Are we in the dying days of the era of great travel deals?
Some industry observers are suggesting that the cruise industry’s recovery from a nearly three-year recession linked to the COVID-19 pandemic will pick up steam.
After a long time witnessing several cruise lines Huge discounts to fill shipsSeveral Wall Street analysts have noted in recent weeks that increasing vessel utilization has finally allowed cruise lines to begin raising average prices above levels seen before the pandemic.
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The fourth quarter of 2022 “is the first quarter where we expect prices to be up from 2019 levels,” Truist hospitality and leisure analyst Patrick Scholes wrote in a research note this week. “Looking to 2023, excluding unforeseen circumstances, we expect prices to continue to accelerate relative to 2019 parity.”
For now, the fare increases that Scholes and others are seeing are not on a monumental scale. Scholes said he expected average rates for major cruise lines to end the current quarter “increasing by a single-digit average”, as a percentage – compared with prices in the fourth quarter of 2019. .
Given that the cumulative inflation rate in the US since 2019 has been around 17%, as measured by the US Bureau of Labor Statistics’ Consumer Price Index, that’s still a drop in prices. real value.
However, in just the past few weeks, some of the extremely low yacht fares for last-minute trips in October, November and December have disappeared.
Related: The ultimate guide to choosing the right cruise line for you
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Leading the budget journey Festival cruise linefor example, no longer advertising last-minute seats on four-night trips for as little as $104, or just $26 a day, like in October. As of Wednesday, the lowest fares for four-night rides available on Carnival’s website are $149 — or $37.25 a day.
While still a remarkably low price for a four-night stay, starting fares have increased by 30% in just a few weeks.
Similar, Royal Caribbean, the world’s largest cruise line, on Wednesday sold last-minute seats for three-night trips on its website starting at $123 – or $41 a day. Just a few weeks ago, the line advertises three-night trips as low as $99.
The higher prices for last-minute vacancy on the train in recent days are partly a result of the always-discount season coming to an end. Fall is off-season in the yachting world and always offers lower fares for excursions than other times of the year.
Higher prices are also a result of stronger demand that is causing cruise lines to slash prices at the last minute to fill ships, travel industry watchers suggest.
Scholes noted in his research report this week: “While prices still show modest slippage as the departure date draws closer, the slippage is much lower than a ‘crash and drop’ sold out’ as the departure date drew closer, which we have observed for most of the year.”
Scholes said the price increase comes amid a significant increase in yacht bookings in the current quarter and first quarter of 2023 over the past eight weeks.
“This is in stark contrast to the trend for most of the past year when booking for the current quarter and [the first quarter of 2023] very weak,” he said.
The capacity of using cruise ships increases
The increase in ticket prices also comes Cruise ship capacity continues to recover from an all-time low following an industry shutdown due to the COVID-19 pandemic.
For instance, the occupancy rate on Norwegian Cruise Line Holdings’ ships increased to 82% in the three-month period ending October 31 – up from 65% in the previous three months – the airline said at the beginning of the month. this. The occupancy rate is continuing to increase in the current quarter.
“We expect the load factors to continue to improve sequentially to mid-to-high 80% in the [current quarter] … and steady occupancy is expected to continue until we reach over 100% historically starting Q2 2023,” said Frank Del Rio, president and CEO. of Norwegian Cruise Line Holdings said on a conference call with Wall Street analysts earlier this month.
Norwegian Cruise Line Holdings is the parent company of Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruise.
Del Rio’s comments come just days after Royal Caribbean Group chief financial officer Naftali Holtz told analysts the company expected occupancy levels to return to historic levels at stores. company logo in the spring.
Royal Caribbean Group is the parent company of Royal Caribbean, Famous people and silver sea yachtand it is also part owner of the German TUI Cruises and Hapag-Lloyd Cruises routes.
Holtz said Royal Caribbean Group ships ended the third quarter with a occupancy rate of 96%, up significantly from the 82% occupancy rate in the second quarter but still below normal.
Royal Caribbean Group ships often set sail at more than 100% capacity — this can happen when more than two people occupy a cabin.
Cruise prices are still relatively low
Even if the starting price for cruises increases in the coming months, the price for cruises will still be significantly lower than the cost of vacationing on land.
As TPG has written several times in recent months, hotels, resorts and airlines have been able to raise prices much faster than cruise lines over the past year as tourism activity recovers from the pandemic. .
Related: Why the best value in a journey right now can be a journey
That has made the long-standing noticeable difference between the cost of land holidays and the cost of yacht holidays even wider than in the past.
In a recent analysis, travel insurance comparison site insuremytrip.com pegged the spread at around 30%, noting that real-time data on what customers are paying shows the trip overland The average journey costs $6,426 – $1,469 more than the average journey.
The bottom line: Cruises are still a great value. But if you’re looking for a market excursion, it might be a good time to grab whatever offer you see now instead of waiting for a better one.
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