Before the pandemic, cruise ships routinely sailed at 100% capacity or more. This is because full capacity is based on double occupancy and some rooms can accommodate more than two passengers.
Ships operated by Royal Caribbean (RLC) – Get the Royal Caribbean Group ReportCarnival Cruise Lines (CCA) – Get the Carnival Corporation reportand Norwegian Cruise Line (NCLH) – Get the report from Norwegian Cruise Line Holdings Ltd. can handle those crowds. Yes, at full capacity the pool decks and some places on board may seem crowded, but the ships are designed to provide a good experience for passengers, regardless of the number of people on board.
After the cruise industry in North America was shut down by the pandemic, from March 2020 to July 2021, the three major cruise lines returned with very limited capacity. Royal Caribbean’s Freedom of the Seas, for example, left Miami on July 2 with about 1,000 passengers, about 30 percent of its total capacity.
The numbers have increased since then, but it has been a slow process. This has led people booked for cruises to wonder exactly how crowded their ships will be. The response has generally been “less than comprehensive”, but that is changing, according to Royal Caribbean chief executive Jason Liberty, who spoke to the company. call for first quarter results.
Royal Caribbean has rebuilt its capacity
Royal Caribbean, Carnival and Norwegian have all taken slightly different approaches to getting ships back into service and increasing capacity. Liberty explained where the ability was and where it goes.
“Load factors improved throughout the first quarter, and we ended March at a load factor of 68%,” the CEO said. “We expect our load factors to continue to grow, averaging between 75% and 80% in the second quarter, and reaching triple digits by the end of the year.”
Capacities have varied based not only on customer demand, but also on the varying impact of the pandemic. And while a full return to normal is the goal, Royal Caribbean has been careful about how it has increased passenger numbers.
“We continue to think carefully about building our business, ensuring we maintain pricing integrity, leverage high onboard spend and, as always, focus on the health and safety of our guests and our crew. crew,” Liberty said.
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Carnival reported that in its first quarter – from January to March – the numbers were well outside historical norms.
“Occupancy – the number of people occupying the available cabins – is still relatively low. In the first quarter of 2022, [Carnival] said its occupancy rate was 54%”, Cruzely reported. “For comparison, the average occupancy in 2019 (the year before the health crisis) was 106.8% across all of its ships.”
Given that these Carnival figures were for the full quarter and that January and February had some impact from the Covid omicron variant, March capacities were likely in line with figures reported by Royal Caribbean.
Cruise demand remains strong
Cruise lines can fix capacity, but they can’t make customers want to cruise. Demand, however, is not an issue according to Liberty.
We continue to see strong demand for leisure travel and cruises. The robust secular trend of experimenting on things that propelled our business over the past few years is now recovering towards pre-COVID levels. Consumers are now re-engaging with the world and as a result travel spending in 2022 is expected to exceed pre-pandemic levels as consumers plan to travel more frequently. Consideration for cruises is the highest in two years and is approaching pre-pandemic levels with the largest recovery among newcomers to cruises.
Royal Caribbean’s CEO didn’t see inflation or other economic concerns dampening demand for cruises.
“Consumers are in sound financial shape. Strong labor markets, wage growth and record savings, $4 trillion in the United States, are supporting holiday spending,” he said.
“We are monitoring the high inflationary environment, but so far we have not seen an impact on consumer behaviors or their willingness to spend on cruise travel.
“Strong demand for cruise experiences continues to translate into strong onboard revenue performance for us across all categories, from casinos, beverages and shore excursions to internet, retail and spa.”