As people see higher inflation on land, even heading out to sea may not be far enough to avoid higher prices.
Several signs — including comments from cruise executives and already increased prices in some areas — point to the possibility that your next cruise could cost more money.
To be sure, cruising still looks to offer one of the best values when it comes to making the most from your vacation dollar. Even so, don’t be surprised if in the coming months you have to dig a little deeper into your wallet to take your trip.
Are Cruise Lines in a Position to Raise Prices?
It might seem odd to think that cruise lines would be in any position to raise prices. After all, after roughly 18 months of a pause in sailing followed by waves of Delta and Omicron, the comeback of sailing has been gradual and bumpy.
Even today not every ship is back sailing, and those that are often sail at less than full capacity. During a recent quarterly investor call, Carnival Corporation said its ships sailed at just 54% occupancy during the first quarter of 2022 due largely to the disruption of Omicron.
But there are signs that as cases have fallen passengers are quickly heading back to sea. Carnival Corporation also said that despite seeing its ships only about half full last quarter, they are already closer to 70% today, with dozens of sailings above 100% occupancy. They also said that they recently saw their busiest week for bookings since cruises returned to sailing.
Other cruise companies have also shared they’ve seen strong bookings and surging demand for trips as people see a strong urge to get back to traveling. That has companies very optimistic about their prospects.
“At this stage, and again, not because I think… I’m giving you what the numbers are showing, 2023 could be — assuming that no other major variants arrives on the scene — could be a fabulous year. [It] could be a record year,” Del Rio said.
In other words, the hurdles to raising prices might not be that high for cruises.
Potential Reasons for Price Increases
At the same time, cruise lines are seeing a number of factors that point either needing to raise prices to offset higher costs or point to an opportunity to generate more revenue.
Rising Fuel Prices: We’ve all seen the cost at the pump rise dramatically. Imagine having to fuel up a cruise ship. Higher energy prices lead to higher costs for the cruise lines. In fact, cruise ticket contracts often have fuel supplement charges that can be implemented when the price of oil is high. These charges can be upwards of $10 per person, per day and put in place when the price of oil reaches a trigger level (typically around $65-70 per barrel).
So far we have yet to see any cruise actually start charging the supplement, but it is an option should fuel prices stay elevated. Or, cruise lines can also simply raise fares on trips in order to recover the higher fuel cost.
Improving Balance Sheets: With more than a year without cruises sailing, how did cruise lines continue to operate? Collectively they took on billions of debt and issued lots of new shares that investors snapped up. That provided the money to see them through the crisis, but also means higher expenses going forward in order to pay off debt.
Cruise lines are making it a priority to improve their finances as the industry returns to normal. Royal Caribbean Group even said recently they wanted to return their balance sheet to pre-COVID levels. That company’s long-term debt went from $8.4 billion at the end of 2019 to $18.8 billion at the end of 2021, according to Yahoo Finance data.
Of course, one way to improve your financials is to raise prices, generating more revenue.
A Boom in Spending: One more reason to raise prices? It certainly sounds like passengers are willing to spend. Seemingly all the major cruise companies have reported sharply higher onboard spending since they’ve returned to sailing.
In the most recent quarter, Carnival Corporation saw a 7.5% increase in revenue per passenger cruise day compared with 2019, driven by “exceptionally strong” onboard revenue. Royal Caribbean saw higher onboard revenue help generate a 10% increase in revenue per passenger versus 2019.
In other words, passengers on cruise ships seem ready to spend.
What Cruise Lines Are Saying About Higher Prices
In fact, cruise lines have been vocal about raising prices and some changes have already occurred.
During the most recent quarterly update call for investors, Carnival Corporation Chief Financial Officer David Bernstein put things bluntly:
“People want to cruise. We have a great product. We’re still a good value compared to land-based alternatives, although we’re trying to make it a bit less of a value as we move forward and to raise price as [Carnival Corporation CEO] Arnold [Donald] indicated,” Bernstein said.
And Norwegian Cruise Line Holdings Ltd. CEO Frank Del Rio talked about raising prices on his company’s Caribbean cruises:
“We also are seeing that with cost pressures affecting all businesses, it’s also affecting the land resorts. They’re having to charge more. And so our cruise, as the industry’s presence in the Caribbean theater, we believe we’re more competitive than ever. And it’s allowing us at least to raise prices in the Caribbean,” Del Rio said.
Recently Norwegian Cruise Line also raised the price of their daily gratuity charge, bumping rates from $15.50 per day to $16.00. Rates on the highest-end cabins jumped from $18.50 to $20 per person, per day.
The cruise line also removed a lower-priced soda beverage package for kids, leaving only one higher-priced package for all ages.
While these are relatively minor increases, they do point to higher prices.
Prices May Rise, But You Can Fight Back
With prices rising seemingly everywhere, it shouldn’t be a surprise even your next cruise might see higher prices as well. Between higher costs for things like fuel to strong demand for travel, even cruise line executives themselves admit that prices are likely headed up.
So does that mean it will put your next cruise out of reach? That’s unlikely — especially when cruise lines carefully consider their prices to a comparable land-based vacation. Even so, don’t be surprised if the price you pay for a trip or items on the ship continues to creep higher.
The good news is that cruising does offer plenty of ways to save money. From when you sail to buying packages at a discount before you cruise, you have some tools to fight back against higher prices. See some of our most popular money-saving advice below:
- 30+ Tips to Save Money On a Cruise (Both Buying & Onboard)
- How to Find Cheap Cruises: The Complete Guide
- 8 Things Definitely Worth It On a Cruise and 3 Places to Save Your Money
