Cruise Industry: 100+ Statistics, Facts, and Trends [2023]

cruise ship revenue per year

Over 32M passengers were expected to go cruising in 2020. 

Only a handful of 400 cruise ships ready to hit the water could take passengers onboard due to COVID-19.

The result? Over $60B in losses. 

So if you’d like to learn more about the cruise industry, you’ve come to the right place. 

In this data-driven roundup, we’ve compiled the most relevant and up-to-date stats and facts on the topic to help you catch the essence.

Let’s dive right in:

Top 10 Cruise Industry Stats and Facts to Know in 2023   

General cruise industry statistics & facts, wonder of the seas, working onboard a cruise ship, cruise ships: a general overview, cruise industry demographics, cruise ships pollute but are good at recycling, covid-19 impact on cruise tourism.

top 10 cruise industry statistics for 2023

  • The cruise industry made $18B in revenue in 2022.
  • The total number of cruise ship passengers stood at 13M+ as of 2021.
  • The cruise industry is expected to reach $25.1B in revenue by the end of 2023.
  • The cruise industry supports over 1M jobs.
  • A cruise costs an average of $214 per passenger daily. 
  • The world’s fleet of cruise ships totals 430.
  • US nationals made up the majority (43%) of all cruise passengers in 2021.
  • US nationals made up 43% of all cruise passengers in 2021.
  • The cruise industry seeks to reduce carbon emissions by 40% by 2030.
  • A cruise ship emits more greenhouse gasses daily than 13M cars.
  • The global revenue of cruises is set to reach $30B by 2024.
  • Only 22% of cruise tickets are purchased online. Instead, 78% of the sales come from offline channels (e.g., ticket offices).
  • Wonder of the Seas, owned by Royal Caribbean Group., is the world’s largest cruise ship.
  • 1.7M passengers cruised to the Caribbean region in 2021.
  • The US, Canada, and Mexico make up half of all cruise passengers.
  • Crime rates on cruise ships are 95% lower than on land.
  • Wonder of the Seas is the largest cruise ship in the world. It’s 1,188 feet long and 209 feet wide (362 x 64m).
  • Wonder of the Seas can take up to 7K passengers and 2.3K crew members onboard.
  • The Wonder of the Seas ship was ordered in 2016 and completed in 2022, with a construction cost of $1.3B.
  • Wonder of the Seas has a Central Park (the first ever park at sea) with over 20K natural plants.
  • The Wonder of the Seas ship has four thrusters with 7.5K horsepower each, which help it reach the cruising speed of 22 knots (25 mph).
  • Wonder of the Seas has 24 bars and dining facilities.
  • There are eight specially designed neighborhoods on the Wonder of the Seas ship.

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  • The cruise industry provided 1.7M jobs in 2019.
  • It takes 24 passengers to support one full-time job on a cruise ship.
  • The cruise industry has average employee turnover rates: 25–35%.
  • A cruise ship may require over 2K crew members.
  • Cruise ships have a strict, military-like chain of command: officers > staff > crew members.
  • 70% of cruise ship crew work in the hotel division.
  • Most cruise companies (70%) hire employees via foreign agencies.
  • A typical cruise ship employment form is a 6-month-long contract.
  • Cruise ship crew are on call around the clock.
  • An average cruise ship member in the US makes $29K annually.
  • 72 new ships were manufactured in 2021.
  • The average cost of building a cruise ship is $600M.
  • There were 65 ocean cruise lines as of 2022.
  • The three leading cruise companies made 85% of the global revenue in 2021.
  • Only 11% of cruise ships can accommodate more than 4K passengers.
  • Most cruise ships (32%) can take 2–3K tourists onboard.
  • 371 out of 430 cruise ships operated in 2022.
  • Here’s a look at the highest-rated cruise lines:
  • The cruise ship’s passenger capacity is projected to reach over 38M in 2027.
  • The average age of a cruise ship is 14.
  • The world’s longest cruise ship (~1,188 ft or 362m) is just 6.5 ft (2m) longer than the fifth longest ship (853 ft or 260m).
  • Royal Caribbean has all five longest cruise ships in its fleet.
  • The most expensive cruise ships are Oasis of the Seas and Allure of the Seas. The former cost 1.5B to build, and the latter’s price tag was 1.4B.
  • Here’s a breakdown of the world’s largest cruise ships:
  • 57% of cruisers are college graduates.
  • 83% of cruise passengers are married. 
  • Cruisers spend around $385 in the port city before boarding a ship.
  • During a typical cruise, passengers spend an average of $750 per person in port cities.
  • Cruise passengers are 47 years old, on average.
  • 85% of Millennials plan to cruise in the future, compared to 82% of Gen Xers and 79% of Gen Zers.
  • Eight in 10 cruisers are likely to book their next vacation on a cruise ship.
  • ~70% of cruisers are willing to board a cruise ship next year.
  • Almost 60% of people who have never cruised say they are likely to cruise in the next few years.
  • 70% of cruisers have an annual household income greater than $80K.
  • 17% of Americans have cruised at least once.
  • Most cruisers (77%) travel with a spouse.
  • 30% of cruise passengers travel mainly with under-aged children.
  • A quarter of cruisers generally travel with friends.
  • A 3K-person cruise ship generates an average of 150K gallons (567 liters) of sewage per week.
  • Cruise ships dump as much as 1B gallons (3.7B liters) of bacteria, heavy metals, and nutrients into the sea yearly.
  • Here’s an overview of the waste produced by a 3K-passenger cruise ship during one week voyage:
  • The cruise line industry dumps 285K gallons (1M liters) of wastewater into the sea every day.
  • 75% of solid waste is incinerated on cruise ships, and the ash is typically discharged at sea.
  • 24% of the solid waste generated by all ships comes from cruise ships.
  • Cruise ships recycle 60% more waste daily than people on land.
  • Cruise lines recycle 80K tons of paper, plastic, aluminum, and glass each year.
  • The global revenue from cruises dropped by 88% in 2020.
  • The cruise industry made just $3B in 2020 compared to 27B in 2019.
  • The revenue growth in the cruise market is expected to plateau at 3% by 2026.
  • The number of cruise passengers globally dropped by 84% in 2020.
  • The cruise industry expected to carry 32M passengers in 2020.
  • The number of ocean cruise passengers stood at 7M in 2020.
  • Only 5M people went ocean cruising in 2021.
  • The number of cruise passengers from North America dropped from 15M in 2019 to 3M in 2020.
  • In 2021, the cruise industry declined by 25% compared to 2020.
  • In the Middle East, the number of cruise passengers declined by 92% in 2020, followed by a 160% increase in 2021. 
  • In North America, the number of cruise passengers dropped by 80% in 2020 and continued to decline by another 25% in 2021.
  • Leading cruise companies saw a 90% drop in revenue in 2021 compared to 2019.
  • Here’s a look at the net income of the largest cruise companies between 2019 and 2021:
  • The cruise industry’s economic contribution in 2019 was $154B.
  • In 2020, the economic contribution of the cruise industry dropped by 59% to $63B.
  • Due to the COVID-19 outbreak, cruise industry-supported jobs shrank by 50%.
  • The number of cruise passengers will surpass the 2019 levels by 2024.

Stacking It All Up

There you have it.

A comprehensive list of cruise industry statistics, facts, and trends to help you better understand the market and its direction.

Was there a statistic you found particularly surprising? Or maybe there are other cruising stats you’d like to see?

Let us know in the comments.

Is the cruise industry growing?

Before 2019, the cruise industry had a 3–5% yearly growth, but in 2020, the market saw a drop of over 80% due to COVID. In 2021, the market got back on track, seeing a 300% increase in revenue and 50% in passenger numbers.

How big is the cruise line industry?

There are over 60 ocean cruise lines, operating a total of 430 ships. In 2019 (before coronavirus), these cruises brought $27B in revenue. By the end of 2023, that number is expected to reach $25B.  

Who are the biggest players in the cruise industry?

Three companies made 85% of the total revenue in the cruise industry in 2021. These are Carnival Cruise ( 45%) , Royal Caribbean Group ( 25% ), and Norwegian Cruise Line ( 15% ).

What’s the #1 cruise line in the world?

Carnival Cruise Lines is the #1 cruise line in the world in terms of revenue ( $12.168B ). However, Royal Caribbean has five of the world’s largest cruise ships in its fleet.

How much money does the cruise industry make?

The cruise industry made $18B in revenue in 2022. It’s also set to reach $30B by 2024. 

