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Brace yourself for more crowded cruise ships next year

Nov. 18, 2022
5 min read
royal caribbean ship
Brace yourself for more crowded cruise ships next year
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Bad news, cruise fans: The days of sailing on less-than-full ships is coming to an end.

Executives at several of the world's biggest cruise companies in recent weeks have said nearly all their ships should be running full again by the middle of next year, for the first time since the COVID-19 pandemic began.

For instance, Norwegian Cruise Line Holdings president and CEO Frank Del Rio told Wall Street analysts last week that average occupancy on the company's 29 vessels should ramp up steadily over the next six months and reach 100% by the summer.

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In fact, he suggested occupancy across the fleet could be more than 100% by the summer — something that is possible when more than two people stay in a cabin.

Occupancy on Norwegian Cruise Line Holdings' ships was about 82% during the three months that ended Oct. 31 — up from 65% in the three months before that. In both cases, that was far below normal levels.

The company owns three cruise brands: Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises.

"We expect load factors to continue improving sequentially to the mid-to-high 80% range in the [current quarter] ... and the steady occupancy ramp-up is expected to continue until we reach historical 100%-plus levels beginning in the second quarter of 2023," Del Rio said during a conference call to discuss the company's third-quarter earnings.

Del Rio's comments came just days after Royal Caribbean Group chief financial officer Naftali Holtz told Wall Street analysts that the company expected occupancy levels to return to historical occupancy levels at the company's cruise brands by the spring of 2023.

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Royal Caribbean Group is the parent company of Royal Caribbean, Celebrity Cruises and Silversea Cruises, and it's also a part owner in German lines TUI Cruises and Hapag-Lloyd Cruises.

Holtz said Royal Caribbean Group ships finished the third quarter at a 96% occupancy level, which was up significantly from an 82% occupancy level in the second quarter but still below normal.

Royal Caribbean Group ships normally sail at more than 100% occupancies.

The world's biggest cruise company, Carnival Corporation, also is forecasting a return to 100% occupancies on ships by summer 2023. The company reported 84% occupancy for the summer months of July, August and September — up from 69% occupancy for the three months before that.

Carnival Corporation owns nine cruise brands, including Carnival Cruise Line, Princess Cruises, Holland America and Seabourn.

In normal years, most major cruise lines typically report occupancies of 100% or more for their ships. The business model followed by most major lines involves setting prices and investing in marketing at levels that will ensure such a high occupancy, as the economics of cruise ships work best when they run full.

However, occupancy levels on cruise ships fell sharply after the start of the COVID-19 pandemic in 2020. At first, cruise ships didn't operate at all, and when they started to resume operations, they sometimes sailed with fewer than half of the cabins filled; cruisers were slow to return and cruise lines struggled to lure people back — even with unusually low prices.

Occupancy levels at some lines as recently as the start of 2022 were less than 50%.

While this was a terrible situation for cruise lines, which reported massive financial losses in 2021 and through much of this year, it was a boon for cruisers who wanted to experience vessels with far smaller crowds than normal.

In 2021, some cruise ships sailed with less than 30% of the normal number of passengers while still operating with a normal crew contingent; this resulted in extraordinary service levels in some cases.

Occupancy on cruise ships has been rising throughout 2022 and already is back to normal in some regions, for some lines.

Royal Caribbean Group, for instance, reported earlier this month that its occupancy levels on Caribbean sailings were close to 105%, which is in the normal range. Occupancy for sailings in Alaska during the last quarter was about 96%, which is below normal, the company said.

Royal Caribbean Group reported occupancy levels on Europe cruises of just under 90% for the third quarter.

Planning a cruise? Start with these stories:

Featured image by CAP AMBASSADOR
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

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10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
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Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023