The past five years have been something 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 been launched.
Then, the pandemic brought the cruise industry to a complete standstill. Cruise lines suspended operations in March 2020, and the entire industry was subject to a CDC no-sail order until the end of October of that year. However, ships did not resume service in the United States until July 2021.
Related: Royal Caribbean shares bold statement on cruise pricing
However, when ships finally did sail again, they did so with numerous restrictions, including limited capacity, fewer onboard amenities, and with vaccination requirements and other COVID-19 protocols in place. The first “normal” cruises didn’t fully return until mid-2022, when the CDC formally finalized its COVID-19 program for cruise ships.
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Image source: Royal Caribbean
Demand for cruises continues to rise
To say that demand has returned with a vengeance would be an understatement. My first cruise in the post-pandemic era was in December 2022 on the Carnival magicwhich was completely packed with travellers who clearly had a 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 holidays has never been higher than it is now.
The proof is in the numbers. Royal Caribbean's revenue over the past 12 months was 42% higher than the same period in 2019. Sure, some new ships have been added to the fleet since then, but their capacity is not that Instead, the reason for the increase in revenue is that high demand for cruises has made the average price of a cruise vacation much more expensive than it used to be.
It’s not just rising demand that’s driving prices up. Part of it is a result of high inflation in recent years. According to 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 are having to pay more for food, drinks and other items, and the cost increases are being passed on to the consumer.
Whether cruise fares are rising depends on who you ask, but nearly every major analysis has concluded that prices are significantly higher. Data from Tripadvisor’s Cruise Critic found that prices in last year’s holiday season were 43% higher than in 2019 for a comparable Caribbean cruise.
It's not just cruise fares that have become more expensive. Gratuities, beverage packages and the cost of special dining experiences have also increased across the cruise industry. For example, Royal Caribbean's per diem gratuity charge has increased 50% since 2015, with two increases in the past two years alone.
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Royal Caribbean prices rise
Now, even with some reliable data, it's hard to say. exactly How much have cruise prices increased? For one, cruise prices can vary dramatically depending on how far in advance 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 exciting new ships that Royal Caribbean has introduced in recent years. The massive Icon of the Seas didn’t exist in a pre-pandemic world, nor did the last two Oasis-class ships, Wonder of the Seas and Utopia of the Seas.
These ships typically command the highest prices in Royal Caribbean's fleet, so it's fair to say that part of the overall increase is due to a desire to try out the latest and greatest ships.
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All that said, cruise prices are clearly are generally higher than before the COVID-19 pandemic, and by a significant margin.
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