The two cruise lines went from closed to open with very limited passenger capacity to sailing with fully loaded ships.
That’s an impressive feat considering the struggle the two companies had to contend with. Even if consumers are willing to get back on planes to visit theme parks, some remain wary of being locked down for multiple days on cruise ships. That may not be fair given the steps Royal Caribbean and Carnival have taken to contain COVID-19, but it’s a factor for both companies.
To lure customers back on board, both companies are offering some prices well below historical norms. The strategy worked, as both cruise lines were operating close to (or above) 100% capacity. These low prices are offset by higher prices for onboard specialty meals, drink packages, tips, and pretty much everything else.
Now, with covid-related rules lifted entirely, older passengers returning and international tourists visiting the US again, both Royal Caribbean CEO Michael Bailey and Carnival CEO Josh Weinstein believe cruise prices need to rise.
Royal Caribbean, Carnival think cruises are too good a deal
Royal Caribbean and Carnival want to offer consumers better value than land vacations — but there are limits to that effort.Weinstein commented on the matter while on cruise line Third Quarter Earnings Conference Call.
“The problem is that our value is too high. Our price should not be at a significant discount to the land, which is what is happening today, ranging from 25% to 50% depending on the itinerary,” he said.
The problem, Bayley told TheStreet, is that it typically takes a year of sales to fill a ship, so the industry has had to scramble after a prolonged covid-related shutdown.
“But all of us came from very low load factors. We were trying to get our models above 100%. So, yes, pricing was a challenge during that time,” he said.
He does believe that higher prices will return.
“I’m more optimistic about pricing now than I was before. I think we’ve seen ourselves, our load factors are recovering, our bookings are steady, our pricing is recovering,” Bailey said.
How to Get the Best Deals on a Cruise
With both Royal Caribbean and Carnival predicting price increases, cruise-hopers should act quickly to lock in the current (often) lower prices. January and February are somewhat of a slow season for the cruise industry. Kids are back at school, the Caribbean is slightly colder and overall demand is generally weak.
Cruise prices in the short term, aside from the holiday season and the newest ships in the fleets of the two cruise lines, remain low by historical standards.
This isn’t the case for cruises beyond 2023, but prices are still well below normal, so it usually makes sense to book now, then monitor prices as you can ask for adjustments (usually given in onboard credit) until the end Payment due date.
If Bayley is right, the low prices, at least relative to land vacations, may not last long. He believes the industry has weathered the storm but is returning to normal.
“It’s kind of like getting knocked over in the mud and everybody gets up and then we slide a little bit but you get yourself back up,” he said.
“And then, you know, you slipped a little bit. But now we’re in this position, we’re all … looking clean, getting back on our feet, and everything’s starting to normalize, stabilize and get better and more it is good.”