Cruise Prices Skyrocket as Operators Meet Unprecedented Travel Demand

As vacationers emerge into a post-pandemic travel world, cruises have experienced a remarkable resurgence, leading to a surge in ticket prices.

Cruise operators such as Carnival and Royal Caribbean Cruises have set ticket prices higher than pre-pandemic levels and are considering further increases, despite posting pre-Covid profits.

According to data from Cruise Critic, a cruise review site owned by Tripadvisor, the average price of a five-night Caribbean cruise in December this year is $736, approximately 37% higher than the average price a year earlier. Compared to 2019, before the Covid-19 pandemic devastated the cruising industry, December ticket prices have increased by 43%.

Carnival CEO Josh Weinstein announced during a call with Wall Street analysts in September that the company’s third-quarter net revenue per passenger per day reached a record high. The company’s booking volumes also reached an all-time high, surpassing 2019 levels in terms of cruise occupancy and revenue.

With rising costs of labor, food, and fuel, Carnival executives expressed confidence in their ability to increase pricing in 2024, given their ownership of multiple major cruise brands.

A Carnival spokesperson declined to comment on specific future pricing actions but stated that the company has consistently offered a value of 25% to 50% more than comparable land-based vacation alternatives. The spokesperson added that Carnival sees potential for further narrowing the pricing gap.

Royal Caribbean CEO Jason Liberty echoed similar sentiments, stating on the company’s post-earnings call in July that they are also considering price increases to meet the surge in demand.

Aaron Saunders, a senior editor at Cruise Critic, attributed the price surge to the comparison with high airfare costs.

As inflation rises, airfare tickets have reached sky-high prices, with international airfare up 26% from 2019 according to fare-tracking company Hopper’s August estimate.

Given the higher costs across the broader travel sector, and the added amenities typically included in cruises such as meals and entertainment, consumers are more likely to opt for cruises. Saunders noted that the demand is coming from both experienced cruisers and first timers, which is a unique phenomenon for the industry.

Speaking on the potential longevity of high prices, Saunders said, “[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.” He emphasized that the Caribbean market is currently the most popular sector, where cruise lines are not required to lower fares or offer significant incentives due to strong booking demand.

Truist Securities analyst Patrick Scholes stated that while rising oil prices are worth monitoring, there is not enough correlation between fuel costs and the increase in cruise prices to explain the substantial ticket prices. Scholes highlighted that cruise lines are raising prices due to strong demand, regardless of fuel prices.

In the pre-pandemic world, last-minute bookings often offered cheaper deals. However, Scholes noted that current prices have reached such highs that they are likely to increase further as the vacation date approaches.

According to Ashley Kosciolek, senior cruise writer at The Points Guy, there is no indication of record-high ticket prices slowing down. Kosciolek also pointed out that the industry is witnessing higher prices for beverage packages and add-on amenities that used to be included in fares.

“Let’s also not forget that the industry’s three largest parent companies — Carnival, Royal Caribbean, and Norwegian Cruise Line Holdings — are still paying off billions in debt incurred during the pandemic,” she said.