Cruise lines set their pricing based on demand. In recent months, demand -- especially for the newest ships -- has accelerated, pushing prices higher.
At the same time, that's not uniform across the industry or even across the cruise lines. Royal Caribbean (RCL), for example, has been selling its yet-to-debut Icon of the Seas sailings at record prices, while older ships still offer very good deals.
The same could be said for Carnival Cruise Line (CCL). That cruise line commands top dollar for its latest ships -- Mardi Gras and Celebration -- while cheap cruises aren't hard to find on smaller, older ships.
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While cruise pricing hinges on demand, that's not necessarily demand across an entire ship. MSC and Virgin -- two upstart competitors going after some of the same customers as Carnival and Royal Caribbean -- sell their suite-class rooms at high prices while overall demand is lagging.
For Carnival and Royal Caribbean, the newest ships with the latest features command the highest prices. Wonder of the Seas, Royal Caribbean's newest ship, sells cruises for more money than its Oasis-class sister ships.
In fact, the difference between sailing Wonder and the older Symphony of the Seas, Oasis of the Seas, and Harmony of the Seas can be hundreds of dollars, even more than $1,000, for the same interior cabin.
In the industry, new cruise ships are being added way faster than ships are being taken out of service.
That could create a problem for Royal Caribbean and Carnival -- the two industry leaders by passengers carried -- as both they and their rivals add ships.
Image source: Royal Caribbean
Major Cruise Lines Are Adding a Lot of Ships
The cruise industry has made a major bet on demand for cruises increasing.
Of course, companies don't consult each other when they order new ships, so the reality is that Royal Caribbean, Carnival, MSC, Virgin, and Norwegian Cruise Line (NCLH) -- all of which have new ships joining their various brands in the next five years -- have made independent bets that they will be able to attract more customers.
"The global cruise fleet is set to grow by over 60 new ships entering service from 2023 through 2028, growing the fleet to 499 cruise ships, according to the 2023 Cruise Industry News Annual Report.
"The passenger capacity is projected to grow from 26.5 million (double occupancy) in 2022 to nearly 38 million by 2028."
In 2023 alone, the industry will add 18% in new capacity. Carnival will add Jubilee, its next sister ship to Mardi Gras and Celebration, in 2023, along with two ships it brought over from its Costa Cruise Line.
Royal Caribbean won't technically add a ship in 2023, but will have Icon in early 2024 followed by Utopia of the Seas, an Oasis-class ship, later that year.
Cruise Capacity a Problem for Carnival and Royal Caribbean
While Virgin is selling an adults-only cruise concept, its small fleet likely takes customers from Royal Caribbean and Carnival. At the end of 2023, the company will have four ships with a total capacity of about 10,000 guests. Some portion of those people are likely new to cruising, but many probably are Carnival, Royal Caribbean, or Norwegian customers looking for a step up in class.
It's MSC, however, that offers the biggest threat to Royal Caribbean and Carnival and perhaps the biggest opportunity for passengers to get a good deal.
MSC offers ships that are fairly similar to those of its rivals. And while its latest, the MSC Seascape, may not quite equal Royal Caribbean or Carnival's top-tier ships in size, it does offer a comparable experience.
In 2023, MSC will have five ships sailing at least part of the year from U.S. ports (mostly Miami and Port Canaveral). Many of those sailings are being sold at very low prices with WiFi and a basic drink package included. That creates a clear alternative for Royal Caribbean and Carnival customers.
Expanded capacity industrywide -- if it does not come with a wave of new-to-cruising customers -- should lead to lower prices, at least on older, smaller ships.
Ultimately, that could increase the base of people who cruise, but in the short term, it should mean that low-cost cruises will be out there for people willing to try MSC or sail on ships other than the latest ones.
