Both Royal Caribbean (RCL) – Get a free report and Carnival Cruise Line (CCL) – Get a free report have rebuilt their businesses since the dark days of the covid shutdown.
The two cruise lines have moved from closed to open with very limited passenger capacity to ships sailing with full load of customers.
It’s an impressive feat given what the two companies have had to contend with. Even when consumers were willing to get back on planes and visit theme parks, some people remained wary of being cooped up on a cruise ship for multiple days. That may not have been right given the steps Royal Caribbean and Carnival have taken to control covid, but it has been a factor for both companies.
The desire to get customers back on board has led both companies to offer some prices well below historical norms. The tactic worked, as both cruise lines sailed near (or beyond) 100% capacity. And those low prices have been offset by higher onboard prices for specialty restaurants, drink packages, tips, and pretty much everything in between.
Now, with covid-related rules fully lifted, older passengers returning and international travelers revisiting the US, both Royal Caribbean CEO Michael Bayley and Carnival CEO Josh Weinstein believe cruise prices need to rise .
Royal Caribbean, Carnival Consider cruising too good a value
Royal Caribbean and Carnival want to offer good value to consumers over land-based vacations, but there are limits to that effort. Weinstein commented on the matter during the cruise line’s third-quarter earnings call.
“The problem is, we’re worth too much. We shouldn’t have a significant discount for landing, which is exactly the case today, anywhere from 25% to 50% based on itineraries,” he said.
Bayley told TheStreet the problem is that it generally takes a year of sales to fill a ship, so the industry has had to scramble after its lengthy covid-related shutdown.
“But we all came from very low load factors. And we were trying to get to our model number 100 percent higher. And so, yeah, pricing was a challenge during that time,” he said.
He believes higher prices will return.
“I’m more optimistic about pricing now than I was before. I think we’ve met, our load factors are back, our bookings are solid, and our pricing is recovering,” Bayley said.
How to get the best price on a cruise
With Royal Caribbean and Carnival predicting higher prices, people looking to cruise should act quickly to lock in the current (generally) lower prices. January and February are somewhat the off season for the cruise industry. Kids are back in school, it’s slightly colder in the Caribbean and overall demand is generally weaker.
Prices for short-term cruises, with the exception of the holiday season and the newest ships in both companies’ fleets, remain low by historical standards.
This isn’t nearly as true for cruises in 2023, but prices are still well below normal, so it generally makes sense to book now, then monitor the price because you can ask for an adjustment (usually given in onboard credit) until final payment is made. deadline.
If Bayley is right, the low prices, at least compared to land-based vacations, might not last long. He believes the industry has taken its lumps but is on its way back to normal.
“It’s kind of like getting pounded in the mud, and everyone’s on their feet, and then we slide a little bit, but you kind of get back on your feet,” he said.
“And then, you know, you slipped a little bit. But now we’re in this position where we’re all… looking pretty clean and back on our feet and everything has started to normalize and stabilize and get better and better.”