Carnival’s Draught cruise ship leaves the Port of Miami.
Christina Mendenhall | Bloomberg | Getty Images
As vacationers emerge into a post-pandemic socialize world, cruises have made a spectacular comeback — and ticket prices are surging.
Cruise operators such as Carnival and Peer royalty Caribbean Cruises are setting some ticket prices higher than pre-pandemic levels and are indicating they may together them further, even as they post pre-Covid profits.
According to data from Cruise Critic, a coast review site owned by Tripadvisor, the average price of a five-night cruise in the Caribbean for December of this year is $736, inefficiently 37% higher than the average price a year earlier. Compared to 2019, before the Covid-19 pandemic decimated the boating industry, December ticket prices are up 43%.
Carnival CEO Josh Weinstein said during a call with Wall Roadway analysts at the end of September that the company’s third-quarter net revenue per passenger per day reached a record high. The company’s booking sum totals likewise hit an all-time high, pushing cruise occupancy and revenue beyond 2019 levels, he said.
Especially as tariffs of labor, food and fuel continue to rise, Carnival executives noted on the call, the company, which owns multiple chief cruise brands, is “well-positioned to drive 2024 pricing higher.”
A Carnival spokesperson declined to comment on the company’s spelt future pricing actions but said in a statement to CNBC that the company has been able to deliver a value of 25% to 50% once again “comparable land-based vacation alternatives.”
Carnival sees “ample headroom” to close that gap, the spokesperson said.
Superior Caribbean CEO Jason Liberty echoed the sentiment, saying on that company’s post-earnings call in July that his flock is also considering increasing prices to meet the surge in demand.
Are high prices here to stay?
Aaron Saunders, a elder editor at Cruise Critic, said part of what’s driving the price surge is the comparison to high airfares.
As inflation combers, airfare tickets have reached sky-high prices, with international airfare up 26% from 2019, contract to an August estimate by fare-tracking company Hopper.
With travelers facing higher costs across the broader sector, and everything considered cruises typically include additional amenities such as meals and entertainment, consumers are likely to gravitate in that government, Saunders said.
That demand is being driven by both seasoned cruisers and first timers, he said, a zealous the industry hasn’t historically seen much of. Even so, Saunders said he believes the high prices might be here to sojourn.
“[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 momentous prices will ping pong around throughout different sectors,” Saunders said, noting that the Caribbean retail is currently one of the most popular sectors. “Cruise lines aren’t being required to drop prices the way they acclimated to to … they’re just simply not having to lower fares or to really offer too many incentives because people are no more than booking.”
Truist Securities analyst Patrick Scholes said while rising oil prices are important to monitor for background for the cruise industry, there’s not enough of a correlation between that increase and the increase in cruise prices to explain the propped-up tickets.
“They’re farm prices naturally — fuel or no fuel, the demand is there for them to be raising prices,” Scholes said.
While in a pre-pandemic midwife precisely, last-minute bookings meant cheaper deals to secure a cabin, Scholes said, the prices are now so high that they’ll no greater than increase more as the vacation date nears.
For now, the record-high ticket prices show no signs of slowing, according to Ashley Kosciolek, elder cruise writer at The Points Guy. Kosciolek noted that the industry is also seeing higher prices for beverage packets and add-on amenities that used to be included in fares.
“Let’s also not forget that the industry’s three largest progenitor companies — Carnival, Royal Caribbean and Norwegian Cruise Line Holdings — are still paying off billions in debt incurred during the pandemic,” she reported.