Royal Caribbean for December 2023 is $736, which is about 37% higher than the average price a year earlier and 43% above the pre-pandemic level.

The final price of a cruise depends on many factors: itinerary, number of nights, cabin type, amenities, and cruise line. It also depends on flights and transportation to and from the cruise ship, as well as includes various packages of drinks and specialty coffees. For example, Royal Caribbean charges about $50 to $100 a day for its Deluxe Beverage Package, which includes an unlimited drinks package. Royal Caribbean customers pay more for their drink packages and many order it, cancel it, get refunded, and buy it again if the price goes down.

Meanwhile, Carnival Corporation uses a fixed price for its Cheers beverage package. Earlier, passengers paid a set daily fee of $59.95 pre-cruise or $64.95 onboard for access to unlimited nonalcoholic beverages and a maximum of 15 alcoholic beverages per day. On October 3, the company announced a price change. Now, the Cheers beverage package is up 17%, or $69.95 a day. Passengers who opt to book onboard will see the same $10 a day increase, from $64.95 a day to $74.95 a day, which is 15% higher.

The price policy in cruise companies has been updated due to a number of reasons. Firstly, there is a widening gap between the prices of cruises and land-based vacations. For comparison, cruise vacations before the pandemic were on average 15% to 20% cheaper than land-based vacations. Now, this gap has widened to 50%.

Carnival Corporation CEO Josh Weinstein stated:

“We are working hard to close the outrageous and unwarranted 25% to 50% value gap to land-based offerings over time.”

Secondly, labor costs, marketing, and port and freight expenses are on the rise, which also leads to cruise operators setting prices higher. Besides, the demand for such tours is not going down, which fuels the price growth further.

Aaron Saunders, a senior editor at Cruise Critic, commented:

“[The higher prices] are likely subject to fluctuation – but what we’re seeing, generally speaking, is that the higher prices are here today, but those higher prices will ping pong around throughout different sectors. Cruise lines aren’t being required to drop prices the way they used to … they’re just simply not having to lower fares or to really offer too many incentives because people are just booking.”

In 2024, the prices are expected to further go up. According to a Wall Street analyst Brandt Montour, the rise in ticket prices for 2024 sailings will be 20% to 30% higher than 2019 levels.

Business News, Market News, News, Stocks
Darya Rudz

Darya is a crypto enthusiast who strongly believes in the future of blockchain. Being a hospitality professional, she is interested in finding the ways blockchain can change different industries and bring our life to a different level.

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