In 2021 and much of 2022, cruise lines used discounts and promotions to get people on cruise ships. Some past passengers did not want to sail back when there were still Covid-related protocols.
Some did not want to get vaccinated while others resented having to prove vaccination, wear masks in public spaces, and deal with social distancing rules. When those rules — especially the vaccine requirement — were abruptly dropped by the Centers for Disease Control (CDC) some people stopped sailing because of the lack of safety protocols.
Related: Royal Caribbean cuts back a popular loyalty program benefit
It really took into 2023 before cruising returned to normal and people stopped factoring Covid into whether or not they planned to cruise. During those years Royal Caribbean slowly built its business moving from capacity-restricted ships at low prices to full sailings at 2019 pricing or higher.
The cruise line has by all standards completed its pandemic comeback and CEO Jason Liberty has often talked about cutting the value gap between a cruise and land-based vacations. It’s still dramatically cheaper for a family of four to take a cruise, in most cases, than it is to visit Disney World or Universal Studios.
Cruises not only include your room, but also entertainment, and food. Theme parks charge for entrance tickets, food, and hotel rooms, and the numbers add up quickly.
That gives Royal Caribbean room to keep pushing prices higher and still be a relative value compared to land-based alternatives.
Liberty has focused on improving Royal Caribbean’s finances.
Image source: Royal Caribbean
Royal Caribbean ships are packed
Cruise lines used demand-based pricing. That means that the more people who want to sail on a specific ship, the higher the price will go.
There are ways around that. Sometimes travel agents book blocks of rooms at lower prices before the cruise goes on sail.
But, in general, higher demand for cruising means higher prices. Liberty shared that demand has been very high during his company’s first-quarter earnings call.
“The first quarter was tremendous, sending us well on our path to a year that is significantly better than we expected just a few months back. Wave season combined with a record-breaking introduction of the revolutionary Icon of the Seas resulted in consistently robust bookings at much higher prices than 2023,” he said.
Royal Caribbean has clearly built its business back to a better position than it was in before Covid.
“This strong booking and pricing environment across all key itineraries coupled with continued strength in onboard spend led to higher revenue in the first quarter and a further improvement in full-year yield expectations. In the first quarter, we delivered 2 million memorable vacations and achieved 107% load factor at exceptional guest satisfaction scores,” he added.
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Booking patterns are strong
Royal Caribbean does not seem to be all that vulnerable to economic concerns. While many Americans have pulled back their spending in some areas, cruising, at least with Royal Caribbean, does not seem to be one of them.
“Booking is consistently outpacing last year throughout the entire first quarter and through April, even though we have significantly fewer staterooms left to sell, leading to higher pricing for all of our key products. Booking strength has been prevalent on both our existing hardware as well as on our industry-leading new chips. We see strong demand across all products and markets,” Liberty said.
The cruise line has been heavily focusing its fleet on serving the U.S. but other markets are strong as well.
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“North America continues to be extremely robust where approximately 80% of this year’s guests are sourced. This strength, in combination with the incredible perfect day at CocoCay, has resulted in strong yield growth for our Caribbean sailings. European bookings are outpacing last year’s levels at higher prices and Alaska has been performing particularly well with year-over-year yield growth,” the CEO added.