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  • Statista, “Most Expensive Cruise Ships Worldwide in 2022, by Building Cost”
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  • Statista, “Net Income of Norwegian Cruise Line Holdings Ltd. Worldwide from 2011 to 2021”
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  • Statista, “Revenue Share of Sales Channels of the Global Cruise Industry from 2017 to 2026”
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cruise ship revenue per year

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Carnival Corp Business Update and Q4 and Year-End Results

  • December 20, 2021

cruise ship revenue per year

Carnival Corporation has provided its fourth quarter 2021 business update.

Key Highlights:

  • U.S. GAAP net loss of $2.6 billion and adjusted net loss of $2.0 billion for the fourth quarter of 2021.
  • Fourth quarter 2021 ended with $9.4 billion of liquidity.
  • For the cruise segments, revenue per passenger cruise day (“PCD”) for the fourth quarter of 2021 increased approximately 4% compared to a strong 2019. The increase was driven in part by exceptionally strong onboard and other revenue. the company said. 
  • As of November 30, 2021, 61% of the company’s capacity was operating with guests onboard and it expects the full fleet to be back in operation in the spring of 2022.
  • Cumulative advanced bookings for the second half of 2022 and first half of 2023 are at the higher end of historical ranges and at higher prices, with or without future cruise credits (“FCC”), normalized for bundled packages, as compared to 2019 sailings.
  • Customer deposits increased $360 million in the fourth quarter of 2021, marking the third consecutive quarter the company has seen an increase in customer deposits.
  • Through its debt management efforts, the company has refinanced over $9 billion to date, reducing its future annual interest expense by approximately $400 million per year and extending maturities, optimizing its debt maturity profile.
  • Carnival Corporation’s CDP score for climate change improved to a B from a C in recognition of enhanced disclosures, including the establishment of its 2030 sustainability goals and 2050 aspirations.

Carnival Corporation & plc President and Chief Executive Officer Arnold Donald noted: “Since resuming guest cruise operations, we have established effective protocols for COVID-19 and its variants and have returned 65,000 team members and 50 ships, all while delivering an exceptional guest experience to over 1.2 million guests and counting. And we have done that while honoring our commitment to strive for excellence in compliance, environmental protection and the health, safety and well-being of everyone.”

Donald added: “Our cash from operations turned positive in the month of November, and we expect consistently positive cash flow beginning in the second quarter of 2022 as additional ships resume guest cruise operations. We enter the year with $9.4 billion of liquidity, essentially the same liquidity level as last year but with significantly improved cash flow generation ahead, as ship operating cash flow and customer deposits continue to build. During 2021, we believe we have clearly maximized our return to service and strengthened our financial position to withstand potential volatility on our path to profitability.”

Fourth Quarter 2021 Results and Statistical Information

For the cruise segments, revenue per PCD for the fourth quarter of 2021 increased approximately 4% compared to a strong 2019. The increase was driven in part by exceptionally strong onboard and other revenue, the company said.

Occupancy in the fourth quarter of 2021 was 58 percent, which was better than the 54 percent in the third quarter of 2021.

Available lower berth days (“ALBD”) for the fourth quarter of 2021 were 10.2 million, which represents 47 percent of total fleet capacity. ALBDs are expected to be 14.1 million for the first quarter of 2022, which represents 63% of total fleet capacity.

Donald noted: “We achieved 4 percent higher revenue per passenger day in our fourth quarter compared to a strong fourth quarter of 2019, while at the same time ramping up occupancy and capacity. In fact, Carnival Cruise Line experienced another quarter of double-digit revenue growth per passenger day compared to 2019, operating at nearly 60 percent of its capacity while also improving occupancy, and is now approaching 90 percent occupancy levels in the month of December, which is a testament to the fundamental strength in demand for our cruise product.”

The company’s monthly average cash burn rate for the fourth quarter of 2021 was $510 million, which was better than expected, according to a press release.

The monthly average cash burn rate includes revenues earned on voyages, ongoing ship operating and administrative expenses, restart spend, working capital changes (excluding changes in customer deposits), interest expense and capital expenditures (net of export credit facilities), and excludes scheduled debt maturities as well as other cash collateral to be provided. As the company continues its gradual return to service, it expects to continue incurring incremental restart related spend, including the cost of returning ships to guest cruise operations and returning crew members to its ships as well as the incremental costs of maintaining enhanced health and safety protocols.

The gradual resumption of the company’s guest cruise operations continues to have a material impact on all aspects of its business, including the company’s liquidity, financial position and results of operations. The company expects a net loss for the first half of 2022 and a profit for the second half of 2022 on both a U.S. GAAP and adjusted basis for both periods.

Resumption of Guest Cruise Operations

Donald added: “With over 60 percent of our capacity now in operation and the remainder planned by spring, we are well positioned for our seasonally strong summer period.”

Since resuming its guest cruise operations in September 2020, the company has carried 1.2 million guests onboard its ships. As of November 30, 2021, eight of the company’s nine brands have resumed guest cruise operations as part of its gradual return to service, with 61 percent of its capacity operating with guests on board.

While the company will benefit from the disposal of 19 smaller, less efficient ships since the beginning of the pause in guest cruise operations, the company is forecasting net cruise costs without fuel per ALBD in 2022 to be significantly higher than 2019, according to a press release.

This is driven by a portion of the fleet being in pause status for part of the year, restart related expenses, the cost of maintaining enhanced health and safety protocols and inflation.

“We anticipate that most of these costs and expenses will end in 2022 and will not reoccur in fiscal 2023. In 2022, fuel consumption is forecasted to be 2.9 million metric tons. The blended spot price for fuel is currently $563 per metric ton,” Carnival stated in its earnings release.

Update on Bookings

Donald added: “Booking volumes continue to build for the remainder of 2022 and well into 2023 and we are achieving those early bookings with strong demand and pricing.”

Cumulative advanced bookings for the second half of 2022 and first half of 2023 are at the higher end of historical ranges and at higher prices, with or without FCCs, normalized for bundled packages, as compared to 2019 sailings. Booking volumes for the same periods during fourth quarter of 2021 were higher than the third quarter of 2021. Over the last few weeks, we have experienced an initial impact on bookings related to near-term sailings as a result of the Omicron variant. (Due to the gradual resumption in guest cruise operations, the company’s current booking trends will be compared to booking trends for 2019 sailings.)

Total customer deposits increased $360 million to $3.5 billion as of November 30, 2021 from $3.1 billion as of August 31, 2021. For the third consecutive quarter, the company saw an increase in customer deposits.

Refinancing

Carnival Corporation Chief Financial Officer David Bernstein said: “We ended the fiscal year with $9.4 billion of liquidity and have addressed our short-term maturities, improving our future liquidity position. Through our debt management efforts, we have refinanced over $9 billion to date, reducing our future annual interest expense by approximately $400 million per year and extending maturities, optimizing our debt maturity profile. During 2022, we will continue to be focused on pursuing refinancing opportunities to reduce interest rates and extend maturities. We believe we have the potential to generate higher EBITDA in 2023 compared to 2019 given our additional capacity and improved cost structure. Therefore, in 2023, our focus will shift to deleveraging driven by cash from operations.”

During the fourth quarter of 2021 the company refinanced $2.6 billion, bringing the total amount refinanced to over $9 billion to date. 

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The economics of cruise ships

In the wake of coronavirus and tanking stocks, cruise companies have sought assistance from the us government. but for decades, the industry has done everything in its power to avoid paying into the ....

Zachary Crockett

Published: June 30, 2020

Updated: February 09, 2024

The economics of cruise ships

Cruise ships are often called “monsters” of the sea.

If you’ve ever seen one in action, you’ll understand why: A vessel like Royal Caribbean’s Symphony of the Seas is longer than 12 blue whales. At 228k gross tons, it is 5x the size of the once-formidable Titanic . It can hold 6,680 passengers and 2,200 crewmembers, the population of a small American town .

In 2018, 28.5m passengers — the bulk of them from America — spent more than $46B on cruises globally. The biggest players see annual profits in the billions.

But cruise companies have done more to earn the “monster” moniker than churning out huge ships and market gains.

For decades, these companies have utilized century-old loopholes to avoid paying corporate taxes. They’ve gone to great lengths to bypass US employment laws, hiring foreign workers for less than $2/hour. They’ve sheltered themselves as foreign entities while simultaneously benefitting from US taxpayer-funded agencies and resources.

