Why Cruises Are So Cheap? (And Will That Remain True?)

Imagine spending a week in the sun, exploring multiple foreign cities, and reveling in nightlife while throwing back endless helpings of seafood. It sounds like the stuff of a high-cost holiday, but it’s really been just the basic perks of booking a cruise. And for years, vacationers have wondered why cruises are so cheap compared to other travel.

Of course, the events of 2020 were not exactly favorable to the cruise industry, which docked its vessels for several months as the COVID pandemic surged. Remember it was on a cruise that the virus first was identified.

But many of the most prominent cruise lines, like Carnival and Royal Caribbean, are already planning a robust return. So the question remains, how is that cruises have been so cheap and will the low prices continue in a post-COVID world? Let’s take a look.

All Aboard

One reason that a cruise vacation has been a historically affordable option is bundling. Instead of paying separately for a flight, a hotel, food to eat and entertainment to enjoy, you get it all-in-one with a cruise package. And most cruises follow an all-inclusive model, which theoretically means you don’t have to spend a dollar while at sea. (Of course, once you’re aboard, they’ll still encourage you to spend money at the gift shop, at the bar, and on excursion packages.)

Another factor contributing to lower prices is the sheer number of passengers that cruises can accommodate. It’s in the cruise line’s interest to fill every cabin on the ship to maximize revenue. And as disembarkation approaches, the pressure to have a full deck causes many companies to dramatically lower prices. Their effort to entice last-minute passengers means that often you can enjoy all the perks of a resort vacation for a fraction of the cost.

But will this model sustain after a year of crisis? Not necessarily.

High Demand, Limited Capacity

Despite the negative attention paid to cruise ships this year, it appears that interest in maritime travel remains high. In an interview with Bloomberg last summer, Carnival CEO Arnold Donald claimed that “there is a lot of pent-up demand” for cruising, and according to Cruzely, Carnival cruises were quickly at capacity shortly after the company announced its return in November 2020.

But in light of our post-COVID reality, such cruises have had to make concessions. They can’t pack their ships anymore. In accordance with social distancing regulations, most cruises will return at limited-capacity. And since there’s no longer the ability to fill every bed, those last-minute deals just might disappear. That is, for cruises which return.

Indeed, the major lines plan to cut their fleets, which will reduce the number of cabins available. Fewer cabins means fewer discounts. “Cruise lines are implementing dozens of new procedures and protocols,” explains Cruzely. “They want to ensure they can keep passengers healthy, and that’s easier to do when starting back with fewer ships.”

The convergence of high demand, limited capacity, and precious few cruise ships will likely lead to higher ticket prices. “There will be more demand than availability,” predicted Donald at an October cruise industry summit. And as a result of this scarcity, the Carnival CEO said, “there will be plenty of room to move prices up, not down.”

Sources: Cruzely, Bloomberg, The Los Angeles Times

Internal Links: “Are All Inclusive Resorts Worth It?” “How to Get Cheap Last Minute Hotels” “When Are All Inclusive Trips Cheapest?”