Airline fuel costs have risen amid the ongoing conflict in the Middle East, making summer travel difficult for many consumers. However, Royal Caribbean noted that the higher airfare prices aren't stopping vacationers from going on cruises. 

Domestic economy ticket prices are up 21% from a year earlier to an average of $570, while premium-seat prices rose 17% to an average of $1,444 per trip, according to Airlines Reporting Corp. (ARC) data released April 16. 

CBS News also reported that airfare prices were up nearly 15% in March compared to the same time last year. Continuing, the article states that, as of April 13, the average domestic round-trip flight cost $358, up 18%, or about $55, from the same period a year ago.

Spirit Airlines is feeling the pressure, too. The ultra-low-cost carrier said they only have enough cash to continue operations for days, not weeks, according to 6abc. There had been ongoing discussions about a $500 million government bailout, but they've since stalled. 

The carrier has been struggling ever since the pandemic, and if forced to liquidate, it would become the first significant U.S. airline in over two decades to completely halt operations due to financial problems. 

Despite the troubling times for the airline industry, cruise demand has remained resilient

Would you believe it if I told you that a round-trip flight from Charlotte, North Carolina, to London, England, was around $1,700 per person on American Airlines? Despite the astronomical cost, my partner and I still have plans to travel to Europe this summer and take a five-night cruise aboard Liberty of the Seas. To us — and many other travelers right now — higher airfare is simply the reality of traveling today, whether to Florida, Texas, or beyond. 

"[W]e've seen a slight impact, obviously, because when the airfares go up, it does have an impact. [T]he great thing is we've got a phenomenal global infrastructure," explained Michael Bayley, President and CEO of Royal Caribbean International, during the company's Q1 earnings call on April 30, 2026. 

"[T]he North American consumer, as we see it and as we commented in our remarks, is very strong. And at least for our customers in terms of where their balance sheets are, where their level of employment is..., and their propensity to vacation and their propensity to cruise with us is, is really... at the highest levels that we have seen in the past," Jason Liberty, CEO of Royal Caribbean Group, added. 

Certain external factors did create short-term hesitation, particularly when it came to European cruises and longer-haul flights; however, demand quickly stabilized. 

"In recent weeks, bookings for Mediterranean itineraries have been rebounding for the limited remaining inventory," the company said in its press release. 

The company had a strong first quarter, too, despite all the ups and downs, reporting total revenue of $4.5 billion, an 11% increase year over year, along with net income of $0.9 billion.

Hassle of airport travel

According to Liberty, the issues go far beyond the cost of airfare itself. Instead, it is more about the growing frustration travelers associate with the overall airport experience, ranging from hectic security lines to flight delays and cancellations. 

However, those who don't want to deal with major airports can choose to drive to cruise ports, which adds a layer of flexibility and convenience that benefits the cruise industry.

For example, those driving from the Atlanta area to Fort Lauderdale or Miami during the government shutdown didn't have to worry about traveling through the Hartsfield-Jackson Atlanta International Airport (ATL), where, according to ABC News, some travelers faced TSA security lines stretching up to four hours in late March.

Orlando International Airport (MCO), which is already a hectic airport due to its proximity to the major theme parks in Florida, also experienced longer-than-usual lines, further highlighting the appeal and convenience of skipping the airport altogether and driving to the cruise port instead. 

"[A]s you can see in our, in our first quarter results... while we saw some of that [hesitation]... we also saw the consumer break through on that, and we saw a little bit more of our drivable markets kind of lift up," Liberty added. 

Read more: Fly in same day? Why it's a mistake to fly the same day as your cruise

Vacations are still a top priority, and cruises remain one of the best bangs for your buck

Although factors like rising airfare costs, reduced airline capacity, and flight disruptions created initial hesitation among travelers, they haven't derailed the broader desire to vacation.

"Travel remains a priority for consumers, with guests becoming more selective and value-focused in how and where they choose to travel," said Naftali Holtz, Chief Financial Officer, Royal Caribbean Group.

"That dynamic aligns well with the attractive value proposition of our experiences, which is why we have done so well historically, even during times of uncertainty."

"Our performance reflects consistently strong execution by our teams and the compelling value proposition and differentiated experiences our brands offer consumers who continue to prioritize experiences," Liberty added. 

That shift toward value and differentiated experience plays directly into cruising's strengths, which helps to sustain demand as broader travel challenges persist globally. 

Read more: I always do 6 things before I book a cruise if I have to fly there

The Iran war and violence in Mexico hasn't stopped people's desire to go on a Royal Caribbean cruise.