Now, in the wake of a coronavirus crisis that has sunk cruise stocks by double digits , these companies are lobbying for federal assistance.

To better understand the dynamics of this wild industry, we spoke with maritime lawyers, legislators, and cruise experts in 3 countries.

The cruise industry at large

Before we get into how cruise companies circumvent US taxes and regulations, let’s take a quick look at the major players, the money they make, and how they make it.

The global market comprises dozens of cruise lines and more than 250 ships. But 3 players — Carnival Corporation & PLC, Royal Caribbean Cruises LTD, and Norweigan Cruise Line HLD — control roughly 75% of the market.

cruise ship revenue per year

Zachary Crockett / The Hustle

These companies, which preside over an empire of subsidiary cruise lines, collectively raked in $34.2B in revenue in 2018.

Cruise ships make this money through two channels: Ticket sales and onboard purchases (e.g., alcoholic drinks, casino gambling, spa treatments, art auctions, and shore excursions), which passengers pay for with pre-loaded cruise cards and chip-equipped wristbands.

On average, tickets account for 62% of total revenue and onboard purchases make up the remaining 38% .

Though tickets represent a majority of revenue, onboard purchases account for the lion’s share of the profit, according to several experts.

As a high fixed-cost business, a cruise ship relies on getting as many passengers as possible on the ship — even at fire-sale rates. The major cruise lines will often fill each ship to 105%-110% capacity, then upsell its captive consumers on additional services.

“They have mastered the ability to get their hands into people’s pockets and to take out every last dollar,” says Ross A. Klein, a professor at Memorial University of Newfoundland, who has closely studied the cruise ship industry. “They can almost give a cabin away for free and still make a profit.”

Despite sizeable overhead costs — which include travel agent commissions, fuel, marketing, and payroll — these large crowds yield handsome profits. Industry-wide, cruise lines enjoy net margins of 17%, nearly double the average of some comparably large hotel chains:

  • Carnival: $3.2B net profit (17% margin)
  • Royal Caribbean: $1.8B net profit (19% margin)
  • Norwegian: $955m net profit (16% margin)

To make these figures a bit more relatable, here’s what this works out to on a per-passenger level for a 7-day cruise:

cruise ship revenue per year

On average, a passenger will spend $1,060 ($151/day) on a ticket and $650 ($92/day) on onboard purchases. After subtracting overhead costs, a ship will make out with roughly $291 in net profit per passenger, per cruise.

That means that at full capacity, a single ship like Royal Caribbean’s Symphony of the Seas might make $9.8m in revenue ($1.7m of which is profit) during one 7-day excursion. That’s $239k in profit per day at sea.

As 50% of this money comes from American travelers, one might expect the cruise industry to be a substantial contributor to the US tax system.

But there’s a catch: These companies aren’t technically American. And they harbor what one legal expert calls a “dirty little secret.”

How cruise companies avoid paying US taxes

Carnival, Royal Caribbean, and Norwegian all have headquarters in Miami, Florida, a city that brands itself as the “ Cruise Capital of the World .”

With this homeland base, a large foundation of US customers, and red, white and blue logos, these cruise lines have manufactured an identity as authentically American corporations. President Trump has even called them a “great US business.”

Legal paperwork tells a different story.

International law requires every ship to register with a country and fly its insignia in open waters. A ship is only subject to the laws of the country it is registered in.

Under an obscure, 99-year-old section of the US tax code, cruise companies are able to register their ships with countries that have more lenient laws than the US — an act called flying a “ flag of convenience ” — and avoid paying into the US tax system.

It’s a tax loophole big enough to drive a cruise ship through.

cruise ship revenue per year

The cruise industry isn’t alone in avoiding Uncle Sam: US companies use offshore accounts to avoid paying an estimated $90B-per-year in taxes.

But it is especially adept at the practice: Carnival is incorporated in Panama and flies the flags of Panama and the Bahamas; Norwegian is incorporated in, and flies the flag of, the Bahamas; Royal Caribbean has been incorporated in Liberia since 1985, and flies the flags of the Bahamas and Malta.

These impoverished countries often compete with each other to offer cruise lines the cheapest services, much like many US cities groveled for Amazon’s HQ2 by offering large tax cuts.

“Cruise lines want to register somewhere where they pay no taxes, are exempt from labor and wage statues, and don’t have to follow health and safety codes,” says Jim Walker, a Miami-based maritime lawyer. “They’re looking for a place that will leave them alone, not oversee their operations.”

For the most part, that’s what cruise companies have gotten: According to annual report filings, the major cruise lines pay an average tax rate of 0.8% — for below the 21% US corporate tax rate.

The benefits of such arrangements are nominal for the countries that register the ships.

Cruise lines will generally pay a small head tax ($4-$15 per passenger) to call on a port. According to Klein, these countries often spend more on maintaining facilities for cruise ships than they make through the fees.

They might also promise a boost to the economies they frequent. But Klein says they work out deals with local vendors where they take up to 70% of the onshore revenue — and studies have shown that local populations in foreign ports don’t get much out of such partnerships.

cruise ship revenue per year

A cruise ship employee cleans a slot machine onboard MSC cruises’ Magnifica in Saint-Nazaire (FRANCK PERRY/AFP via Getty Images)

Registering ships abroad also shelters cruise companies from US employment and safety laws.

Cruise ships hire crew members from Southeast Asia, Eastern Europe, and  “anywhere else you can find people willing to work for nothing,” and demand grueling workloads in exchange for comparatively paltry wages.

The standard contract for a crew member like a cleaner or dishwasher requires a mandatory 308 hours per month — 11 hours a day, 7 days a week, for as long as 8-10 months, with no days off — for the equivalent of $400-700 per month, or $1.62 to $2.27 per hour .

Unprotected by labor laws and regulations, crew members who get injured on the job are swiftly replaced, like “ fungible goods .”

In its latest report , the Cruise Lines International Association, an influential trade group, argues that the cruise industry has a $52.7B “total economic impact” on the US economy and “supports” 421k American jobs. But Klein says it’s unclear what goes into calculating these figures.

The Hustle asked several major cruise lines to comment on the concerns raised in this article. None of the companies responded.

There is one thing the cruise industry has been expeditious about doing on US soil: Lobbying to keep its exemptions in place.

According to the nonprofit Open Secrets , the cruise industry spent $66.2m in lobbying fees between 1998 and 2019. It also made contributions of at least $1.1m to candidates in cruise ship states, including $29.5k to a US representative from Florida who chairs the Panama Caucus, and $23.5k to a senator who fought to blockade a cruise tax.

$813,807 for a single taxpayer-funded rescue effort

While cruise ships avoid paying US taxes, they simultaneously benefit from the services of taxpayer-funded federal agencies.

Professor Klein, who has testified before Congress on matters of cruise ship safety, says that in the past 25 years:

  • 361 passengers have fallen overboard on cruise ships (14 per year)
  • 353 gastrointestinal/norovirus outbreaks have broken out on cruise ships
  • 500+ environmental violations have been charged to cruise ships

In many of these cases, US agencies have to intervene — and taxpayers, not cruise companies, usually eat the cost.

cruise ship revenue per year

Rescue teams search for survivors on the Costa Concordia, which struck a rock off the Italian coast in 2012 (Target Presse Agentur Gmbh/Getty Images)

Klein has filed open-records requests and obtained documents on the companies, which he shared with The Hustle . They show that a single cruise ship passenger rescue effort can cost the US Coast Guard and the US Navy from $500k to $1m+ . One 2009 search for a woman who fell overboard off the coast of Florida set the Coast Guard back $813,807.

When ships go dead in the water — as was the case with Carnival’s Splendor fire in 2010 and its Triumph disaster in 2013 — these costs can balloon to $5m+.

Walker, the maritime lawyer, adds that, in certain cases, cruise ships also require the resources of taxpayer-funded agencies like the US Public Health Service, Centers for Disease Control and Prevention, United States Citizenship and Immigration Services, and US Customs and Border Protection.

What does this all mean in the context of coronavirus?

In the wake of a COVID-19 pandemic that has infected more than 157k and killed at least 5.8k people worldwide (as of March 14), the hospitality industry is reeling.

Cruise ships — often called “ floating petri dishes ,” for their adeptness at spreading illnesses — have been hit especially hard. After at least 21 passengers tested positive for COVID-19 aboard Carnival’s Grand Princess , the State Department urged the public to “not travel by cruise ship.”

