Why Are Royal Caribbean Cruises Getting More Expensive in 2024?

Over the years, Royal Caribbean has become a favorite among cruise enthusiasts, offering an unparalleled experience. Since my first cruise on Royal Caribbean in 2004, I have chosen to go on 60–70% of my cruises with them due to the combination of high value and exceptional experience. It appears that my preferences are not unique, as many other cruise-goers are experiencing similar trends.

These increasing prices can be attributed to several key factors that have been affecting the cruise industry as a whole.

Increased Demand

In April 2024, Jason Liberty, CEO of Royal Caribbean, noted that bookings were outpacing the previous year, despite fewer staterooms being available for sale. He explained that demand for Royal Caribbean's vacation experiences was accelerating, with new ships often selling out a year in advance. This heightened demand has led to a significant price hike across the board.

Increased Costs

Fuel

The current cost of fuel has remained elevated due to unrest and conflict in various regions, including Ukraine, Israel, and the Red Sea. Additionally, many ports now require the use of cleaner and more expensive fuels, such as biofuels, to comply with environmental regulations. For instance, cities like Amsterdam and ports in Norway and Alaska charge substantial fees for these biofuels. The use of 'port power' connections, which are becoming more common in home port cities, also results in higher than normal usage rates.

Food and Beverage

The prices of food and beverages have risen by about 40–50% from pre-pandemic levels. Although cruise companies benefit from bulk purchases, the costs are more fluid and influenced by supply chain issues and higher shipping fees across multiple jurisdictions. Furthermore, the cost of diesel, which is used to transport food and other consumables to ports, is at a premium in Europe and other regions. While it is understandable to blame Putin, the root of the issue lies in poor policies and inadequate business strategies.

Labor and Entertainment

There has been a steady increase in standard labor costs over the past five years, with specialized labor costs rising even faster. The desire for a safe and high-quality cruise experience means that labor and entertainment costs are higher than ever before. Even when passengers are charged for these services, upfront costs are significant.

Refurbishments and Upgrades

Supplies and equipment have not yet fully recovered from the impact of the pandemic. Procuring replacements can be very expensive, and additional products require more expensive logistics and expertise. The demand for advanced features like high-speed internet, more television channels, and advanced technology further contributes to these rising costs.

Replacement Equipment

For instance, if a coffee maker in the buffet breaks, and the closest replacement is in Taiwan or Korea, it can be both expensive and time-consuming to ship the replacement to a port for customs clearance and onboard replacement. These logistical challenges add to the overall cost structure.

Crown and Anchor Members Driving Demand

One of the critical factors contributing to the rising cost of Royal Caribbean cruises is the substantial growth in the number of Crown and Anchor Members. Many of these members are retired and enjoy frequent cruising, often taking back-to-back trips. This group is also competing for higher membership levels and more privileges, similar to airline frequent flyer programs. These members are driving demand and influencing pricing.

Financing and Building New Ships

The increased prices do more than just cover operational costs; they also help finance and build newer ships, office buildings, recover from the pandemic, and recruit new personnel. This is true for all cruise lines, not just Royal Caribbean.

In conclusion, the increasing cost of Royal Caribbean cruises is driven by a combination of heightened demand, increased fuel and operational costs, labor and entertainment expenses, refurbishments and upgrades, and the growing influence of Crown and Anchor Members. These factors collectively contribute to the rising cost of one of the most alluring experiences in the cruise industry.