Royal Caribbean Group released its first quarter financial results, and they say demand for its cruises is still going strong.

In its earnings report, the company made clear that while external factors created some short-term hesitation among travelers, the broader trend hasn't changed. Their bookings show people are still prioritizing cruise vacations, and reservations are now running ahead of where they were at the same time last year.

"Demand for our experiences continues to be strong," said Jason Liberty, Chairman and CEO of Royal Caribbean Group. "We expect another year of double-digit revenue and earnings growth, driven by consumers’ preference for our leading brands and expanding portfolio."

Royal Caribbean reported total revenue of $4.5 billion, an 11% increase year over year, along with net income of $0.9 billion.

Adjusted earnings per share came in at $3.60, beating the company’s previous guidance thanks to higher revenue, lower costs, and better performance from joint ventures.

The results show that despite the geopolitical issues of the last few months, cruise demand is quite resilient.

A brief slowdown, followed by a quick rebound

Royal Caribbean said bookings started out the quarter tracking at an "exceptionally strong trajectory," particularly for high-demand European sailings. 

But that momentum hit a temporary speed bump late in the quarter.

"Bookings for high-yielding Mediterranean itineraries… moderated following recent geopolitical developments late in the first quarter," the company said in its press release.

Royal Caribbean Group saw the slowdown in both Europe and itineraries along the West Coast of Mexico, tied to "geopolitical-related considerations specific to that region."

Several factors contributed to the hesitation, including rising airfare costs, reduced airline capacity, and flight disruptions.

However, those slowdowns were both short-lived.

"In recent weeks, bookings for Mediterranean itineraries have been rebounding for the limited remaining inventory," the company said.

They reported bookings in April were once again exceeding the same period last year, signaling whatever hesitation was in the market quickly disappeared.

Optimistic, despite challenges

Royal Caribbean Group sees growth, even with global factors that could continue to influence demand in certain regions.

The second and third quarters, in particular, may feel more impact from the earlier slowdown in Mediterranean bookings, since those sailings make up a larger portion of deployment during that time.

At the same time, rising fuel costs are expected to increase expenses, which could put pressure on pricing or margins.

Still, the company’s overall outlook remains positive.

"We remain focused on delivering the best vacations responsibly, accelerating revenue growth, and managing costs, all while continuing to invest in our future and drive further differentiation," Liberty said.

Vacations are still a top priority

Even with global uncertainty, Royal Caribbean says consumer behavior hasn’t fundamentally changed.

"Travel remains a priority for consumers, with guests becoming more selective and value-focused in how and where they choose to travel," said Naftali Holtz, the company’s Chief Financial Officer.

"That dynamic aligns well with the attractive value proposition of our experiences, which is why we have done so well historically, even during times of uncertainty," Holtz added.

Royal Caribbean’s results appear to back that up. The company carried 2.5 million guests in the first quarter, a 12% increase compared to the same period last year, while capacity rose 8%.

Ships sailed very full in the quarter, with load factors of 109%. An occupancy level above 100% means cabins had more than two people booked in that room.

Royal Caribbean said its “booked position enjoys record prices with volumes within historical ranges,” a sign that strong demand is allowing the company to hold firm on fares.

Even after the temporary dip in bookings, that pricing strength hasn’t weakened.

During April, the company said bookings "continued to exceed the same period last year, including continued strength in close-in bookings."

Royal Caribbean said its yield growth in the first quarter "exceeded the company’s guidance mainly due to higher pricing across key products driven by strong close-in demand and onboard revenue."

In other words, not only are more people booking cruises, but they’re also willing to pay more, even when booking later.

Guests are spending more onboard

Not only are bookings up, but people are spending extra on all of those add-ons, such as drink packages, Wi-Fi, and more.

"Onboard revenue trends remain strong, with onboard spending continuing to exceed prior-year levels," the company said.

Royal Caribbean Group says the combination of increased demand for onboard and destination experiences, as well as an expansion of what’s available to purchase, have contributed to this increase in buying cruise add-ons.

"This is driven by both guests’ growing demand for onboard and destination experiences and the company’s continued expansion of product offerings both on ship and at destinations," the press release said.

Another reason is Royal Caribbean is getting better at matching people to the things they truly want.

"These trends are also supported by more effective and targeted engagement, ensuring the right experiences are matched with the right guests."

Royal Caribbean Group's secret weapon isn’t new ships: it's AI. See the company's fourth quarter earnings for proof.