Customers clamored to cancel trips and cruise stocks fell by 60% — the worst stock performance on record for the industry. 

Initially, some cruise lines attempted to weather the storm by selling tickets at all costs . According to emails obtained by the Miami New Times, salespeople at Norwegian were instructed to respond to coronavirus-inquiring customers with scripted one-liners, like “The only thing you need to worry about for your cruise is do you have enough sunscreen?”

When we called the company’s booking hotline last week, a salesperson told us that coronavirus doesn’t exist in tropical climates .

cruise ship revenue per year

Some major lines have since self-imposed suspensions on cruise trips to and from US ports for up to 60 days — a move that further imperils their revenue.

The Trump administration has hinted at a potential bailout , and the Cruise Lines International Association is urging its 43k travel agent partners to call the White House to express their support for the industry.

Critics like Klein aren’t having it. “They pay no taxes and now they want taxpayer support?” he says. “What happened to laissez-faire capitalism?”

But as federal aid begins to look unlikely, some cruise operators have shifted their pleas to a different set of ears.

In a video posted to Twitter, Jan Swartz, the President of Carnival’s Princess cruise line, called on the American public to help guide the company through dark waters.

“We ask you to book a future Princess cruise to your dream destination as a sign of encouragement for our team,” she wrote. “With your support we will emerge from this time of trial even stronger.”

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The global cruise industry: Financial performance evaluation

The global cruise industry has experienced persistent growth dynamics over the last two decades, with an impressive rebound after the 2008 financial crisis, unlike commercial shipping. Globalization, restructurings, mergers and a diverse bundle of travel and tourism services to cater for different passenger profiles have boosted robust revenue and profitability growth. Major cruise companies deploy ambitious investment plans to expand and renew their expensive fleet with larger modern vessels of high value. The mix of funding sources to finance these capital-intensive projects is critical and exerts a direct impact on the cost of capital. The paper contributes a rigorous corporate financial performance evaluation in the cruise sector and attempts to shed light on managerial financial efficiency, capital structure options, solvency conditions and corporate value dynamics. A sample of leading cruise companies, jointly holding a dominant market position, is incorporated to empirically investigate and assess their financial, accounting and stock market performance, based on convenient financial ratios and established market metrics. The detrimental impact of the recent coronavirus pandemic on the cruise sector is also discussed. This original study attempts to bridge the relevant research gap, as past literature remains surprisingly thin on this critical topic. A set of challenging and innovative contributions is delivered for the financial performance of major cruise companies, for the first time to the authors' knowledge, in support of efficient managerial implications and recommendations.

1. Introduction

Cruise tourism business is a form of traveling for leisure purposes that involves an all-inclusive holiday on a cruise ship. According to UNWTO, cruise tourism includes ‘a wide range of activities for travelers in addition to its traditional function of providing transport and accommodation’. The cruise industry is the fastest growing sector of the travel industry, with demand estimated to grow at 7.0% per annum over the past decade, and cruise passenger surpassing the threshold of 30 mln. in 2019 ( CLIA, 2020 ; Wondirad, 2019 ). At the same time, the business is seen to be extremely volatile and ever more highly capital-intensive. Newbuilt cruise vessels can cost multiples in value compared with commercial ocean ships, estimated at $1.3 bln. per vessel, accommodating up to 6000 passengers, albeit at lower operating unit costs ( Dowling, 2006 ; Lester & Weeden, 2004 ; Wood, 2004 ). Nevertheless, in the 1990s, the cruise industry has experienced extensive restructuring, following a wave of failures and consolidations. Larger holding cruise companies acquired smaller peers that continued operating as ‘brands’ withing the new business ventures though, serving repeat customer loyalty and offering diverse quality and service levels.

Financial empirical research on cruise shipping remains surprisingly thin. Few earlier studies investigate, selectively, topics such as, the translational partnership organization of the industry ( Hall & Braithwaite, 1990 ); cruise impact on and implications for regional and local market development ( Hobson, 1993 ); cruise market globalization trends ( Wood, 2000 ); cruise strategic capacity investments ( Byung-Wook, 2005 ; Wie, 2005 ); cruise line and passenger challenges ( Veronneau & Roy, 2012 ); cruise line supply chains and logistics ( Daly & Fernandez-Stark, 2017 ; Veronneau and Roy, 2009 , Veronneau and Roy, 2011 ; Veronneau, Roy, & Beaulieu, 2015 ); fund raising approaches for newbuilding cruise ships ( Kiziellewicz, 2017 ; OECD, 2007 ); and mergers, acquisitions and restructurings ( Charlier, 2004 ; Hobson, 1994 ); inter alia.

This study focuses on the financial performance evaluation of the global cruise business and attempts to fill this research gap in the field by contributing a set of challenging and innovative findings, as well as managerial implications and recommendations. To the authors’ best knowledge, this appears to be the first attempt to investigate in depth the critical issues of managerial efficiency, profitability, and growth prospects, financing sources and capital structure, leverage, solvency, and value creation dynamics in the context of the global cruise industry. Initially, a concise overview of prevailing key developments and trends in the cruise business over recent years is provided. Subsequently, critical key financial metrics and performance indicators are estimated and evaluated over time and against major peer competitors for a sample of leading cruise players.

The theoretical framework and the stream of literature that the paper is grounded on relates to critical investment and financing decisions and their financial implications for managerial performance, corporate profitability, value creation, and firm growth. To this end, in a broader context, a core set of seminal reference papers investigate key managerial decisions on funding source options (debt and/or equity), capital structure mix priorities, (weighted average) cost of capital (WACC) shifts, and share price volatility, inter alia, as well as their interrelated implications for investment decisions and overall corporate financial performance (e.g., Baker & Wurgler, 2002 ; Donaldson, 1961 ; Hovakimian, 2006 ; Kisgen, 2006 ; Modigliani and Miller, 1958 , Modigliani and Miller, 1963 ; Myers, 1984 , Myers, 2001 ; Myers & Majluf, 1984 ). It remains an innovative, challenging and fruitful empirical task to investigate the financial implications of these decisions and evaluate the managerial efficiency and financial performance of major global cruise companies, as depicted and reflected on the evolution of critical and widely established financial ratios and metrics. Indeed, these issues are not seen to have been investigated yet in the relevant empirical literature. Nevertheless, they remain important for a highly capital-intensive sector, such as the cruise industry, taking, indicatively, into consideration that the cost of a newbuild cruise vessel can now surpass the $1.0 bln. threshold ( CLIA, 2020 ).

The empirical approach is based on a blended financial methodology, including preliminary data mining and collection, financial statement analysis and comparative assessment and evaluation of critical cruise financial ratios and indices. Based on that, a set of focal policy recommendations is finally provided. The information input is obtained from financial statements and annual reports, stock market datasets and company financial analysis reports, over a recent five-year horizon.

The paper is structured as follows. Section 2 provides a concise summary of recent developments in cruise demand and supply sides, identifying critical growth drivers, economic implications, and prospects ahead. Section 3 overviews major cruise company investment decisions; and Section 4 analyses the complex topic of financing decisions and fund-raising approaches, based on alternative capital structure options that eventually shape the critical cost of capital indicator. Section 5 investigates, analyses, and evaluates a set of key financial ratios, metrics, and indicators to assess cruise company financial performance and value creation dynamics. Finally, Section 6 concludes.

2. Cruise business growth drivers

2.1. demand for cruise services and economic impact.

Cruise shipping business offers a bundle of combined global shipping and tourism services to cruise passengers, as it caters for vacation services on board and ashore, with a full package of diverse recreational tourism-related services. However, a fundamental strategic shift is seen in global cruise business over time ( Garin, 2005 ). Whereas in earlier days, cruise shipping services were mainly targeting higher net-worth luxury customers at substantial price cost, the industry has gradually diversified to demonstrate market segmentation and to attract massively average-income cruise passengers of different age and social profiles. This trend has been supported by attractive cruise service packages at reasonable prices, as massive newbuilt vessel capacity has resulted to extensive economies of scale benefits. Broadly, cruise shipping is perceived as a ‘customer's market’, shaped by shifting consumer tastes and trends. Cruise passengers appear to increasingly prefer ‘paying more for experiences than for possessions’.

