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Having trouble finding an affordable summer vacation? A cruise could be the answer

May 18, 2022
7 min read
Norwegian Cruise Line Joy
Having trouble finding an affordable summer vacation? A cruise could be the answer
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Are you struggling to find a vacation destination that still has space available for the summer at a reasonable price? We have some advice: Consider a cruise.

While it's shaping up to be a "sold-out summer" at many top vacation destinations such as theme park mecca Orlando, where many hotels and resorts already are heavily booked for prime weeks, industry watchers say there still are plenty of rooms available for the coming months on cruise ships — and at relatively low prices.

"The travel industry is seeing a huge resurgence of travelers for the summer season – from filled hotels and booked rentals, to packed planes and rising fares to match," notes Colleen McDaniel, editor-of-chief of leading cruise site Cruise Critic. "But one area where the cruise industry is standing apart from the pack is in its availability — and affordability."

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Speaking Tuesday with The Points Guy, McDaniel said the last-minute availability for summer on cruise ships wasn't due to a lack of interest among vacationers. She said Cruise Critic still was seeing strong interest in cruising this summer from its readers across the globe.

Instead, it has to do with the rapid increase in capacity that cruise lines are bringing online as summer approaches, she suggested.

Many cruise lines around the world shut down operations entirely for more than a year after the COVID-19 pandemic started in early 2020, and when they began to return to operations in 2021, "it was a slow, methodical restart," McDaniel noted. "Cruise lines were only sailing certain ships and with very limited capacity onboard."

Now, "lines are returning their full fleets for the summer season and ... beginning to remove their capacity limits," she said. "The result is the need to fill those empty cabins in a short amount of time ... and more summer deals than we typically have seen this time of year."

Occupany on Norwegian Cruise Line Holdings ships is expected to be just 65% this quarter. (Photo courtesy of Norwegian Cruise Line)

The boost in capacity at cruise lines is allowing vacationers to book cruises on a wide swath of ships and itineraries with very little advance notice — something that is unusual.

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"There typically is very little inventory to sell inside 60 days [before departure of a ship], and that's not necessarily the case today," Norwegian Cruise Line Holdings CEO Frank Del Rio noted last week during a conference call with Wall Street analysts.

Del Rio's comments came as the parent company of Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises said it expected occupancy levels on ships this quarter to be around 65% — far lower than normal. The company reported occupancy levels of just 48% for the first three months of the year.

Historically, most cruise ships operated by major cruise companies such as Norwegian Cruise Line Holdings have sailed year-round at occupancies in excess of 100% — something possible when more than two people stay in some cabins. Cruise companies consider a ship to be 100% occupied when two people are staying in every cabin.

Related: A beginner's guide to picking a cruise line

During the conference call with Wall Street analysts, Norwegian Cruise Line Holdings CFO Mark Kempa suggested the company expected occupancy levels on its ships to remain below 100% on average for many months to come. Kempa said the company expected occupancy to build steadily throughout the year but not return to historical levels until the first half of 2023.

Kempa's comments came just days after Royal Caribbean Group reported first-quarter occupancy levels that were far below normal at 57% and said it expected occupancies to remain below normal in the coming months.

Royal Caribbean Group CEO Jason Liberty told Wall Street analysts on May 5 that the company expected occupancy levels to average 75% to 80% in the current quarter across all of its brands. Liberty said he expected the company's ships to return to normal occupancies in excess of 100% by the end of the year.

Royal Caribbean Group is the parent company of its namesake Royal Caribbean brand as well as Celebrity Cruises and Silversea Cruises. It also owns a partial stake in Europe-based TUI Cruises and Hapag-Lloyd Cruises.

Both Norwegian Cruise Line Holdings and Royal Caribbean Group executives said they were seeing a surge in close-in bookings for cruise departures, in part because of all the extra space available on ships. But it hasn't been enough to fill ships to historical levels.

Cruise giant Carnival Corporation also recently reported below-normal occupancy for the ships of its nine brands, which include its namesake Carnival Cruise Line brand as well as Princess Cruises, Holland America and Seabourn.

The different companies and brands have taken different approaches to discounting to fill ships for the coming summer, with some slashing rates more than others. Norwegian Cruise Line Holdings, notably, has been reluctant to lower prices to fill cabins, believing it would hurt the company long term by making it harder to later raise prices.

"We are not going to chase short-term [occupancy] and damage the brand for the long term," Norwegian Cruise Line Holdings' Kempa told Wall Street analysts during last week's conference call. "That is not the right strategy for our company, so we will maintain that price discipline."

But the bottom line is that even at cruise companies holding the line on pricing, fares are notably low for close-in sailings when compared to the soaring cost of hotels and resorts on land. The cost of hotels and resorts in the U.S. are up around 30% over the past year by some measures.

Cruise fares also aren't keeping up with inflation in many cases.

As of Tuesday, seven-night Caribbean cruises for the summer at Carnival were available starting as low as $314 per person — about as low as they've been in the past decade. Seven-night Princess sailings to Alaska were available starting at $407 per person.

The deals may not last long. Cruise line executives have noted the growing differential in pricing this year between land resorts and cruise ships in recent talks with Wall Street analysts and have said they hoped to close the gap over time.

"We've always said that cruise is underpriced versus our true competitors, which are land-based vacations," Kempa said during last week's conference call. "And as you've seen consumers more and more willing to pay higher pricing for land-based alternatives, that is additional demand and additional pricing that we can go after ... [it's] an opportunity for the industry as a whole."

To Cruise Critic's McDaniel, the current differential in pricing between land and sea vacations coupled with the increased availability of cruises for summer makes now an unusually wonderful time to book a cruise.

"Summer tends to be the cruise industry’s busiest season, so the late availability and affordable pricing is an unusual perk for travelers still looking to book their summer vacation," McDaniel said. "If you’ve had a cruise on your radar, now is definitely prime time to book in terms of available options that won’t break the bank."

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Featured image by (Photo courtesy of Norwegian Cruise Line)
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.