Backed by strong demand for its brands and vacation experiences, 2025 proved to be an outstanding year for Royal Caribbean.

During Royal Caribbean Group's (RCG) Q4 earnings call on Thursday, January 29, company executives acknowledged that demand for cruising remains strong. 

In fact, RCG experienced the best seven booking weeks in the company's history since the last earnings call in October 2025. Approximately two-thirds of the 2026 inventory has already been booked at higher rates than in the past. 

"We’re not only seeing good volume, but our pricing is higher in the Caribbean than it was last year," said Jason Liberty, Royal Caribbean Group CEO. 

However, higher fares are also being driven by the company’s expanding use of artificial intelligence (AI), which has helped RCG optimize pricing in real time and determine if last-minute discounts are necessary. 

Fares are higher than last year, but it's not just demand

Cruise fares have always been priced dynamically. In other words, the cost of an interior cabin on a weeklong cruise aboard Star of the Seas can fluctuate within hours based on how much inventory remains for that specific sailing.

This dynamic pricing system is standard within the cruise industry, as it helps companies balance supply and demand while keeping ships full during off-peak and peak travel periods. Recently, however, Royal Caribbean has leaned heavily into its use of AI to inform how it prices its cruises.

"Our yield management models... are AI-based," Liberty explained. "They do learn… [and] we have a pretty good handle now on close-in demand, how we market it, [and] how we price it... and our yield management and forecasting is informed by all of that." 

By analyzing the data these systems collect in real-time, Royal Caribbean can increase its fares without hurting the overall demand for its products. 

Read more: Analysis of cruise pricing data to find the cheapest time to book

Higher prices are sticking

Royal Caribbean’s cruise fares are rising, but demand remains strong because travelers are willing to pay more and spend more onboard. The cruise line's latest research shows that its consumers feel financially secure and continue to prioritize experiences, with 40% planning to increase their leisure travel spending in the next year. 

Not only that, but demand is exceeding capacity growth. As such, Royal Caribbean can continue raising fares while still keeping ships full, with premium experiences and onboard spending a central part of its long-term revenue strategy.

"[W]e're seeing people who are willing to pay more money than they did last year. They're willing to spend more money on the ships than they did last year," Liberty explained. "We're getting the volumes that are more than what our capacity increases, and we're benefiting from a lot of the investments that we've made."

Other ways Royal Caribbean is using AI across its operations

AI-driven pricing tools are just one way that Royal Caribbean is using artificial intelligence in its day-to-day operations. 

"AI and disruptive technology are becoming a foundational advantage for us. Representing a core capability that improves the guest experience, strengthens our commercial engine, and helps us run the business more intelligently," Liberty said during the Q4 call. 

Beyond pricing, the company is using AI to expand the way guests interact with its entire family of brands, not just a single line within its portfolio, such as Royal Caribbean or Celebrity Cruises.

"[T]echnology and AI that make the experience more seamless and more personal," he added. "This approach expands the way guests can vacation with our family of brands and reinforces our vacation of a lifetime strategy."

For example, they aim to use technology to make vacations easier to discover and plan, improving overall guest satisfaction. Relevance and personalization directly correlate to what people are willing to pay for a premium vacation and pricey add-ons. 

"We are improving our ability to curate and personalize what guests see while increasing pre-cruise engagement… The goal is to reduce friction, improve the experience, and present relevant options that add value to the guest," Liberty said. 

In their eyes, AI isn't meant to replace the work of paid employees, either. Rather, when used correctly, it's a tool that can make their experience better and provide even more value. 

Liberty continued, "We are also using AI to improve efficiency and execution, from supply chain forecasting to energy management and marine operations. These are the types of capabilities that build durable operating leverage over time and reinforce our focus on margin expansion and returns."

Consumers might be cutting back on spending in some places, but they're still spending big on cruises.

During Royal Caribbean Group's third quarter earnings call, executives were clear that while people might be looking for ways to spend less overall, they're not willing to skimp on vacation.

"Consumers continue to prioritize experiences and make room in their budgets for meaningful vacations," said Royal Caribbean Group CEO Jason Liberty as he spoke to Wall Street analysts. 

While there may be-a shift in consumer behavior in everyday life, it hasn't hit vacations.

People are still spending on cruises

If someone is going to try to save money, a vacation isn't where they're looking.

The cruise giant's own research tells them that a vast majority of consumers are still spending the same on vacations as they did before.