Cruise shipping is the fastest-growing segment in the leisure travel market with high capacity utilization rates. The prime cruise business actors include more than 55 cruise line companies, offering ocean, river, and specialty cruise services, and covering more than 95% of global cruise capacity. Business members include also more than 340 executive partners that are key suppliers and cruise line partners, including ports and destinations, ship development suppliers and business services; around 15,000 travel agencies, including the largest players, hosts, franchises and consortia; and, 25,000 travel agent members worldwide ( CLIA, 2019 ).

Contrary to commercial ocean shipping, the global cruise business has shown robust growth rates and persistent recovery, after the 2008 financial crisis. In terms of total revenue, the cruise industry generated $46.6 bln. in 2018, exhibiting a spectacular rebound since revenue had declined abruptly below $25 bln., due to the recession spread after 2008 ( CLIA, 2020 ). The economic output generated by the global cruise industry is estimated at $150 bln. in 2018 against $126 bln. in 2016 (+20%, 2018/2016), with 28.5 mln. cruise passengers, offering 1.17 mln. jobs (full-time equivalent employees; +6.2%, 2018/2017), and distributing $50.2 bln. in wages and salaries ( CLIA, 2018 , CLIA, 2019 ). In view of global passenger spending capacity, estimates indicate aggregate direct purchases of $7.97 bln. (+11.4%, 2018/2017), corresponding to $376 average passenger spending before boarding a cruise and to $101 in port visiting during a cruise. Furthermore, 65% of cruise passengers is seen to spend a few extra days at embarkation or debarkation ports. Cruise business is seen to develop around Caribbean, Australasia, Brazil, Europe, North America, Asia, Canada, UK, and Ireland. The worldwide income multiplier effects of the cruise industry have wider economic implications, as these disseminate to a wide spectrum of related business sectors and activities.

Over 2008–2018, the global cruise business has experienced an unprecedented 10-year average growth above 45% in sourced cruise passengers ( CLIA, 2019 ; Florida Caribbean Cruise Association, 2019 ). This performance is attributable predominantly to the spectacular passenger growth from European markets (60.4%), followed by North American markets (39.4%). This figure raises up to nearly 75% if passenger growth of the rest of the world is also counted ( Table 1 ). The number of total cruise passengers came up to 30 mln. in 2019 from 16.3 mln. in 2008 (+84%). A steady cumulative annual passenger growth rate (CAGR) at 7% is estimated over 1990–2020.

International demand for cruises (sourced passengers, mln).

Source: CLIA (2019) .

Initial estimates on the number of annualized worldwide cruise passengers carried indicate 32.0 mln. passengers for 2020 against 3.6 mln. passengers back in 1990 (+790%, 2020/1990) ( Fig. 1 ).

Fig. 1

Global cruise passengers carried (mln.)

Cruise passengers originate from a diversity of geographic regions and source markets ( Table 2 ). North America remains by far the largest source region of cruise passengers, contributing more than half of global cruise passenger flows (50.2%); its share, though, has dropped compared with 2007 (66%). Europe follows at a distance (23.7%) and has also seen its share slightly on the decline. Asia, on the other hand, is a robustly upcoming cruise passenger source region (15.0% in 2019, up from 9.2% in 2018).

Worldwide cruise passenger by source region (%).

Europe: Benelux, France, Germany, Italy, Scandinavia, Spain, Portugal, UK. Source: CLIA (2020) .

The breakdown of preferred destinations, as depicted by cruise line deployment by region is presented for 2018 and 2019 in Table 3 . The Caribbean remains by far the prime cruise destination of high demand (32%) with the Mediterranean (17%) and Europe (excluding Mediterranean; 11%) following at a distance ( Table 3 ).

Cruise line deployment by region (%).

Source: CLIA (2020) .

The cruise market share distribution among major cruise players is presented below ( Table 4 ). Three leading players are seen to dominate the global cruise market. Carnival Corporation holds a dominant position with passenger and revenue market shares at 47.4% and 39.4%, respectively. Royal Caribbean Cruise ranks second with passenger and revenue shares at 23.0% and 20.2%, respectively. Norwegian Cruise Line Holdings follows at a distance with passenger and revenue shares at 9.5% and 12.6%, respectively. These three major players control a global cruise market share of 80% in passenger terms and 72.2% in revenue terms, respectively.

Cruise line market share.

Source: Authors' compilation; www.cruisemarketwatch.com .

2.2. Growth drivers and prospects

Cruise shipping growth is driven by consistent efforts of all parties involved to explore alternative approaches towards increasing business efficiencies. These include further newbuilding investments to expand and modernize cruise fleet, adding new vessels of larger capacity, diversifying the destination choices offered, increasing penetration in core North American and Latin American markets, attracting more passengers from new source markets and enriching on-board and on-shore activities to meet cruise passenger demands. Furthermore, the inclusion of more local ports has been treated responsibly, based on collaboration with cruise destinations and local communities. The cruise industry is seen to become more conscientious, paying attention towards preservation of local cultures and landmarks and minimization of environmental footprints; exploring alternative creative ways to manage visitors' flows; and, implementing higher standards of responsible tourism. The latter include partnerships with local governments, staggered arrivals and departures, local excursion diversification, shoreside power, and local passenger spending, as more travelers are spending time in and near cruise ports (e.g., Klein, 2011 ).

Broadly, the cruise industry demonstrates promising growth dynamics ahead. This is supported by a global shift in consumer tastes and habits around cruise services, irrespective of passenger generation. For instance, more than 66% of generation ‘X', 71% of millennials, and expanding percentages of generation ‘Z', originating predominantly from the vital US market, are seen to have an increasingly positive attitude towards cruise travel and tourism services compared with earlier years. Generation ‘Z' is anticipated to become the largest consumer generation by 2020 outpacing even millennials. This generation, like the one before, prefers experiences over material items. They appear to prefer cruise travels, including multiple destinations and targeted specialized services (such as music festivals at sea, for instance; CLIA, 2020 ).

Cruise passenger numbers originating from major emerging markets, such as China, India, and Latin America, are anticipated to increase further, supported by improving global disposable income and economic growth conditions. In addition, social demographic shifts indicate that, as global marriage rates are on a decline, increasing numbers of single adults are seen to pursue lone cruise services with a ‘traveling alone’ focus. Cruise lines respond to this upcoming clientele by offering, targeted ‘solo travel’ services, such as studio cabins, solo-lounges, and single-friendly activities. Another upcoming cruise clientele sub-group is female travelers, as their numbers are seen growing. Many tourism and travel companies are creating female-centered cruise itineraries, based on focused interests, and facilitating building women community bonds ( CLIA, 2020 ). Relevant references investigating these issues further include Teye and Leclerc (2003) , Chen, Neuts, Nijkamp, and Liu (2016) , Satta, Parola, Penco, Persico, and Musso (2016) , inter alia.

What is more, cruise travelers are now seen to set sights on destinations that were previously out of reach and some only accessible by cruise ships from the Galapagos Islands to Antarctica. Demand for off-peak season cruise packages also exhibits rising popularity, as travelers may prefer to visit tropical destinations to escape a domestic cold season. The number of modern ‘digital nomads’, that is travelers combining work with leisure time, is also on the rise. This target group can enjoy cruise vacation services in conjunction with remote e-work, cutting down on time-off and still earning an income. On the other hand, micro travel cruise services exhibit upward demand trends as well, as many travelers are interested in quick recreational trips of varied and flexible trip duration alternatives. In response to that, cruise companies offer bite-sized cruise options of three-to-five-days, scheduling shorter itineraries to a variety of destinations.

3. Investment decisions in the cruise business

The cruise companies promote consistently a set of ambitious and capital-intensive strategies to sustain business growth. Newbuilding investment projects target to expand and modernize the existing fleet with vessels of larger capacity. Total cruise industry capacity reached 537 thous. passengers and 314 ships, with about 55 active cruise companies at the end of 2018 ( CLIA, 2020 ). The brand diversification of operations is summarized in Table 5 .

Cruise passenger capacity.

Source: Authors' compilation; CLIA (2020) .

Most cruise players have large investment plans under deployment, scheduled over 2019–2025. For instance, Carnival, Royal Caribbean, and Norwegian plan to invest $4.2 bln., $7.2 bln., and $4.5. bln., respectively, in newbuilding vessels, aggregating to $16 bln. in investments. With total cruise sector investments adding up to $70.3 bln., the joint investment share of these three major players corresponds to 23% of total cruise investment budget ( Table 6 ).

Newbuilding investments – capital requirements (USD bln.), 2019–2025.

Source: Authors' compilation; www.cruisemarketwatch.com (2020).

