Cruise companies want the same thing going into 2023 that they did going into 2022: to make money again.
With their fleets fully back in operation, nearly two dozen new ships
gracing the waters and the pandemic seemingly fading in the rearview
mirror, cruise lines are looking for ways to fill their ships and turn a
profit while doing it.
Making money has been a tough proposition. Of the three publicly
traded cruise companies – Carnival Corp., Royal Caribbean Group and
Norwegian Cruise Line Holdings – Royal Caribbean alone managed to turn a
profit in Q3 (which also was the first profitable quarter by any of the
Big 3 since the pandemic).
Royal Caribbean Group expects to return to historical load factors by
late spring. Norwegian Cruise Line Holdings said it expects to hit 100%
occupancy in the second quarter, and Carnival Corp. expects occupancy
to return to historical levels in the summer.
Covid restrictions that coloured much of the past year have
disappeared from cruise ships and most destinations around the world, so
the return to some level of normalcy appears to be in the cards. Of
course, that's barring another unforeseen "black swan event," as
Norwegian Cruise Line Holdings CEO Frank Del Rio likes to call them.
Cruise executives have reason to be optimistic about 2023. Families
who wouldn't or couldn't consider cruises for much of last year due to
vaccination or testing requirements can now sail unencumbered, leaving
the industry anticipating a strong Wave season to bring cruise lines
back into historically typical booked positions early in 2023. This will
return them to the comfortable position having the leverage to exert
more pricing power.
Executives are also optimistic that inflation won't have a major
effect on customers. So long as the unemployment rate remains low in
2023, they feel that people will continue taking vacations and see
cruising as a value proposition compared to land resorts and theme
Meanwhile, guests continue to splurge when onboard, spending on
specialty dining, cabana rentals, shore excursions and drink packages.
But lines will have to be careful in the new year: While some
executives contend they are holding prices firm, cruise companies have a
lot more capacity to fill this year after taking delivery of new
On the cost side, inflation and supply chain issues continue to dog
cruise companies, affecting costs on necessities like food and causing
delays in getting parts for building new ships. Hefty airline prices
could also complicate matters for cruise lines and lead to discounting
to offset customers' air spending.
Meanwhile, the ships may be back, but not all ports or destinations
will likely return in the new year: The war in Ukraine continues, which
continues to impact St. Petersburg and Baltic sailings. On the plus
side, Japan, a linchpin in Asia cruising, appears to be coming back next
year, with Princess' Diamond Princess resuming sailings there for the
first time since the beginning of the pandemic. With China's status
still uncertain, however, there won't be a large amount of tonnage in
Instead of spreading out around the globe in a full return to
normalcy, there will be additional products in other popular
destinations: the Caribbean, Alaska and Southern Europe. With less
variety of destinations, having additional inventory could cause
challenges and possibly soften prices.
Source: Travel Weekly