Roughly three-quarters of consumers intend to spend the same or more on vacations over the next twelve months, a level that has remained consistent for several quarters. 

Their research also shows that while consumer spending has "normalized" from the elevated levels over the past two years, "demand for experiences and leisure travel remains intact."

While the rest of the economy may have softened on overall spending, people are still spending big on their trips.

Mr. Liberty thinks this is largely due to the great value a cruise offers, "Cruising offers superior value for money versus alternative options, driven by the high-quality onboard amenities and services, pricing inclusive of meals and entertainment, and the opportunity to visit a variety of destinations with the convenience of having everything in one place."

This is evident in the extraordinary demand they've seen for the fist Celebrity river cruises, and the new Icon Class ships.

The other reason the company feels good about the future of consumer spending is because of the new offerings they have lined up.

Royal Caribbean International is on the precipice of launching a new beach club in The Bahamas, followed by two more beach clubs in 2026.  Then you have Perfect Day Mexico opening in 2027.

The opportunity to try those experiences is likely going to drive demand even further, according to Royal Caribbean International President and CEO Michael Bayley.

"[Beach clubs are] also a driver for itinerary as well because we are beginning to see that itineraries that include the beach club as well as Perfect Day seem to be driving even more demand than historically, which has been really strong."

"I think we'll see that kind of combination of beach clubs really push through in onboard revenue and short excursions."

Willing to pay more

Another interesting anecdote about consumer spending is that cruisers are not only still booking, but they're willing to pay up for it.

Liberty talked about how demand is fueling cruise bookings, "As we see really strong demand and people are dreaming more and more about their vacation experiences."

"We are also seeing that translate to onboard spend. And so we are thoughtfully meeting our guests with the experiences, and they are willing to pay for them."

According to Mr. Liberty, the average cruiser has this makeup:

• Great job
• Great balance sheets (bank accounts)
• A strong desire to vacation and build experiences and memories with their friends and family

He acknowledged that they might not be willing to pay as much as they did like last year, "but they are willing to pay more."

Relying more on loyal customers

While tapping the new-to-cruise market is always going to be the primary area for sourcing business, Royal Caribbean Group is also looking to its repeat customers to cruise even more.

The company has steadily enhanced its loyalty matching program so to make it easier and more beneficial to sail on all the cruise lines owned by Royal Caribbean Group.

In 2024, status matching was introduced between the lines so a person could get an equivalent tier of loyalty status at a different line.

The move provided tangible benefits instantly to those that were loyal to one brand, but wanted to try another one.

The company then announced in its earnings call this year a new way to earn points interchangeably between the cruise lines.

Points Choice is coming early next year, and it means you can sail on Celebrity but earn Royal Caribbean points, or vice versa. This is an important change for cruisers looking to climb the loyalty ladder of one line while still being able to branch out.

Executives think it's a win-win for brand and consumer. Its aim is to generate additional sales across all of its brands while making it easier for cruisers to move up to higher loyalty tiers and their associated benefits.

Royal Caribbean's cruise boom isn't slowing down.

The second quarter earnings results were released by Royal Caribbean Group on Tuesday, and the message is clear to consumers: cruise demand is surging, even as prices rise.

The company said its ships sailed with a load factor of 110% during the second quarter, indicating ships are sailing full.

"Demand for our portfolio of brands and our industry-leading experiences continues to accelerate," said Royal Caribbean Group President and CEO Jason Liberty in a press release.

A stronger than expected second quarter

The posted results paint a picture of very strong consumer demand for going on one of the Royal Caribbean Group brands of ships.

• $1.2 billion net income; EPS of $4.41, beating expectations.
• 2.3 million guests served in one quarter, which is up 10% year over year during the same time period.
• Net Yields up 5.3%, driven by higher ticket prices and onboard spend.

"Guest spending onboard and pre-cruise purchases continue to exceed prior years, driven by greater participation at higher prices," the company said in its prepared statement. That's been a trend for years that is seemingly getting stronger.

What it means is more people booked on cruises than ever are spending more than ever on extras for their sailing, such as shore excursions, WiFi, spa treatments, drink packages and more.

An equally important trend is ships are selling out closer to sail dates, "Bookings have accelerated since the last earnings call, particularly for close-in sailings."

This means the rate of new cruise bookings have picked up since the first quarter, especially for last-minute cruises.

Strong demand for the newest ships and destinations

Royal Caribbean Group called out a few of its newest products that are set to come online because of how well they're selling.

They reported strong demand for new ships like Star of the Seas and Celebrity Xcel.