Broadly, an impressive newbuilding cruise vessel orderbook is under execution over 2019–2025 ( Table 7 ; more details in Table 7A in the Appendix; ( WAC, 2019 )). It is worth noting that the large vessel size in several cases can accommodate more than 6000 cruise passengers. Recent feedback on cruise investment plans indicates that 278 vessels are projected in operation by the end of 2020 and 19 vessels are scheduled to debut in 2020. The average age of cruise fleet is seen at 14.1 years, improved from 14.6 years in 2018.

Cruise ship newbuilding orders, 2019–2025.

A broader issue of concern for cruise investments relates to the environmental sustainability commitment. While cruise ships comprise less than 1% of global maritime fleet, the entire shipping industry benefits from the adoption of new technologies and practices that were not in play earlier. The development of new technologies and cleaner fuels remains a high priority for the cruise industry. Estimates indicate that the cruise companies have invested over $22 bln. in new energy-efficient ships and technologies to minimize the environmental impact, supporting the goal of reducing carbon emission rates by 40% by 2030 compared to 2008 ( CLIA, 2020 ). As per new emission standards, sulfur in the fuel is limited to 0.5% from January 2020. The cruise industry is also seen to be consistently committed to responsible tourism practices, with a focus on destination stewardship, setting-up partnerships with local governments in key destinations. A complementary concern relates inevitably to cruise hosting port constraints, including market segmentation, vessel size service capacities, seasonality effects and congestion bottlenecks at peak periods. To that end, cruise players are anticipated to invest further into port facilities and related infrastructure.

Having said that, the compliance of cruise companies to environmental protection is associated with high investment costs for the construction of new generation cruise ships. Vessel manufacturing costs also rise as ships incorporate innovative advanced technologies. Although cruise vessel prices are seen, on average, at around half a billion dollars, updated estimates indicate this figure to now surpass the one billion dollars threshold ( CLIA, 2020 ). To that end, the critical questions as to how these massive investments are to be financed and at what capital cost remain to be tackled. Following the global financial crisis, several leading international banks specialized in ship credit, such as RBS and DVB, have decided to exit ship lending entirely, liquidating their ship loan portfolios. On the other hand, an emerging global trend relates to private entry strategies, partnerships, and internationalization patterns of cruise companies entering cruise terminal operations in major destinations, such as the Mediterranean Sea ( Pallis, Parola, Satta, & Notteboom, 2018 ). Plausibly, the deployment of such strategies is anticipated to bring about considerable financial implications for cruise lines and cruise terminals, both in terms of spending patterns as well as of income.

4. Financing decisions in the cruise business

4.1. capital funding priorities.

The financing approach a cruise company is to follow to fund its investments and the contribution of alternative capital source options are of fundamental managerial importance. Obviously, this should have direct implications for this cruise company's optimal capital structure mix and its cost of funding. The investigation of these issues in the context of cruise companies remains a challenging and innovative task. To the authors' knowledge, this appears to be the first empirical study tackling these issues in the cruise industry. This research interest is further reinforced and justified considering that the global cruise industry is a highly capital-intensive business with consistent investment expansion plans under development over the last decades, associated with substantial funding requirements. As noted earlier, most cruise companies plan to expand and upgrade their fleet and have already placed a massive newbuilding orderbook under play. The incorporation of luxury facilities and high-end technological advances and services drive unit vessel prices even higher than $1.3 bln. ( CLIA, 2020 ).

Managerial financing decisions have direct implications for the cruise company's capital structure mix, its cost of capital and, eventually, shareholder value creation and growth prospects. The capital structure mix refers to the percentage weights of equity and debt, reflecting the respective capital source contribution to form the company's total invested capital. As the cost of equity and cost of debt differ, modifications in the capital structure mix also affect the company's overall cost of capital. These focal issues have generated steaming debate among academics and market practitioners over time. A summary of major finance theories on capital structure is now provided and subsequently explored briefly in the context of the cruise business.

Modigliani and Miller (1958) , first, postulate the capital structure irrelevance approach. Assuming perfect markets and absence of taxes and bankruptcy costs, the capital structure mix is irrelevant because firm market value is determined by the company's earning power and the risk of its underlying assets. Modigliani and Miller (1963) incorporate, subsequently, the tax effect on capital cost and firm value. In this case, firm value increases with leverage due to tax shield benefits. Interest on debt capital is an acceptable deduction from the firm's income and thus decreases the firm's net tax payment. Assuming potential tax benefits, debt financing can result to lower cost of capital.

Trade-off theory, furthermore, argues that the optimal level of debt is where the marginal debt benefit is equal to its marginal cost ( Myers, 1984 ). Debt financing up to a certain level contributes interest tax shield benefits, offsetting financial distress costs. A firm can attain an optimal capital structure by adjusting debt and equity weights, thereby balancing tax shield benefits and financial distress costs. Myers and Majluf (1984) postulate the pecking order theory, based on earlier research by Donaldson (1961) , and argue that (assuming perfect capital markets) management prefers internally generated funds rather than raising external funds. A company should prefer internal funding first, then issue debt, and finally, as a last resort, issue equity capital. Firms with higher profit and growth opportunities would use less debt capital ( Myers, 2001 ). If a firm has no investment opportunities available, profits are retained to avoid future external financing. Information asymmetry between insiders and outsiders and separation of ownership can explain why firms avoid capital markets.

Market timing theory of capital structure maintains that companies are more likely to issue equity when their market value is high, relative to book and past market values, and to repurchase equity when their market value is low ( Baker & Wurgler, 2002 ). Share price volatility affects corporate financing decisions, and eventually the firm's capital structure. As the resulting effects on capital structure are persistent, this indicates that current capital structure is strongly related to historical market values. Capital structure is perceived to be the cumulative outcome of past attempts to time the equity market. It is argued though, that market timing does not exert material effects on the firms' capital structure in the long run ( Hovakimian, 2006 ). The credit rating-capital structure (CR-CS) hypothesis is proposed as an extension of the existing trade-off theory of capital structure ( Kisgen, 2006 ). Capital structure decisions are expected to adjust along the relevant benefits and costs associated with shifts between different credit rating levels. When a firm is closer to a rating shift, it may issue less debt compared to the alternative of being far from a credit rating shift.

To sum up, debt financing can offer a lower cost of capital, due to tax deductibility advantages. A company with positive prospects can proceed to raise capital using primarily debt rather than equity, so to avoid ownership dilution (transmitting negative signals to market players). Debt signaling (company announcements of funding with debt) is typically seen as positive news. However, a high debt exposure bears enhanced bankruptcy risks, and increases shareholders' financial risks, thus a higher return on equity is required. To conclude, companies must assess their optimal funding mix at which the marginal benefits of debt equal the marginal costs incurred. The optimal capital structure mix is associated with that combination of equity and debt financing that results to a lower cost of capital, supporting robust value creation prospects.

4.2. Capital structure mix and WACC

Based on 2019 figures, all three major cruise companies have seen their long-term debt exposure increased against 2018, by 22.8% at $9.7 bln. for Carnival, by 8.4% at $9.0 bln. for Royal Caribbean, and, by 5.2% at $6.1 bln. for Norwegian ( Table 8 ). This reflects a debt weight reallocation in the capital structure mix for Carnival and Norwegian, though this remained stable for Royal Caribbean. Over 2016–2019, debt funding contribution increased from 41.9% to 43.7% for Carnival and from 59.2% to 59.9% for Royal Caribbean but declined overall from 65.1% to 61.1% for Norwegian. On average, Carnival is seen to rely more on equity funding (equity/debt mix: 60/40), contrary to Royal Caribbean and Norwegian that are seen to be more dependent on debt (equity/debt mix: 40/60) ( Table 9 ; Fig. 2 ).

Capital sources (USD bln.).

Source: Authors' calculation based on cruise company financial statements.

Cruise company capital structure mix (%).

Fig. 2

Capital structure mix components.

As the capital structure of major cruise companies indicates, the funding mix is relatively balanced with a reasonable exposure to debt risk. This comes in contrast to global commercial shipping business that is seen to be typically financed predominantly by bank lending ( Drobetz, Gounopoulos, Merikas, & Schroder, 2013 ; Syriopoulos, 2007 , Syriopoulos, 2010 ).

