increased demand and rising fares
As demand has surged, fares have also escalated. While there are deals available on cruises, prices at Royal Caribbean, Carnival, and Norwegian have consistently surpassed pre-pandemic figures.
Cruise lines maintain pricing leverage since they provide substantial value compared to land-based vacations.
Families frequently find themselves choosing between a trip to Disney World or Universal Studios and going on a cruise. Often, the tickets alone for these theme parks can cost more than the basic fare for a cruise for the entire family. Cruises, additionally, encompass an almost limitless selection of food, entertainment, basic beverages, and more, whereas all those elements, plus accommodation, incur extra charges during a theme-park visit.
In theory, you could book a basic-fare cruise with Royal Caribbean, Carnival, or Norwegian without spending any additional money. There’s no requirement to purchase specialty dining, shore excursions, or pay more for alcohol, soda, fresh juice, or specialty coffee.
While spending extra is not necessary — recent data from all three major cruise lines indicates that people are willing to spend more on-board.
elements influencing onboard spending
Onboard spending does not exclusively refer to money spent aboard the ship. It includes purchases made prior to a cruise, typically with a 50/50 mix.
Overall, the figures have been climbing, as highlighted by earnings-report data from Cruise Industry News.
- Norwegian Cruise Line Holdings noted gross onboard spending per passenger per day estimated at $6.85 and net $5.51 (after associated costs) for the second quarter. This marks a significant increase from $5.70 and $3.35 respectively in Q2 2019, the last standard year before the cruise industry bounced back from the pandemic.
- Royal Caribbean reported gross onboard spending per passenger per day estimated at $6.44 and net $5.04 for Q2 2024, compared to $4.67 and $2.27 respectively in the 2019 timeframe.
- Carnival Corp. reported gross onboard spending per passenger per day estimated at $4.41 and net $5.57 for the second quarter ending May 31, 2024, in contrast to $3.25 and $3.97 respectively in the 2019 quarter.
These increases have been attributed to several factors. The most significant is the overall rise in prices for extras such as drink packages, paid dining experiences, and internet access. Additionally, all three cruise lines have introduced new ships featuring more paid options.
Royal Caribbean executives consistently highlighted the growing onboard spending during the cruise line’s second-quarter earnings call.
“Once booked, guests are engaging with us more quickly and purchasing considerably more onboard experiences per booking than in the second quarter of last year, both earlier and on significantly more [available passenger days,] leading to elevated satisfaction rates and greater onboard spending,” Chief Executive Jason Liberty stated.
He does not believe it’s merely a reflection of the economy that consumers are spending more. He asserts that Royal Caribbean has facilitated their willingness to spend.
“Centering customers in our operations has been vital to our success and enables us to connect with guests for all of life’s moments, transforming a once-in-a-lifetime vacation into a lifetime of vacations,” he remarked. “A key differentiator in this journey is our hardware, with constant innovation.”
Norwegian Cruise Line CEO Harry Sommer also remarked on heightened onboard spending during his company’s second-quarter earnings call.
“In the second quarter, we noted sustained strength in onboard revenue, which was fueled by our guests’ continued enjoyment of our excursions and onboard features, including specialty dining and communication services, which have been enhanced by the ongoing implementation of Starlink across the fleet,” he indicated. Starlink refers to the satellite-based internet service from Elon Musk’s SpaceX.