In addition, there's been an early booking surge for Royal Beach Club Paradise Island.

Mr. Liberty talked about this trend in his prepared remarks, "The strong demand we are seeing across our new ships and land-based destinations reinforces that our strategy is working and resonating with today’s traveler."

Higher prices for cruises

Royal Caribbean Group said Net Yields are expected to rise another 3.5% to 4.0% for the year, and that's important for consumers to understand.

Net Yields measure how much revenue the cruise line earns per passenger, after subtracting certain costs. 

When Royal Caribbean says Net Yields are rising, it means they're making more money per guest. Usually that's from higher ticket prices, and/or higher onboard spending.

In the second quarter of this year, Royal Caribbean’s Net Yields were up 5.3%, and for the full year, they expect them to rise another 3.5% to 4.0%. That may sound like a small percentage, but across millions of passengers, it’s a huge increase in revenue.

There are three key factors pushing Net Yields higher:

• Higher cruise fares, especially for new ships and in-demand itineraries
• People spending more drink packages, specialty dining, shore excursions, and Wi-Fi
• People booking last-minute cruises and still paying premium prices

"Net Yield growth in the quarter was split evenly between new and like-for-like hardware, and was driven by both ticket pricing and onboard spend."

A pipeline of innovation to carry them forward

Another trend within today's results is that Royal Caribbean Group sees even brighter days ahead because of its upcoming lineup of new offerings.

"We see another step change in growth… with a powerful pipeline of incredible new ships, the ramp-up of our highly differentiated new destinations… and continued investments in disruptive technology," Mr. Liberty said in the press release. That's a sign they see their new ships and private destinations as leverage for being even better in the coming months and years.

Over the next two years, Royal Caribbean Group is poised to launch four new cruise ships, new beach clubs and private destinations, and even river cruises.

Plus, expect more investment in personalization and loyalty tech. There's a clear connection between having a better app and website experience and higher revenue for the company.

Two of the biggest cruise companies in the world shared different outlooks on how they see the rest of the year going.

On April 29, Royal Caribbean Group released its first quarter results, revealing the company is seeing strong demand for its products, ranging from Royal Caribbean's Icon of the Seas to Celebrity Cruises' Celebrity Ascent. 

The surge in demand isn't slowing down, either. RCG reported that they are 86% booked for 2025 and warned of higher prices for last-minute cruisers. 

"Bookings for 2025 have remained on track, cancellation levels are normal, and we continue to see excellent close-in demand," said Jason Liberty, Royal Caribbean Group President and CEO, during the company's Q1 earnings call.

Record bookings continued into April, with Liberty reporting that the company's bookings were greater than during the same period last year. 

However, Norwegian Cruise Line's first quarter results weren't as positive. 

Norwegian Cruise Line Holdings (NCLH) posted its earnings the very next day. Revenue for Norwegian came in at $2.13 billion, below the estimated $2.15 billion as per data compiled by LSEG. This means that the company's quarterly revenue declined 3%, marking the first year-over-year decline since the second quarter of 2021. 

Norwegian also reported adjusted profit of 7 cents per share, below estimates of 9 cents. Consequently, NCLH's stock tumbled 9%, as reported by Reuters. 

The company warned of weak consumer spending on pricier voyages, citing growing concerns about a possible recession that may be affecting spending.

One area they are seeing softness in is European cruises. 

“[Europe] was actually booking really, really well till about a month or two ago. And then the American consumer seemed to be a little skittish about doing far-from-home travel,” CEO Harry Sommer told CNBC.

Now, the annual net yield is expected to increase between 2.0% and 3.0%, compared to its earlier forecast of 3.0%. In contrast, Royal Caribbean raised its annual profit forecast. 

Despite the disappointing Q1 results, Sommer believes the cruise industry has an advantage during economic turmoil because of the value proposition compared to land-based vacations. 

“You know, you may have a weak month, a weak quarter, but consumers continue to take vacations,” Sommer said. “It’s sort of one of their God-given rights, and they enjoy them...they come back.”

While the US economy might have a few question marks, Royal Caribbean doesn't see any slowdown on its end.

Royal Caribbean Group released its first quarter results and blew past expectations and raised its full-year guidance.

The results indicate the company is seeing strong demand for its products, reinforcing the trope of experiences over products.

"Our strong first quarter results are a testament to the enduring appeal and attractive value proposition of our leading brands and the incredible vacations they deliver," said Jason Liberty, Royal Caribbean Group President and CEO.