The weighted average cost of capital (WACC) is a critical metric for a company's aggregate cost of funding from all potential capital sources. It is calculated as the weighted average cost of equity and cost of debt (weighted contribution of equity and debt (plus of any other capital source) in total invested capital), that is:

where: k e  = cost of equity; E  = Equity; k d  = pre-tax cost of debt; t  = corporate tax rate; D  = Debt; E/(E + D) and D/(E + D)  = weights of equity and debt in the company's capital structure, respectively.

Hence, WACC is a key indicator of the minimum after-tax required rate of return which the cruise company must earn for all its investors (capital suppliers, i.e. shareholders and debtholders). At the same time, the company's cost of capital is the expected return to both stakeholders (owners and lenders) and represents investors' opportunity cost of taking on the risk of investing their funds into the company. More specifically, cost of equity is the required rate of return on common stock of the company. It is the minimum rate of return which a company must earn to keep its common stock price from declining. Cost of equity is estimated using alternative models (including, dividend discount model (DDM) and capital asset pricing model (CAPM)). After-tax cost of debt represents the after-tax rate of return debtholders require to earn until debt maturity. Cost of debt is calculated by assessing the yield to maturity of the company's bonds and other loan instruments. If no yield to maturity is available, the cost of debt can be estimated using the instrument's current yield. After-tax cost of debt is included in WACC calculation because debt offers a tax shield (i.e., interest expense on debt reduces taxes and this is incorporated in the cost of debt calculation). The WACC factor for major cruise companies in 2019 is summarized below ( Table 10 ).

Cruise company cost of capital, WACC (%).

WACC: Weighted Average Cost of Capital. Year: 2019.

Source: Authors' calculation based on cruise company financial statements and Bloomberg database.

The next section focuses on the core research objectives and develops the empirical methodology on the financial performance evaluation of major cruise companies to contribute a set of fruitful managerial recommendations, and conclusions.

Fig. 3 illustrates the underlying logical nexus and summarizes the earlier key points, interrelating cruise company investment and financing decisions with critical corporate financial performance ratios and metrics to follow in the next section and highlights the paper's contributions to the topic at hand.

Fig. 3

Nexus of investment and financing decisions to cruise company financial performance.

Source: Authors' compilation.

5. Financial performance evaluation: Methodology and key findings

This section deals with a solid quantitative assessment of corporate financial performance dynamics, and trends shaped in the cruise industry, over the period 2016–2019. As mentioned, this topic remains surprisingly unresearched in the relevant academic literature (e.g., Clancy, 2017 ). To explicitly state the research objectives and innovative contributions of this study, the following critical issues are investigated for leading global cruise companies: the ambitious investment plans under deployment; the capital funding priorities and sources, based on the decomposition of the capital structure mix; and, the assessment and evolution of the WACC metric over time. To assess, subsequently, the profitability robustness, value creation dynamics and growth prospects of the sample cruise companies, an integrated financial performance evaluation approach is undertaken, based on a widely applicable, financial ratio analysis, focusing on the following key issues: revenue and profit growth; managerial efficiency, as depicted by ROE, ROA, ROIC ratios; the ROIC-WACC interrelationship and its growth and value dynamics implications; financial leverage exposure and solvency assessment; and earnings per share ratios and share price performance over time.

To serve these research objectives, the empirical methodology is based on a solid corporate financial analysis, assessment, and evaluation of critical financial ratios and established metrics on key cruise market players, built on financial statement, accounting, and stock market inputs. This applied approach can then produce useful empirical findings and policy recommendations for efficient managerial decisions of the cruise companies. Though this methodological framework is standard in different business sectors, to the authors' best knowledge, this appears to be the first empirical application to global cruise corporate players.

A case study company sample is selected, consisting of the major cruise players, namely Carnival, Royal Caribbean, and Norwegian cruise lines. As discussed earlier, these cruise companies hold an undoubtedly dominant market share, as they jointly control more than 80% of the global cruise market in terms of revenue and passengers and set the financial tune in the sector ( CLIA, 2020 ). Hence, by focusing on these companies, a solid, reliable, and sufficiently representative feedback can be gained for the overall cruise sector. Furthermore, these leading cruise companies have their shares listed and traded on international stock exchanges (New York, London); thus, useful empirical reflections can be gained by their stock market behavior, performance, and market value. The consolidated financial statements of the sample cruise companies have been incorporated for the empirical financial analysis. These cruise companies own several subsidiaries (e.g., Carnival Corporation & PLC owns Costa Crociere, and Aida Cruise, through Costa Group; as well as it owns P&O Cruises and Cunard, through Carnival UK, etc.), and the strategies of the parent companies are realized also by their own brands.

As a point of clarification, MSC Cruise is also an important cruise market player, though it holds a relatively lower market share compared with the other sample companies. MSC was initially included in the preliminary sample compilation under study. However, it was eventually excluded from the final sample, to preserve data consistency and convergence, as MSC Cruise is not listed on a stock exchange and a part of the research interest is in the stock market behavior of the listed cruise companies. Due to the dominant market share and economic importance of the sample cruise companies, the empirical analysis and findings are not expected to be affected materially by the exclusion of MSC Cruise. In any case, a relevant follow-up study could enrich and expand on the current sample to include more cruise players.

A brief corporate profile of each sample cruise company now follows.

5.1. Cruise company profile

Carnival Corporation & Plc (CCL) offers cruise services under the Carnival Cruise Lines, Holland America Line, Princess Cruises, and Seabourn brand names in North America; and AIDA Cruises, Costa Cruises, Cunard, and P&O Cruises names in Europe, Australia, and Asia. Carnival runs 100 cruise ships and is a sole dominant cruise market player, as it controls a market share at 48%. This is the only cruise group with its shares traded on dual listing (S&P500 and FTSE100 indices). The company was founded in 1972 and is headquartered in Miami, Florida.

Royal Caribbean Cruises Ltd. (RCL) operates as a global cruise vacation company the cruise brands Royal Caribbean International, Celebrity Cruises, Azamara and Silversea Cruises. The firm also holds interest in TUI Cruises, Pullmantur and SkySea Cruises brands. Royal Caribbean runs 60 ships and holds a significant cruise market share at 23%. The company plans to launch 11 new cruise ships of average vessel capacity over 4500 passengers by 2025. The company was founded in 1968 and is headquartered in Miami, Florida.

Norwegian Cruise Line Holdings Ltd. (NCLH) is a global cruise company and operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands, offering itineraries to more than 490 destinations worldwide. With a combined fleet of 28 ships, and nine ships to be added by 2027 with an average capacity of 3000 passengers per vessel it holds a cruise market share at 10%. The company was founded in 2010 and is headquartered in Miami, Florida.

5.2. Revenue and profit growth

Cruise revenues exhibit consistently robust growth trends for the leading cruise players, over 2016–2019 ( Table 11 ). Contrary to most commercial shipping market segments that experienced abrupt and persistent revenue declines since the outbreak of 2008 global financial crisis, cruise shipping has seen a robust resistance and relatively rapid recovery. In 2019, Carnival recorded cruise revenue at $20.8 bln. (+10.3%, 2019/2018). Similarly, Royal Caribbean also gained robust revenues at $10.9 bln. (+15.3%, 2019/2018). Norwegian Cruise Line, on the other hand, saw comparatively modest revenue growth at $6.5 bln. (+6.6%, 2019/2018).

Cruise company revenue and profits.

EBITDA: Earnings Before Interest, Tax, Depreciation and Amortization.

Source: Authors' calculations; cruise company financial statements; www.macrotrends.net .

Gross profits exhibit an upward trend for all three cruise players, especially for the market leaders, Carnival, and Royal Caribbean. Earnings before interest, tax, depreciation, and amortization (EBITDA) is considered as a critical indicator of operational profitability and is defined as income after operating expenses have been deducted and before interest payments, taxes, depreciation, and amortization have been deducted. This profit component is to compensate subsequently for debtholder claims (interest payments), State claims (taxes) and, lastly, shareholder claims (dividends), with the latter ones perceived as residual claimants, bearing highest risk levels. The leading cruise companies exhibit modest EBITDA and Net Income shifts over 2016–2019.

According to a market motto, ‘if gross profit is not there, there will be no net profit’ as well. Gross profit margin is calculated as the ratio of gross profits to revenue. Assuming a cruise company investing in a sector that exhibits a high gross profit margin but not making bottom-line net profits may be a striking indication of a mismanaged case. Corporate restructuring and operational tuning may be required to turn the business into a profitable venture. Broadly, the level of gross profit margin depends directly on how a business is organized and the other costs it must support. For instance, after gross profit calculation, a cruise company still must pay operating expenses, financial, tax and other expenses. Subsequently, a cruise company must have robust net profits to distribute an attractive return (dividend) to shareholders. In case a cruise company can effectively control operating expenses, it can remain profitable with a lower gross margin ratio. Broadly, a higher gross profit margin is preferred, as it indicates efficient processes and offers flexibility to have money left over to spend on other business operations.

