Are you looking to book a cruise departing in the next few months? Here’s the bad news: You might have trouble finding a cabin — at least if you’re picky about the type of room you get.
With demand for cruises running at sky-high levels, bookings are soaring. As a result, many cruise departures in the next few months are already nearly completely sold out. Space is disappearing fast on sailings for the coming summer and fall, too, even as the imbalance between supply and demand is leading to rising fares.
“Bookings have consistently outpaced last year across all key products and at higher prices,” Jason Liberty, Royal Caribbean Group CEO, noted Thursday in a conference call with Wall Street analysts to discuss quarterly earnings. “In fact, the five highest booking weeks in our company’s history all occurred since the last earnings call.”
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As a result of the strong bookings, Royal Caribbean Group’s brands have just half as many cabins available to book for the first quarter of 2024, compared to what was available this time last year for the first quarter of 2023, Liberty said.
That comes despite a significant 8.5% jump in cabin capacity at the company since last year due to the addition of new ships such as Icon of the Seas, he noted.
Royal Caribbean Group is the parent company of Royal Caribbean, the world’s largest cruise line, as well as Celebrity Cruises and luxury brand Silversea Cruises. It’s also a part owner of Germany’s TUI Cruises and Hapag-Lloyd Cruises.
Liberty’s comments echoed an overview of the booking situation presented to Wall Street analysts by Carnival Corporation president and CEO Josh Weinstein in late December.
Speaking in the wake of Carnival Corporation’s release of fourth-quarter earnings, Weinstein said the company had already sold 85% of its cabin inventory for the entire first half of 2024 — a “historical” level, in his words.
“At this point, much of the first half is already behind us,” Weinstein said, suggesting that Carnival Corporation had already moved on to selling cabins for the second half of 2024 and beyond.
“For our peak summer period, all major products are better booked at higher prices, benefiting from an improving trend in both occupancy and price during the fourth quarter,” Weinstein added.
Carnival Corporation is the parent company of Carnival Cruise Line, Princess Cruises, Holland America and six other major lines that collectively account for nearly half of all cruises taken in the world.
The majority of cabins for 2024 already sold
In a research note to investors in mid-January, leisure industry analyst Patrick Scholes of Truist estimated that Carnival Corporation had already sold more than 70% of its cabins for all of 2024.
In a more typical year, the company would have sold about 60% of its cabins for the year by mid-January, Scholes noted.
The differential of 10 percentage points — a huge amount — is not atypical for the industry right now, according to Truist’s analysis of big data on cruise bookings and pricing, and talks with cruise line executives.
Scholes estimated that cruise lines, on average, were running about 7 to 10 percentage points ahead of normal when it came to booked occupancy for all of 2024 as of mid-January.
That’s despite an 8% increase in global cruise cabin capacity over the past year due to the addition of new ships.
It’s a booked-up level so high that the booking pace at some cruise lines in December and early January started to slow due to nothing more than they were running out of cabins to sell, according to Scholes.
“Why has booking pace in December and early January been negative [year over year], and why should one not be concerned? The answer is that there is simply minimal inventory,” he wrote.
Scholes suggested the heavily booked position at many cruise lines for the coming year was the result of cruisers planning their cruise voyages further in advance than they had in the past.
As of mid-January, travelers were booking cruise vacations about 210 days prior to sailings, on average, according to Scholes — or about seven months. That means that, on average, cruisers are locking in trips for September now.
Strong bookings leading to higher fares
With bookings strong, cruise lines have been able to raise prices notably in recent months, which means fewer deals available in recent weeks for wave season — the period at the start of the year when many cruisers line up trips for the year.
“At wave season at this time last year, the cruise lines experienced record bookings as they were more focused on just filling ships given the significant amount of available occupancy and much less focused on price,” Scholes noted. “This year, that strategy is flipped as the focus is on pricing growth given how well-booked the industry is at the start of the year.”
Scholes said pricing for cruises was up by a “low-to-mid teen” percentage level in December into early January.
“Interestingly, in our ‘big data,’ we see the greatest degree of pricing growth for the periods in which there are the fewest cabins left to sell, namely departures in [the first quarter of 2024] and to a lesser extent in [the second quarter],” he wrote.
Or, as Carnival Corporation’s Weinstein put it in December when talking to Wall Street analysts: “By pulling forward all the volume, it gives us better control over our pricing environment and our ability to keep pricing at an elevated level.”
Weinstein said Carnival Corporation’s brands started 2024 in the best-booked position the company had ever seen both in terms of occupancy and price.
“As we’ve made our way through the quarter, we’ve managed to pretty much keep that occupancy advantage, and prices on everything that’s booked is now considerably higher,” he noted.
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