Why Your Next Cruise Vacation May Cost More Than You Expected
Gone are the days when booking a cruise was considerably cheaper than booking a flight — at least for the time being. According to reports, cruise operators are planning on raising prices even more, which means that your next voyage might result in your checking account taking a serious hit.
It was just in the summer of 2022 when cruises hit record-low prices, with some costing only $29 a day. At the time, cruise lines offered competitive rates to travelers to fill their respective ships, trying to restore the demand for cruising to pre-pandemic levels. But the period of affordable cruising was short-lived. By the end of the year, operators had begun introducing price hikes to meet the burgeoning demand. "Looking forward into 2023, barring unforeseen circumstances, we expect pricing to continue to accelerate vs. 2019's comparable levels," C. Patrick Scholes, Truist Securities' managing director of lodging and leisure equity research, wrote in a briefing.
True enough, during the wave season of 2023 (January to March), when prices are supposed to be at their lowest, some operators took it as an opportunity to raise rates. Royal Caribbean Group CEO Jason Liberty noted in an earnings call that its price hike didn't deter passengers from booking anyway. Koreen McNutt, senior vice president of sales for MSC Cruises USA, shared the same sentiment: "We've seen strong demand, which is causing prices for most sailings to increase" (via Travel Weekly). Unfortunately for voyage lovers, this trend is bound to continue.
Cruise prices have seen an increase of over 40%
You would have to do a bit more number crunching if you want to comfortably afford a cruise in the coming months. To illustrate, if you want to hop on a five-night voyage to the Caribbean over the holiday season, you would have to fork over $736, which is a 37% bump from 2022 prices and a 43% hike from 2019 prices, according to a report from Cruise Critic, as reviewed by CNBC.
It's not just ticket prices that are seeing an increase, but amenities and gratuities, too. Royal Caribbean raised the prices for some of its dishes at one of its restaurants by 40%, while Carnival raised gratuities for its staterooms to $16 per person per day. Celebrity Cruises followed suit and raised theirs to as much as $18.50 per person per day. What's more, Carnival drew ire from passengers when it announced that it was considering charging fuel surcharges to accommodate the rising costs of oil.
Businesses raising their prices isn't novel a concept; but in the cruising industry, the skyrocketing costs are driven by demand. The more people continue to book cruises without balking at these rates, the more cruise lines will be incentivized to impose more hikes. "They're raising prices naturally — fuel or no fuel, the demand is there for them to be raising prices," C. Patrick Scholes noted.
When will it all return to normal?
If you're still hoping that cruise prices will return to their summer 2022 rates, or at least be low enough to be easily justifiable, don't hold your breath. Carnival Corp CEO Josh Weinstein said in an earnings call that the company's ultimate goal is to reduce cruising's pricing disparity against land-based travel options. "(We are) working hard to close the outrageous and unwarranted 25% to 50% value gap to land-based offerings over time," he declared (via Reuters). "We're looking at growth with respect to price increases as we get to 2024, 2025, and 2026."
Additionally, many cruise lines are still trying to recover from the debt they incurred over the pandemic, so prices may not let up any time soon. "All these companies are highly aware of how much debt they need to pay down," C. Patrick Scholes told USA Today. "I would expect just that the longer you wait here to book, the more (the) price is going to go up."
But cruise operators are reportedly doing what they can to make their guests' spending worthwhile. Royal Caribbean Group CFO Naftali Holtz shared with the outlet that they are actively improving their facilities to enhance the guest experience. "We have just elevated and evolved the product ... by bringing new ships and new experiences to them, and you can see that resonating," he said.