The past five years have been somewhat of a roller coaster ride for the cruise industry. Demand was strong in 2019, as the U.S. economy was doing well, and several innovative new ships had recently launched.
Then, the pandemic caused the cruise industry to grind to a halt. Cruise lines suspended operations in March 2020, and the entire industry was under a No Sail Order from the CDC until the end of October of that year. However, ships didn’t actually resume service in the United States until July 2021.
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However, when ships finally started sailing again, they did so with numerous restrictions, including limited capacity, fewer onboard services, and with vaccine requirements and other COVID-19 protocols in place. The first “normal” cruises didn’t completely return until mid-2022, when the CDC formally ended its COVID-19 program for cruise ships.
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Image source: Royal Caribbean
Cruise demand keeps climbing
To say that demand came roaring back would be a bit of an understatement. My first cruise in the post-pandemic era was a December 2022 sailing on the Carnival Magic, which was completely filled to capacity with travelers who clearly had pent-up demand to get out and experience the world. Combine this with the highly anticipated launch of several new ships, and demand for cruise vacations has never been higher than it is right now.
The proof is in the numbers. Royal Caribbean’s revenue over the past 12 months was 42% higher than it was in the same period in 2019. Sure, there have been a few new ships added to the fleet since then, but its capacity isn’t that much higher. Instead, the reason for the revenue spike is that high cruise demand has made the average price of a cruise vacation far more expensive than it used to be.
It isn’t just soaring demand that is driving prices higher. Some of it is a result of the elevated inflation of the past few years. Based on Consumer Price Index data, the average cost of goods and services in the United States is about 20% higher than it was in 2019. This means that cruise lines have to pay more for food, beverage, and other items – and the cost increases are being passed on to the consumer.
The increase in cruise fares depends on who you ask, but nearly every major analysis has found that prices are significantly higher. Data from Tripadvisor’s Cruise Critic found that prices in last year’s holiday season were 43% higher than they were in 2019 for a comparable Caribbean cruise.
It isn’t just cruise fares that have become more expensive. Gratuities, beverage packages, and the cost of specialty dining experiences have all trended higher throughout the cruise industry as well. For example, Royal Caribbean’s per-day gratuity charge has increased by 50% since 2015, with two increases in the past two years alone.
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Royal Caribbean prices are up
Now, even with some reliable data, it’s tough to say exactly how much cruise prices have increased. For one thing, cruise pricing can vary dramatically based on how far out you book, the type of room you choose, the time of year, and several other factors.
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It’s also worth noting that much of the recent demand is being driven by a wave of new and exciting ships Royal Caribbean has introduced in recent years. The massive Icon of the Seas didn’t exist in a pre-pandemic world, nor did the two latest Oasis-class ships, Wonder of the Seas and Utopia of the Seas.
These ships are generally commanding the highest prices in Royal Caribbean’s fleet, so it’s fair to say that some of the overall increase is being driven by the desire to try the latest and greatest ships.
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Having said all of that, cruise prices are clearly higher in general than they were prior to the COVID-19 pandemic, and by a significant margin.
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