Carnival’s Breeze cruise ship leaves the Port of Miami.
Christina Mendenhall | Bloomberg | Getty Images
As vacationers emerge right into a post-pandemic travel world, cruises have made a spectacular comeback — and ticket prices are surging.
Cruise operators akin to Carnival and Royal Caribbean Cruises are setting some ticket prices higher than pre-pandemic levels and are indicating they might raise them further, whilst they post pre-Covid profits.
In line with data from Cruise Critic, a cruise review site owned by Tripadvisor, the common price of a five-night cruise within the Caribbean for December of this yr is $736, roughly 37% higher than the common price a yr earlier. In comparison with 2019, before the Covid-19 pandemic decimated the cruising industry, December ticket prices are up 43%.
Carnival CEO Josh Weinstein said during a call with Wall Street analysts at the top of September that the corporate’s third-quarter net revenue per passenger per day reached a record high. The corporate’s booking volumes likewise hit an all-time high, pushing cruise occupancy and revenue beyond 2019 levels, he said.
Especially as costs of labor, food and fuel proceed to rise, Carnival executives noted on the decision, the corporate, which owns multiple major cruise brands, is “well-positioned to drive 2024 pricing higher.”
A Carnival spokesperson declined to comment on the corporate’s specific future pricing actions but said in an announcement to CNBC that the corporate has been in a position to deliver a price of 25% to 50% over “comparable land-based vacation alternatives.”
Carnival sees “ample headroom” to shut that gap, the spokesperson said.
Royal Caribbean CEO Jason Liberty echoed the sentiment, saying on that company’s post-earnings call in July that his company can also be considering increasing prices to fulfill the surge in demand.
Are high prices here to remain?
Aaron Saunders, a senior editor at Cruise Critic, said part of what is driving the value surge is the comparison to high airfares.
As inflation surges, airfare tickets have reached sky-high prices, with international airfare up 26% from 2019, in response to an August estimate by fare-tracking company Hopper.
With travelers facing higher costs across the broader sector, and considering cruises typically include additional amenities akin to meals and entertainment, consumers are more likely to gravitate in that direction, Saunders said.
That demand is being driven by each seasoned cruisers and first timers, he said, a dynamic the industry hasn’t historically seen much of. Even so, Saunders said he believes the high prices may be here to remain.
“[The higher prices] are likely subject to fluctuation — but what we’re seeing, generally speaking, is that the upper prices are here today, but those higher prices will ping pong around throughout different sectors,” Saunders said, noting that the Caribbean market is currently one of the crucial popular sectors. “Cruise lines aren’t being required to drop prices the best way they used to … they’re just simply not having to lower fares or to actually offer too many incentives because persons are just booking.”
Truist Securities analyst Patrick Scholes said while rising oil prices are necessary to observe for context for the cruise industry, there’s not enough of a correlation between that increase and the rise in cruise prices to clarify the propped-up tickets.
“They’re raising prices naturally — fuel or no fuel, the demand is there for them to be raising prices,” Scholes said.
While in a pre-pandemic world, last-minute bookings meant cheaper deals to secure a cabin, Scholes said, the costs are actually so high that they’re going to only increase more as the holiday date nears.
For now, the record-high ticket prices show no signs of slowing, in response to Ashley Kosciolek, senior cruise author at The Points Guy. Kosciolek noted that the industry can also be seeing higher prices for beverage packages and add-on amenities that was included in fares.
“Let’s also not forget that the industry’s three largest parent corporations — Carnival, Royal Caribbean and Norwegian Cruise Line Holdings — are still paying off billions in debt incurred through the pandemic,” she said.
