This Travel Season You Can Find Low Prices on the High Seas
Cruising After COVID
The COVID-19 pandemic hammered travel stocks, including cruise lines. With restrictions easing, Royal Caribbean (RCL), Carnival (CCL), and Norwegian Cruise Line (NCLH) forecast a return to profitability. More passengers need to climb on board to hit those targets, as costs are on the rise.
The industry’s strategy involves offering major discounts to travelers. Analysts say other promotions will also be part of the equation. Wall Street is expecting those moves will pay off. Royal Caribbean is expected to reach near 100% capacity by the end of this year, up from only 60% in early April.
Deals to Be Had
Cruise Critic, a site that reviews cruises, says summer cruise pricing is at its lowest level since the industry restarted in 2021. At the same time, hotel prices are rising, and executives say that will continue. Comparing the two costs, a five-night Caribbean cruise costs around $100 a day on average. That’s close to 10% less than the daily rate for a midscale hotel in the US as of last month.
Rising fuel prices are a concern for cruise operators, but surcharges are uncommon. That means prices will likely stay low even if oil continues to become more expensive.
In fact, prices have fallen and inspired some shrewd moves among passengers. In some cases people are canceling trips they already booked and losing out on nonrefundable deposits, simply because prices are so much lower now. Many trips booked months ago are now 20% to 30% cheaper.
For cruise operators the downward pricing pressure comes with an upside. If occupancy rates are boosted onboard spending increases. Analysts predict that will happen over the next six months. Onboard spending is expected to double from March to December of this year. Plus, lower ticket prices mean passengers have more cash to spend.
Cruise stocks are down more than 50% on average over the past 12-months. But not all cruise stocks are the same, according to industry experts. Norwegian offers more luxury cruises, and that sector’s pricing is holding steady. Carnival is on the opposite end of that spectrum, with just 5% of its business coming from luxury cruises. America is finding record high gas prices and expensive plane tickets when taking to the roads and skies this summer. Perhaps the ocean is calling in more ways than one.
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