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Cruise bookings are so hot that Royal Caribbean outperformed all of its predictions, defying slowdown fears

26 Oct 2023
Matt Hochberg

It's not your imagination, a cruise vacation is so in demand right now that even Royal Caribbean can't believe how hot their product has become.

Wonder of the Seas

Royal Caribbean Group reported its third quarter 2023 results on Thursday, along with its 2024 outlook. Not only did the company have a one billion dollar profit, but they see even stronger demand to come.

Royal Caribbean Group raised its full-year profit forecast for a third time, which is an important sign of how strong demand is.

During an call with investors, Royal Caribbean Group CEO Jason Liberty talked about how well-positioned a cruise vacation is with consumers, "The unprecedented acceleration in demand and pricing for our leading brands, combined with stronger demand for onboard experiences, were certainly the main drivers of our outperformance."


The business of cruising across the three primary brands of the Royal Caribbean Group: Royal Caribbean International, Celebrity Cruises, and SilverSea, have resonated with consumers in bookings.

Some interesting facts:

  • More than 130,000 guests sailing on their ships every day
  • Guest median household income of at least $125,000
  • Guests spending on experiences is currently up 25% compared to 2019, with twice the amount spent on goods
  • A third of pre-booking purchases now coming through the mobile app
  • Cruise fare rates were up approximately 18% in the third quarter compared to 2019

Mr. Liberty pointed out that while airlines and hotels have concerns related to the financial health of those businesses, cruises are seeing no slow down, "our commercial apparatus is firing on all cylinders."

A closer look at who's booking cruises

New Years Party

Royal Caribbean said it saw a significant increase in new to brand and new to cruise customers this year. This is important, because those that have never cruised before represent the single most viable source of new business.

In the third quarter, approximately two thirds of guests were new to cruise or new to brand, all while also doubling the repeat booking rate. Mr Liberty said this indicates, "strong loyalty and satisfaction."

He added that about 70% of guests made pre-cruise purchases, and this is important because customers who purchased onboard experiences before their cruise spent two and a half times more than those who only bought once on board.

Wonder of the Seas aerial rear

"We have thousands of people making bookings for experiences that are at least 6 to 8 months from today," Mr. Liberty explained. "They're making bookings into 2025. They're even making bookings into 2026."

"So our visibility in terms of how the consumer is looking at things going forward, at least on a vacation experience on our incredible brands is is pretty good based off of where the consumer is standing today."


Moreover, Royal Caribbean is seeing a customer that wants to stay with a Royal Caribbean Group ship, more than any other, "I think what's important is what we're getting is a very sticky consumer who wants to be sailing with us, staying within our ecosystem."

"And so sometimes it's not a question of where they're going to go... but they're going to go somewhere with us. And that's what we're focused on making sure they're doing."

Cruise vs land vacations

Utopia of the Seas overhead render

Mr. Liberty once again beat the drum of comparing cruises to land vacations, and reiterated how competitive cruises are instead.

He admitted the cruise industry is just "a sliver of overall vacation and travel and leisure", but he sees even a 1% shift of that travel demand to cruise would have an incredible impact on cruises.

"We're seeing that with the younger generations who really look at us very much similar to how they would look to go to Orlando or Vegas or skiing, etc."

Magic Kingdom in Disney World

He is fond of referring to the value gap that exists between cruises and land vacations, where cruising is such a better value compared to a land resort.

"If we can close half of that gap and get back to where we were, that's also worth probably about ten Oasis class ships."

Europe was the difference maker

There are many reasons why Royal Caribbean Group has a great third quarter, but European cruises were at the top of the list.

Royal Caribbean Group Chief Financial Officer Natali Holtz explained, "Overall, about 50% of the better than expected yield performance was driven by European itineraries, with the remainder mainly driven by Caribbean and Alaska."

About half of passengers on Royal Caribbean Group's European sailings come from the US, and the other half come from around the world.

The Caribbean and Alaska have always been strong performers, but Europe essentially outperformed itself and catapulted itself up this quarter.

Matt started Royal Caribbean Blog in 2010 as a place to share his passion for all things Royal Caribbean with readers. He oversees all the writers at Royal Caribbean Blog, and writes a great deal of content on a daily basis.  He has become one of the foremost expert on a Royal Caribbean cruise.

Over the years, he has reached Pinnacle Club status with Royal Caribbean's customer loyalty program.

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