As consumers become more discerning about how and where they vacation, cruise lines are competing for Americans’ travel budgets. royal caribbean Think shortening your schedule and filling your days with events and exclusive opportunities will captivate your customers.
“I think our mindset is experience-driven,” Royal Caribbean CEO Jason Liberty said this week on CNBC’s “Squawk on the Street.” “More than half of our guests actually When you survey those guests, who are Millennials or younger, about 42% say that within the next 12 months, their plans are actually to go on a shorter vacation experience.
Royal Utopia of the Seas is the world’s second largest cruise ship, with a maximum capacity of nearly 5,800 passengers. It has 13 swimming pools, 21 dining venues, two casinos and more. This is the second cruise ship Royal Caribbean has brought to the market in six months. “Free Press” stated that the greedy demand for cruise ships after the epidemic has not yet weakened.
“We’re not seeing any pushback from consumers, whether they’re planning a vacation experience further out… (or) then on board, they go out and continue to spend,” Liberty said. “We have not seen a change in consumer behavior in any area of the ship.”
To expand its business and broaden its appeal, Royal Caribbean is looking at how to better compete with other types of vacations that customers choose, such as skiing, casinos or theme parks.
“When we look at what our guests do when they’re not with us, they go to Orlando, they go to Vegas, they go to all-inclusive resorts,” Liberty said. “What we’re trying to do is make sure that our experience, whether it’s on board a ship or on our private island, is highly competitive with a land-based vacation.”
Morningstar travel and leisure analyst Jamie Katz believes Liberty’s strategy to attract Disney theme park visitors is working.
“U.S. travelers don’t always have time to take a six- to eight-day cruise due to work schedules and children’s school calendars,” Katz said. “Three-day cruises give customers more options.”
expansion plan
One of the benefits of bringing a new boat to market is that you can charge more.
“You do see a sizable pricing premium,” said Patrick Scholes, travel and leisure analyst at Truist Securities. “Historically, the industry as a whole has priced new ships at a 20% premium over existing ships.”
Scholes said price increases for Royal Caribbean’s Utopia could be even higher.
Liberty said he expected higher pricing to continue into the second half of the year, citing a “value gap” between cruises and land-based vacations.
competitors carnivalPrices have also been increased amid strong demand.
“We haven’t seen signs of a consumer slowdown, if anything, what we’ve seen is an acceleration,” CEO Josh Weinstein told CNBC after the company’s latest earnings report in mid-June. growing up.
Analysts note that cruise travel is one of the few areas of the travel and hospitality industry that continues to experience significant price increases. last week, Delta Airlines Published prices were weaker than last year. Analysts at HSBC expect air ticket prices to remain the same or fall in 2024 as in 2023.
Several analysts and investors will be aboard Utopia this week to better understand how the ship differs from its competitors.
One area of interest is the impact of cutting-edge technology: Liberty says artificial intelligence is helping Utopia reduce food waste by 30 to 40 percent. The company also uses artificial intelligence to help with dynamic pricing and intelligent management of customer data.
Aside from Utopia, the cruise giant doesn’t have many ships coming online.
Royal Caribbean currently has the strongest order book in the industry. The company’s Icon of the Seas, the world’s largest cruise ship with a capacity of 7,600 passengers, caused a stir earlier this year.
During Royal Caribbean’s most recent earnings call, executives said Icon’s bookings will remain strong through 2025.
“We are entering a two- to three-year period when very few ships are coming online. Typically, the industry’s supply grows by 5% to 7% per year,” Scholes said.
But building a large cruise ship requires a lot of work. Wall Street analysts estimate it would take three to five years to order and deliver a ship.
norwegian cruise line Work is underway to bring eight new ships to market over the next six years.
Viking CruisesThe company, which went public earlier this year with shares well above its listing price, will bring three new ocean-going cruise ships to market over the next three years, not including its river cruise ships.
