In 2021 and much of 2022 cruise lines used discounts and promotions to get people on cruise ships. Some people who'd sailed previously did not want to sail again when covid-related protocols were in place. Some did not want to get vaccinated while others resented having to prove vaccination, wear masks in public spaces, and deal with social-distancing rules. When those rules — especially the vaccine requirement — were abruptly dropped by the Centers for Disease Control and Prevention, some people stopped sailing because of the lack of safety protocols.Related: Royal Caribbean cuts back a popular loyalty program benefitIt really took into 2023 before cruising returned to normal and people stopped factoring covid into whether they planned to cruise. During those years Royal Caribbean slowly built its business, moving from capacity-restricted ships at low prices to full sailings at 2019 pricing or higher.The cruise line has by all standards completed its pandemic comeback and Chief Executive Jason Liberty has often talked about cutting the value gap between a cruise and land-based vacations. In most cases it's still dramatically cheaper for a family of four to take a cruise than to visit Disney World or Universal Studios.Cruises include not only your room but also entertainment and food. Theme parks charge for entrance tickets, food and hotel rooms, and the numbers add up quickly.That gives Royal Caribbean room to keep pushing prices higher and still be a relative value compared to land-based alternatives.
Perfect Day at CocoCay has been a huge success for Royal Caribbean.Image source: Daniel Kline/TheStreet
Royal Caribbean ships are packed Cruise lines use demand-based pricing, meaning that the more people who want to sail on a specific ship, the higher the price will go. There are ways around that. Sometimes travel agents book blocks of rooms at lower prices before a cruise goes on sail. But in general higher demand for cruising means higher prices. During the company's first-quarter-earnings call, Liberty said that demand has been very high. "The first quarter was tremendous, sending us well on our path to a year that is significantly better than we expected just a few months back," he said. "Wave season combined with a record-breaking introduction of the revolutionary Icon of the Seas resulted in consistently robust bookings at much higher prices than 2023."Royal Caribbean has clearly built its business back to a better position than it was in before Covid. "This strong booking and pricing environment across all key itineraries coupled with continued strength in on-board spend led to higher revenue in the first quarter and a further improvement in full-year yield expectations," he added. "In the first quarter, we delivered 2 million memorable vacations and achieved 107% load factor at exceptional guest satisfaction scores." Want the latest cruise news and deals? Sign up for the Come Cruise With Me newsletter.Royal Caribbean booking patterns are strongRoyal Caribbean does not seem to be all that vulnerable to economic concerns. While many Americans have pulled back their spending in some areas, cruising, at least with Royal Caribbean, does not seem to be one of them."Booking is consistently outpacing last year throughout the entire first quarter and through April, even though we have significantly fewer staterooms left to sell, leading to higher pricing for all of our key products," Liberty said. "Booking strength has been prevalent on both our existing hardware as well as on our industry-leading new ships. We see strong demand across all products and markets."The cruise line has been focusing its fleet heavily on serving the U.S., but other markets are strong as well.Want the latest cruise news and deals? Sign up for the Come Cruise With Me newsletter."North America continues to be extremely robust, where approximately 80% of this year's guests are sourced," the CEO said. "This strength, in combination with the incredible Perfect Day at CocoCay, has resulted in strong yield growth for our Caribbean sailings. European bookings are outpacing last year's levels at higher prices and Alaska has been performing particularly well with year-over-year yield growth."
