Act before cruise deals sail into sunset
Cynthia Nelson loves a good deal. So, when she spotted a reasonable fare for a January cruise to Mexico with Princess Cruises, she snagged it.
“I am myself a bargain shopper,” she told USA TODAY. The 54-year-old decided to forgo a balcony and book a cheaper interior room for her and her husband to spend money on excursions like whale watching.
Nelson took her first cruise last year and has found sailing can be an economical alternative to other kinds of vacations. The Bay Area resident said her weeklong cruise last month cost around $1,800 including food, excursions and miscellaneous costs.
But cruise deals may soon be harder to find. As the cruise industry has continued to recover from the pandemic, some lines have seen record bookings in recent months, signaling that higher prices may be on the way.
Are cruises cheap right now?
Travel prices are up like in much of the economy, but cruises “are going to be a little bit of an anomaly in the travel world right now,” said Patrick Scholes, a lodging and leisure analyst with Truist Securities.
Following the industry’s pandemic-induced shutdown, cruise lines had to offer widespread discounts to entice travelers to come back, Scholes said. And while the companies have recently gained more steam, prices remain lower than other parts of the travel sector such as hotels and airlines.
Last summer, cruise pricing was down 5% from a comparable period in 2019, according to Scholes’ estimates. And while pricing is picking up – at around 5% to 10% above pre-COVID-19 levels for mainstream lines and upward of 15% for luxury lines – travelers still may find it significantly lower than hotels and resorts, for example.
“You know, you want to go to Miami Beach or Colorado or something, (hotel/ resort) pricing’s up like 40% or 50%,” Scholes said.
“Today, far and away, the best value in vacationing is going to be booking a cruise,” he said.
Some lines have raised prices for amenities like Wi-Fi and gratuities while cutting back on other services, but Scholes said not all recent changes are the same. Higher internet prices, like Carnival Cruise Line recently implemented, is “just a natural inflationary increase,” Scholes said, while cuts to stateroom cleaning like Norwegian Cruise Line has made may be related in part to continued staffing shortages.
Scholes also noted that Norwegian Cruise Line Holdings Ltd., has “definitely been under the most Wall Street pressure to cut back on costs” of the three major publicly traded cruise companies, which also include Carnival Corp. and Royal Caribbean Group. Norwegian Cruise Line did not immediately respond to a request for comment.
(Truist Securities Inc. and/or an affiliate of the firm own equity securities in Carnival Corp. and Norwegian Cruise Line Holdings. Truist Securities Inc. and/or an affiliate of the firm has previously provided and/or may seek to provide future client services for compensation to Carnival Corp., Norwegian Cruise Line Holdings and Royal Caribbean Group.)
Trust in cruise lines is up
Even as prices go up, traveler sentiment on cruises has turned a corner coming out of the pandemic. Lindsey Roeschke, travel and hospitality analyst at Morning Consult, said among roughly 2,200 American adults the company surveys monthly, 47% said they trust cruise companies as of January, up 6 percentage points from a year before.
That bucks a trend she’s seen elsewhere in the industry, with trust in airlines down following a number of disruptions to air travel around the holidays and at hotels. Airlines were down 3 percentage points during the same time, while hotels were down 4.
“Cruise lines are seeing a little bit of a boost coming from people further emerging from the concerns about COVID that kept them away from cruising in the first place,” Roeschke said.
Morning Consult also asked about their travel plans and found that 22% of those who expect to take a trip in the next year said they will go on a cruise, up five points from a year earlier.
That is reflected in bookings. Royal Caribbean Group, which owns brands including Royal Caribbean International and Celebrity Cruises, said during its fourth-quarter earnings update this week that the company had seen the seven biggest bookings weeks in its history since its earnings call in November.
Lines report higher bookings
Royal Caribbean Group CFO Naftali Holtz said the company has continued to step up its offerings for guests. For instance, Hideaway Beach, a new adultsonly area on Royal Caribbean’s private island Perfect Day at CocoCay, is set to open in the fourth quarter of 2023.
“We have just elevated and evolved the product ... by bringing new ships and new experiences to them, and you can see that resonating,” he told USA TODAY.
Holtz added that their cruises are “a really compelling value proposition” for passengers, and said dropping the majority of its pre-cruise COVID-19 protocols last year broadened the company’s potential customer base.
Other major lines have noted similar milestones. Holland America Line said its bookings in the third week of January were the highest for any January week on record in what the line called an “early sign of a successful wave season,” according to a news release. Norwegian also saw a record booking day, week and month in November.
In the coming months, Scholes said travelers can expect fewer last-minute fare discounts, as cruise lines have fewer cabins they need to fill and fewer deals bundling perks with fares.
“They don’t have to give as much incentive as, say, six months or a year ago to get somebody to cruise, and ... all these companies are highly aware of how much debt they need to pay down,” he said. Because of that, prospective passengers may want to book sooner than later.
“I would expect just that the longer you wait here to book, the more (the) price is going to go up,” Scholes said.