Bad news, cruisers: Fares are hitting new records — and the trend is likely to continue
You're not imagining it, cruisers: Fares for cruises have been jumping this year — to record levels. And it looks like cruise pricing is only going higher, barring some sort of economic downturn that causes a significant dent in demand.
In a conference call with Wall Street analysts Friday, executives at Carnival Corporation — the parent company of nine of the world's largest cruise brands — said it had made $175 million more in the last three months than it had projected just three months ago, in part because revenue from ticket prices was up so much. Rising occupancy on ships also played a role.
"We've consistently been delivering pricing well in excess of 2019 levels, while closing the occupancy gap by 11 [percentage] points over the course of the year," Carnival Corporation president and CEO Josh Weinstein noted during the call.
Weinstein said the company's per diems for the last three months — a measure of how much ticket revenue it's getting per passenger — was up 5 percentage points as compared to 2019, the last normal year for cruise bookings before the COVID-19 pandemic began.
But that number folded in some one-time factors that mask what was an even bigger rise in pricing on many itineraries. Weinstein noted, for instance, that the company no longer was running cruises to St. Petersburg, Russia, traditionally among its highest-priced itineraries, due to the war in Ukraine.
"Normalizing for this impact, we estimate per diem growth would have been up about 7 [percentage] points," Weinstein noted.
Related: How to pick the perfect cruise for you
Carnival Corporation's per diem number also represents an average of ticket prices across its many brands, which include some non-North America-based brands that have struggled more than its North American brands in the wake of the COVID-19 pandemic.
Carnival Corporation is the parent company of four North American brands: Carnival Cruise Line, Princess Cruises, Holland America and Seabourn. But it also owns five overseas brands, including Europe-based Costa Cruises, U.K.-based P&O Cruises and Australia's P&O Cruises Australia.
There's plenty of evidence that cruise pricing across the industry has been rising at a far faster rate than Carnival Corporations' per diem numbers would suggest.
In a recently released research note, Wall Street analyst C. Patrick Scholes of Truist Securities estimated that pricing for 2024 sailings industrywide is now running a hefty 17.5% to 22.5% ahead of 2019 levels. Those numbers include an increase of "high single digits" in just the past year.
Another Wall Street analyst, Brandt Montour of Barclays, recently pegged the rise in ticket prices for 2024 sailings at an even higher 20% to 30% above 2019 levels.
Wall Street analysts also are reporting massive increases in fares for 2025 — yes, some cruisers already are booking trips for 2025.
Scholes, whose firm analyzes "big data" sets for cruise bookings and pricing and also talks regularly with large travel agency groups, noted that pricing for 2025 sailings is up an even sharper 50% as compared to 2019.
Scholes did note that higher-end, higher-priced cruises tend to book up further in advance than mass-market cruises, which "skews the pricing numbers [for 2025] higher at the moment versus where we believe they will eventually finish."
More price increases coming
The consensus among Wall Street analysts and cruise line executives alike is that more price hikes are coming.
On the Carnival Corporation call, Weinstein suggested that strong demand for cruises of late could allow the company to raise prices even more in the coming months. He said the company had just raised its expectations for full-year per diems by a full percentage point.
Demand for cruises is so strong right now that Weinstein said the company's ships were 10 percentage points more booked for the coming year than they were at this same time in 2019, despite a 5% rise in capacity for 2024 due to the addition of new ships.
Related: Cruise bookings are so hot that some lines are running out of inventory
The fact that bookings for the coming year are stronger than in the past means that Carnival Corporation lines can raise prices going forward, he suggested.
"Being 10 [percentage] points ahead ... does give us a good amount of maneuverability to really deliver on the yields next year," he said.
Yield is a measure of revenue that combines the effects of pricing and occupancy, both of which are expected to be up next year at cruise lines.
Weinstein noted that cruises still are priced considerably below comparable land vacations when comparing like-for-like experiences. That, in theory, gives the cruise industry a lot of runway to raise prices for cruises without turning off vacationers.
"The vacation value we offer will continue to resonate with those seeking more for their vacation dollar," he said. "We have been leaning into that message given the unprecedented and unwarranted value [of cruising compared] to land-based vacation alternatives."
Speaking later in the call, another Carnival Corporation executive, chief financial officer David Bernstein, said he expected per diems for the current quarter (September through November) to be up 7% to 8%. Per diems will likely jump even higher in 2024, he suggested.
"We are well positioned to drive 2024 pricing higher," he added.
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| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
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Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.