Royal Caribbean Group’s first quarter results point to a company thriving, fueled by record bookings, improved margins, strategic investments, and newly regained investment-grade financial strength.

First quarter by the numbers

Royal Caribbean Group saw good indicators all around for its products and showed a healthy return in the quarter.

• Report Q1 earnings: $2.70 EPS vs guidance, $2.71 Adjusted EPS.
• Total revenues of $4.0 billion, Net Income of $0.7 billion.
• Adjusted EBITDA $1.4 billion — margin strength is key.

About 2.2 million guests took a cruise with Royal Caribbean Group in the quarter, which is a 9% increase year over year.

Record breaking demand

The first few months of any year is known as "WAVE season" because it acts like an ocean wave carrying bookings throughout the rest of the year.

This was a very good WAVE season for Royal Caribbean, and that continued into April. Bookings in April still stronger than last year, showing momentum is sustained.

The company reported "record bookings during WAVE season."

"Bookings for 2025 have remained on track, cancellation levels are normal, and we continue to see excellent close-in demand," said Liberty.

Even in April this held true, "during April, the company's bookings were greater than the same period last year, including continued strength in close-in bookings"

Executives continue to believe that consumers are spending on experiences (vacations) over material goods.

How Royal Caribbean is pulling this off

Royal Caribbean Group's formula is a mix of cruise fares rising and people willing to pay them.

That pricing power is evident in onboard revenue and pre-cruise purchases, "Guest spending onboard and pre-cruise purchases continue to exceed prior years driven by greater participation at higher prices."

Strong close-in demand at higher prices is what they've reported in this quarter. Plus, continuous investment in adding new ships and private destinations generate higher interest among consumers.

There is quite a line-up of big projects coming soon:

• 7 new cruise ships by 2028
• Increasing from 2 to 7 exclusive destinations by 2027
• Celebrity Cruises River launching in 2027

Cost control and investment upgrades

Another factor helping the company this quarter is its strict adherence to cost controls.

"Our strong balance sheet allows us the flexibility to continue to expand capital return to shareholders, invest in growth and innovation, and maintain investment grade balance sheet metrics in a range of macroeconomic environments," said Naftali Holtz, CFO.

During the quarter, the company was upgraded to investment grade by S&P Global Ratings. Plus, they exercised significant debt reduction and share buybacks.

On top of that, they have a good amount of cash on hand, with $4.5 billion in cash and available credit.

"This quarter, we continued to opportunistically reduce debt, while lowering cost of capital and recapturing a portion of our Covid-era share dilution," Holtz added.

Hinting at a strong year to come

Royal Caribbean Group isn't making any bold predictions for the year, but they are seeing good signs to come.

The company increased its full year 2025 Adjusted EPS guidance from$14.55 to $15.55. The increase in earnings expectations is driven by the better than expected revenue performance in the first quarter and the benefit of currency exchange rates and lower fuel costs for the remainder of the year.

"With our industry-leading brands, state-of-the-art ships, exclusive destinations, and a fortified balance sheet, we will continue dreaming and innovating to win a greater share of the growing $2 trillion global vacation market," Liberty said.

While there are economic doubts for many companies, Royal Caribbean's results show cruising is one luxury people are willing to prioritize.

Royal Caribbean Group is on a roll with another great quarter, and even better outlook for the days to come.

The company shared its third quarter financial results, which were better than expected.

Net income for the third quarter was $1.1 billion, compared to Net Income of $1.0 billion for the same period in the prior year.  The company also reported total revenues of $4.9 billion.

The driving force behind its strong quarter was higher prices on last-minute cruises, continued high demand for cruise extras, and lower costs due to timing.

Another factor was balance sheet actions taken in the third quarter resulted in lower interest expense and the company's return to its pre-Covid unsecured balance sheet.

In a statement, Royal Caribbean Group President and CEO Jason Liberty celebrated the robust earnings, "Our exceptional third quarter results and increased full year expectations reflect the robust demand for our differentiated vacation experiences."

He's already looking ahead to 2025 as a year where Royal Caribbean will grow significantly more, "We see elevated demand patterns continuing as we build the business for 2025, and although the yield comparable will be a high bar, our proven formula of moderate capacity growth, moderate yield growth and strong cost discipline is expected to continue to deliver strong financial results."

Third quarter results

There were interesting statistics to come out of Royal Caribbean Group's strong quarter.

In the third quarter, across all of the company's brands, the occupancy rate was 111%. This means cruise ship cabins were not just sold out, but more cabins had more than two people in them. 

