Cruises are making a major comeback since COVID — and fresh demand is sending ticket prices to new heights.
Popular cruise operators Carnival and Royal Caribbean have set some ticket prices even higher than they were pre-pandemic — more than 40%, according to one closely watched monitor — and prices could continue to climb, according to industry experts.
The average price of a five-night cruise in the Caribbean this December will run travelers $736 per person — a whopping 43% higher than the same time in 2019, according to data from Cruise Critic, a cruise review site owned by Tripadvisor, reviewed by CNBC.
December’s average cruise costs also mark a roughly 37% increase from last year, when cruises were still being shunned as “super spreader” gatherings, according to the site.
Coming out of the pandemic, “cruising was always going to be the last one people realized was safe or not,” hence why people were quick to “realize that airline tickets and land-based resorts have gotten more expensive,” but “the ocean’s just now rising,” said former Carnival executive Carlos Torres de Navarra.
Though cruise lines have had to “implement price increases just like everybody else,” vacations by cruise ship boast discounts that are “recession-proof in some respect,” de Navarra said in an interview with The Post.
“Travel agencies have quoted cruises offering somewhere between a 50% and 70% discount to land-based vacations,” said de Navarra, who’s now the principal of cruise port destination developer Azul Destinations.
Take it from retired Australian couple Marty and Jess Ansen, who’ve been at sea for 500 days — longer than most of the crew, including the captains — after realizing it’s cheaper to cruise around the world for two years than pay for a retirement home.
“If the cruising experience was impaired coming out of the pandemic, then I think there would have been a different concern,” de Navarra said. “Clearly, that’s not a concern.”
Cruises’ popularity has also seen many Americans booking cruises for the first time.
This group — which de Navarro referred to as the “first-timer market” has opened up an “additional audience [and] that demand gives cruise lines the ability to start raising prices,” de Navarro said.
“Over 70% of people in US have never cruised before,” he noted.
And while the rising cost of oil is certainly a “headwind,” de Navarra said, it’s not the culprit for the price hikes, especially since cruise lines are putting a greater focus on the Bahamas and Caribbean markets — which are closer to America’s East Coast and therefore call for less fuel.
“They’re raising prices naturally — fuel or no fuel, the demand is there for them to be raising prices,” Truist Securities analyst Patrick Scholes told CNBC.
“The cruise industry right now is focusing on: ‘How do I create and improve on destinations that are close to where my ships start and end to mitigate this fuel issue?'” de Navarra said.
The answer appears to be “investing in destinations” closer to the US, like Nassau, Bahamas, where Royal Caribbean just announced it would open a 17-acre Royal Beach Club resort come 2025, according to de Navarra.
Historically, cruise lines have spent as much as $500 million to build ports that they believe will generate demand.
Now, projects like the Calypso Cove development in Long Beach, Bahamas offer even more economic value to cruise ships.
This cruise port has all the usual bells and whistles — like beaches with cabanas and retail destinations — but caters to an array of operators who don’t need to spend as much on port development and still have the ability to generate revenues with on-shore add-ons like “cabanas and other excursions,” de Navarro said.
Calypso Cove, which Azul Destinations is bankrolling with $250 million with the help of merchant bank AMA, will start accepting as many as 1 million passengers per year from any cruise line that invests in the development.
“The cruise industry started getting outside of its core business of cruise experience and got into destination experience,” de Navarro said.
Now, “the challenge is that they [cruise lines] have a ton of debt that they have to deal with that they didn’t have before,” he added, referencing the millions in debt cruise operators took on to get through the pandemic.
But lucky for cruise lines, “debt will be paid off faster because ticket prices are higher,” de Navarro said.