Royal Caribbean, Carnival Cruise issue warning for cruise fans

During the Covid era, when all major cruise lines were essentially shut down, it seemed somewhat unlikely that cruising would make a full comeback. During that period, cruise lines had to offer massive deals to entice people to book theoretical cruises that might happen at some point in the future.

Royal Caribbean offered low prices and double loyalty points as a way to get its most loyal passengers to come back onboard. The theory at the time was that just getting some passengers onboard when the industry was allowed to resume sailing would show others that taking a cruise was safe.

That was a challenging proposition as Covid did show many Americans how quickly a virus could spread in a closed environment. It seemed logical that some ardent cruisers would be wary to return even with vaccines and the many improvements to shipboard cleaning and air filtration.

There was a day when it seemed like Covid would teach Americans that we are all only as healthy as the person making our meal. It seemed like things like mandatory sick days, and basic health precautions would become something that would become the norm simply because that would keep us all healthier.

That did not happen and while the cruise industry has adopted stronger cleaning and health protocols, the broader world has not. Cruise passengers, while they may have been wary at first, have come roaring back and that's a mixed blessing for anyone looking to cruise.

Social distancing is no longer a thing on cruise ships.. Image source: Dukas/Universal Images Group via Getty Images

Royal Caribbean and Carnival have record success

When you sail on a Royal Caribbean or Carnival Cruise Line (CCL) cruise ship these days, there are very few signs that Covid ever happened. There are more hand sanitizer stations and you do still see some passengers wearing masks. Some ships still have some outdated signs about social distancing, but mostly, ships are full, people are crowded together, and Covid seems like a distant memory

The cruise industry has bounced back better than expected and faster than anyone what imagine, That's something Carnival CEO Josh Weinstein addressed during his company's first-quarter earnings call.

"The first quarter has been fantastic across the board and yet another set of records. We delivered record revenues, record bookings, and record customer deposits again this quarter, a great start to the year," he shared.

Prices, he noted, are higher and ships are sailing with more passengers.,

"Yields increased over 17% year over year, another record, and more than double the increase in unit costs. This was driven, not only by closing the occupancy gap but also through solid mid-single-digit price increases," he added.

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Those numbers, which are similar to what Royal Caribbean reported, are great for the company and its shareholders, but they send a warning message to people looking to book a cruise.

Royal Caribbean's ships are filling into 2026

Cruise lines have capacity constraints based on how many rooms they have available to sell. When the cabins are sold, they're gone, and there's no way to quickly create more availability. That means that as ships start to fill up, prices go up as the available rooms become more scarce.

Royal Caribbean CEO Jason Liberty shared some positive news about his company's booking pattern during its first-quarter earnings call.

"Guests are making their decisions much further out. When we look at the repeat rates that are going on and the dreaming that our guests are doing to make sure that they're getting the vacation experience that they want is really all leading to very, very strong demand trends for 2024 as well as 2025. And by the way, we're also taking bookings into 2026," he said.

With both companies reporting strong advance bookings, that means that passengers will likely be paying higher prices in most cases. Liberty also noted that passengers are making some added-fee booking choices, like specialty dining, drink packages, internet, and excursions, earlier.

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"We're also seeing very strong booking behavior pre-cruise. And again, making sure that our guests are, have the ability to get the first day of their vacation back by planning their onboard activities and shore excursion activities well in advance. And that's also not only helping our ability to yield manage on the onboard experience, but it's also improving our customer deposits, which is also rising due to that," he added.