Royal Caribbean Group saw higher pricing overall, but European and Alaska cruises saw particularly higher prices. In addition, the company made more money through selling add-ons, such as drink packages, WiFi, shore excursions, and more.

Strong demand is a major factor, as Royal Caribbean Group is actually seeing the demand and pricing environment accelerated since last quarter, exceeding 2023 levels. 

"Consumer spending onboard, as well as pre-cruise purchases, continue to significantly exceed 2023 levels driven by greater participation at higher prices," the company said in a statement.

They believe their success is due to vacationers preferring their new cruise ships, existing ships, and private destinations.

"Support our growth ambitions"

Another important success for the company this quarter was the company's return to its pre-Covid unsecured balance sheet.

A balance sheet refers to a company's assets, liabilities, and owner's equity at a specific point in time.

Royal Caribbean Group has spent many months paying back loans, refinancing loans, and structuring its debt to not hinder the company's operations.

Like all cruise lines, Royal Caribbean Group took on a lot of debt during the 2020 cruise industry shutdown to stay in business through a variety of loans.

Royal Caribbean Group CFO announced, "This quarter, we achieved an important milestone of returning to a fully unsecured capital structure while also reducing cost of capital and recapturing a portion of our Covid-era share dilution."

He went on to say this change allows them to, "further support our growth ambitions and expand capital allocation." That's an important indication for cruise fans who are always eager to see their new plans.

Capital spending is the category of expenses the company refers to when it builds a new cruise ship or builds a new private island.

As an example, the next private beach experience was announced during the third quarter to build Perfect Day Mexico, which will open in 2027.

Demand for booking a cruise vacation is so red hot for Royal Caribbean right now that it's likely we'll continue to see an upward trend in cruise prices.

While there is variability in how cruises are priced, Royal Caribbean sees a willingness on behalf of the consumer to not only book more cruises, but pay more for it. The company had to adjust its earnings forecasts because they're getting more bookings than they expected at higher prices.

During Royal Caribbean Group's second quarter earnings call, Chief Financial Officer Naftali Holtz cited an example of bookings for Caribbean cruises for the coming few months.

Caribbean cruises in the third quarter will make up 42% of all Royal Caribbean Group sailings, and a lot of people are willing to pay more to go on them, "this product is booked ahead in both rate and volume and the strong yield growth is driven by new hardware and higher pricing on existing ships supported by our private destinations."

Translated from financial jargon, that means Caribbean cruises in the next 3 months have more cabins booked than normal, and the company is making more money already because people are willing to pay higher prices due to an investment in newer cruise ships and itineraries that visit Perfect Day at CocoCay.

Willingness to pay more

The top reason why you should expect Royal Caribbean cruise prices to continue to rise is because customers are demonstrating they will pay higher prices.

Looking ahead to the rest of 2024, Royal Caribbean Group CEO Jason Liberty spoke about this trend during the earnings call, "all the yield improvement that you're seeing in Q3 and Q4 is really being driven by price."

"I think it's a really strong indication that not only the willingness to pay more, but these prices continue to increase as we build and manage demand."

To put it in perspective, Mr. Liberty indicated Royal Caribbean Group's revenue for the second half of 2024 is 25% higher than it was in 2019, which was the previous high water mark for the cruise industry. 

If 2024 looks positive, 2025 looks even better for the company. They're taking more bookings for 2025 than for 2024, and that means the higher pricing trend will continue into 2025 and beyond.

"The strength in the commentary that we talk about on pricing and pricing increasing, it very much applies to 2025 and beyond," Mr. Liberty explained during the earnings call.

"So we feel very good. We're in a very strong book position for 2025, pricing is up and increasing are the trends that we continue to see."

"I think we feel really good about 2025. The pattern show pricing continues to accelerate."

When you combine sky-high onboard spending, prices, and demand, it's a formula for higher prices on average. That probably means less cheap cruise deals on the horizon.

If you're reading all of this and think surely consumers will buck against the higher prices, it's not something Royal Caribbean sees on the horizon.

One Wall Street analyst asked about "pricing sensitivity" from customers because of comments made by land-based hotel operators.  Royal Caribbean rebuffed that notion based on what they're seeing on their end.

Mr. Liberty explained, "the booking window continues to extend, so they're planning further out, their willingness to pay more for these incredible vacation experiences continues to increase."

Part of the reason why he believes cruise bookings are stronger than land vacations is because of the value gap between the two types of vacations, which Mr. Liberty estimates is around 20%.

