Royal Caribbean, Carnival Have Bad Pricing News for Cruise Fans

The rival cruise lines agree on something that won’t make customers happy.

Both Royal Caribbean (RCL) – Get Free Report and Carnival Cruise Line (CCL) – Get Free Report have built back their businesses from the dark days of the covid shutdown. 

The two cruise lines went from closed to open with very limited passenger capacity to ships sailing with full customer loads.

It’s an impressive feat given what the two companies had to battle. Even when consumers were willing to get back on planes and visit theme parks, some people remained wary of being enclosed for multiple days on a cruise ship. That might not have been fair given the steps Royal Caribbean and Carnival had taken to control covid, but it was a factor for both companies. 

A desire to lure customers back onboard led both companies to offer some prices well below historical norms. The tactic worked, as both cruise lines have been sailing near (or over) 100% capacity. And those low prices have been offset by higher prices onboard for specialty dining, drink packages, gratuities, and pretty much everything else.

Now, with covid-related rules fully lifted, older passengers returning, and international travelers visiting the U.S. again, both Royal Caribbean CEO Michael Bayley and Carnival CEO Josh Weinstein believe that cruise prices need to rise.

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Royal Caribbean, Carnival See Cruising as too Good a Value 

Royal Caribbean and Carnival want to offer good value to consumers compared with land-based vacations — but there are limits to that effort. Weinstein commented on the matter during the cruise line’s third-quarter-earnings call.

“The issue is we are way too much of a value. We should not be priced at a significant discount to land, which is exactly the case today, anywhere from 25% to 50% based on itineraries,” he said.

Bayley told TheStreet that the problem is that it generally takes a year of selling to fill a ship, so the industry had to scramble after its long covid-related shutdown.

“But all of us were coming from very low load factors. And we were trying to get to our model number of 100% plus. And so, yeah, pricing was a challenge during that period,” he said.

He does believe that higher prices will return.

“I am more optimistic about pricing now than I’d been before. I think we’ve seen ourselves, our load factors are back, our bookings are solid, and our pricing is recovering,” Bayley said.

How to Get the Best Price on a Cruise

With both Royal Caribbean and Carnival forecasting higher prices, people looking to cruise should act quickly to lock in the current (generally) lower prices. January and February are somewhat the offseason for the cruise industry. Kids are back in school, it’s slightly colder in the Caribbean, and overall demand is generally weaker.

Prices for cruises in the short term, with the exception of the holiday season and the newest ships in both cruise lines’ fleets, remain low by historical standards.

That’s not as true for cruises further into 2023, but prices are still broadly lower than normal, so it generally makes sense to book now, then monitor the price because you can ask for an adjustment (usually given in onboard credit) until the final payment due date.

If Bayley is correct, low prices, at least relative to land-based vacations, may not continue much longer. He believes the industry has taken its lumps but is on the path back to normal.

“It’s a little bit like being knocked in the mud, and everybody standing up, and then we slip a little bit, but you kind of get yourself back on your feet,” he said. 

“And then, you know, you’ve slipped a little bit. But now we’re in this position where we’re all … looking pretty clean and back on our feet and everything started to normalize, stabilized, and get better and better.” 

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