For consumers, it's a sobering prediction for what the future holds in terms of prices, "the trends that we see is just continued acceleration on the pricing side."

Bargain hunters will need to be agile

While the trend is moving cruise prices higher on average, it's still possible to find an ultra-cheap cruise. 

Royal Caribbean prices its cruises largely based on supply and demand, and there are going to be deals out there, especially on sailings that have less demand.

First and foremost, Royal Caribbean will see the highest prices on its newer ships, such as Utopia of the Seas or Icon of the Seas. That's because new ships always command a higher price because they have the latest and greatest features on them.

Generally speaking, you'll find lower prices on older, smaller ships.  

As an example, try Adventure of the Seas out of Port Canaveral instead of Utopia of the Seas.  Or Freedom of the Seas out of Fort Lauderdale instead of Icon of the Seas.

Some of the best cruise deals are on longer sailings that take place while school is in session. Transatlantic crossings remain some of the best deals from a per-night cost basis.  

Transatlantic cruises take place in the spring and fall when cruise ships migrate from North America to Europe and then back again.

Read more: What it's really like to take a transatlantic cruise

The reason they're cheaper is they are longer, usually 10-14 nights, and a lot of families cannot go on vacation for that long a period.  Plus, families can't book them because their kids are in school.

The other strategy for a good cruise deal is a bit of luck.  Sometimes there's a last-minute cruise deal that pops up, and other times there are specific sailings in the coming months or years that are priced lower.  

Spotting these cruise deals can be just plain luck, or you could also rely on a good travel agent that monitors prices during the course of their daily work and can alert you when they spot something good.

Read more: 10 Secrets Royal Caribbean travel agents wish you knew

While I would not expect cruise prices to drop across the board, savvy consumers should be able to find some deals.  

But for the newest ships, don't expect a lot of wiggle room.  It's why booking early is still the best strategy to get the best price possible on these vessels.

Royal Caribbean Group continued its trend of reporting strong quarterly earnings with its second quarter performance.

Thanks to strong demand and favorable timing of expenses, the company "above expectations" results for the second quarter.

Demand for cruises remains a constant for the company, which cited stronger pricing on close-in demand and continued strength in onboard revenue, as well as favorable timing of expenses, as reasons why results exceeded its expectations.

In a statement to the media, Royal Caribbean Group President and CEO Jason Liberty celebrated his company's strong performance, "Our momentum continues! We met our financial targets 18 months earlier than expected, have our balance sheet in a strong position, reinstated our dividend, and ... we are just getting started."

"Exceptional demand for our vacation experiences has accelerated our performance by generating significant yield growth over the past several years," added Liberty. 

"As we look forward, we remain intensely focused on driving strong shareholder returns by delivering a lifetime of vacations and taking a greater share of the rapidly growing $1.9 trillion global vacation market. This is underpinned by our formula for future success – disciplined growth and moderate yield growth while controlling our costs."  

Inside the second quarter

Total revenues for the second quarter were $4.1 billion, with a Net Income of $854 million, and Operating cash flow was $1.6 billion.

The average cruise ship sailed in the second quarter at 108% capacity. Occupancy rates over 100% are a good measure because it means there were more than two people in a lot of cabins.

Royal Caribbean is seeing high demand for its products along with high prices remaining in place since the last quarter. 

In fact, booking volumes were higher than the second quarter in 2023 and at record pricing levels. 

The company continues to be in a record booked position for 2024 sailings. Consumer spending onboard, as well as pre-cruise purchases, continue to significantly exceed 2023 levels driven by greater participation at higher prices.

"We have seen strength for all key products and are already taking more bookings for 2025 sailings than 2024," Mr. Liberty commented.

The company was particularly proud of the fact it achieved all three of its financial goals. For the 12 months ending June 30, 2024, the company achieved all three of its Trifecta goals: triple digit Adjusted EBITDA per APCD, ROIC in the teens, and double digit Adjusted EPS.

Loan update

Royal Caribbean Group took out many loans during 2020 and 2021 in order to stay in business, and some of the critical ones are now paid off.

"During the quarter, the company repaid the remaining balance of its ship related debt amortization deferral obtained on its export credit facilities during 2020 and 2021, which removed the remaining restrictions on capital return."

 "Our strong balance sheet allows us to expand capital allocation and reinstate a quarterly dividend, further supporting our goal of creating long-term shareholder value," said Royal Caribbean Group Chief Financial Officer Naftali Holtz.