The net profit margin is calculated as the ratio of net profits to revenue. Net profit is calculated as the gross profit (revenue minus cost of goods sold) minus operating expenses, interest paid on debt, taxes and all other expenses. The net profit margin is a far more definitive profitability metric for investors and analysts and indicates how much of each dollar received as revenue translates to corporate profit. This is critical since revenue increases do not necessarily translate into increased profitability. A higher profit margin is desirable since it means the company generates more profits from its revenue. A careful assessment of both cruise company gross profit margin and net profit margin reveals managerial efficiency in earning profits relative to the costs involved in producing cruise services.

The operating profit margin, on the other hand, is calculated as Earnings Before Interest and Taxes (EBIT) to revenue. EBIT is revenue minus all operating costs, before interest paid, taxes and dividends. A highly variable EBIT can indicate a risky business, whereas a stable EBIT a well-managed and predictable one. Hence, the operating profit margin ratio indicates the net operating profitability and points to a successful management at generating income from the core business operations (per dollar of revenue), controlling costs effectively and/or increasing revenues faster than operating costs.

The profit margin ratios for all three sample cruise companies remain consistently high over 2016–2019 ( Table 12 ). The 2019 net profit margin for Royal Caribbean, for instance, at 17.4% indicates that, for $100 of revenue, $17.4 have remained as net profit in the company. The joint evaluation of gross, operating, and net profit margins for the leading cruise companies indicates a broadly stable, efficient, and successful financial management.

Cruise management financial efficiency.

GPM: Gross Profit Margin; OPM: Operating Profit Margin; NPM: Net Profit Margin.

When examining the per day figures, cruise revenue and profits per day are seen at $51.7 mln. and $8.6 mln., for Carnival; $ 26.0 mln. and $5.0 mln., for Royal Caribbean; and $16.6 mln. and $2.6 mln., for Norwegian, respectively, for 2018. Average cruise revenue and expense per passenger are estimated at $1791 and $1562, respectively. This corresponds to a profit at $227 per passenger, forming a net profit margin at 12.7%. A breakdown of the estimated average cruise revenue and expense per passenger is summarized in Table 13 .

Average cruise revenue and expense breakdown per passenger.

2018 figures; financial breakdown of typical cruiser worldwide (across all cruise lines). Average cruise duration: 8.0 days; median duration: 7.0 days.

Source: Carnival Corporation & Plc., Royal Caribbean Cruises, Norwegian Cruise Lines, Thomson/First Call, Cruise Lines International Association (CLIA), Florida Caribbean Cruise Association (FCCA), DVB Bank, Cruise Pulse; www.cruisemarketwatch.com .

5.3. Managerial efficiency ratios

A set of critical and widely employed diagnostics tools to evaluate managerial efficiency on cruise company financial performance include the Return on Equity (ROE), Return of Assets (ROA) and Return on Invested Capital (ROIC) ratios. These metrics permit comparative performance evaluation of each sample cruise company over time as well as against its competitors. They can also reveal critical drivers of growth and provide explanation for the stock market behavior of the cruise companies' share trading patterns at higher/lower valuation levels.

ROE is defined as net income to equity and indicates the equity required to generate a certain amount of net income; or, how well the company is using equity (owners' capital). ROA is calculated as net income to assets and indicates the assets required to generate a certain amount of net income; or how effectively the management utilizes the company's fixed and current assets (how dependent it is on them). ROIC is defined as EBIT (earnings before interest and tax) to total invested capital (equity plus debt) and indicates the operational profit generated by the total capital employed in the company; or, how efficiently the company allocates all its capital to profitable investments; or, how much capital is required to grow its business. ROE attracts investors' attention as it a critical indicator of how effectively a company's management uses shareholders' capital and reveals whether management is growing the company's value at an attractive and competitive rate. ROE, ROA and ROIC ratios are calculated as in the forms below ( Table 14 ).

ROE – ROA – ROIC ratios.

ROE: Return on Equity; ROA: Return on Assets; ROIC: Return of Invested Capital.

EAT = Earnings After Tax (Net Income); EBIT = Earnings Before Interest and Taxes (Operating Profit); Invested Capital = Equity + Debt.

A key factor distinguishing ROE and ROA is financial leverage or debt, since the fundamental balance sheet equation holds that assets equal equity plus debt. Plausibly, in case a company carries no debt, its equity and total assets will be the same, hence, ROE and ROA would also be the same. However, if that company takes on financial leverage, ROE will rise above ROA; this relates to the balance sheet equation, since equity equals assets minus liabilities. Thus, by taking on debt, a company increases its assets, due to the cash that comes in. But since equity equals assets minus debt, a company decreases its equity by increasing debt. In other words, when debt increases, equity shrinks; since equity is ROE's denominator, then ROE, in turn, gets a boost. At the same time, when a company takes on debt, total assets (ROA denominator) increase; hence, debt amplifies ROE in relation to ROA. ROE, however, weights net income only against owners' equity and does not provide any feedback on how well the management uses funding from borrowing and issuing bonds. If ROA is sound and debt levels are reasonable, a strong ROE is a solid signal that management is efficient at generating returns from shareholders' capital. On the other hand, if ROA is low or the company bears a heavy debt, a high ROE may be misleading as to the company's growth prospects.

ROIC overcomes certain ROE and ROA limitations and is a better measure of profitability than ROA and ROE, as it removes the debt related distortion that can make highly leveraged companies look highly profitable when using ROE. Unlike ROE and ROA that incorporate net income, ROIC is based on EBIT (earnings before interest expenses and taxes), arguably a critical operating profitability indicator that takes total invested capital into account. This can offer a closer focus on the core operating performance, removing financing decision effects (that is, regardless of the capital source, equity, or debt).

The joint evaluation of ROE ROA and ROIC ratios for the leading cruise companies indicates a persistently robust financial performance and efficient use of each company's equity, debt, and assets in all cases ( Table 15 ). ROE ratios run from 12.1% (Carnival) to 14.9% (Norwegian) to 16.0% (Royal Caribbean), respectively, reflecting a satisfactory return on shareholders' equity. Carnival is seen to attain the best performance of its assets (ROA: 6.7%), with the other cruise companies following closely (Royal Caribbean: 6.3%; Norwegian: 5.8%). ROIC ratios are seen also to be very close for all three cruise companies (Carnival: 9.6%, Royal Caribbean: 10%, Norwegian: 9.8%), indicating a solid operational performance with efficient use of shareholder and debtholder capital, and supporting robust growth dynamics and value creation.

WACC: Weighted Average Cost of Capital. Year: 2019. Source: Bloomberg database.

5.4. ROIC versus WACC: Growth and value dynamics

When comparing a company's return on invested capital (ROIC) against its cost of capital (WACC), ROIC should stand higher than WACC to support robust growth prospects, value creation and share price trading at a premium. ROIC also can be used as a benchmark to compare a firm's value against competitors. A common market benchmark spread in support of value creation is a ROIC higher than WACC by at least +2%. A ROIC lower that WACC (or a spread of less than 2%) is considered as a value destroying condition. Some companies run at a zero-return level, and, while they may not be destroying value, they have no excess capital to invest in future growth ( Koller, Goedhart, & Wessels, 2020 ). The cruise companies under evaluation exhibit a ROIC higher than WACC in all cases. However, the ROIC-WACC spread is seen lower than 2% in all sample cruise cases, raising concerns about their solid growth prospects and value creation potential.

The ROIC ratio can be adjusted on a per unit basis to be equivalently recalculated as:

This implies that superior ROIC ratios can be attained from either a) a ‘price premium’ relative to peers; b) a lower ‘cost of capital’ per unit, improving cost and capital efficiency; or, c) a combination of both, a) and b). A company can create value by investing its capital into profitable investment projects to attain attractive ROICs. Robust revenue growth rates, ROIC higher than WACC and operating cash flows are core drivers to corporate value creation.

In the longer-term, a company can sustain strong revenue growth and high ROIC only in case it possesses and preserves a well-defined ‘competitive advantage’ against its peers. However, as competition erodes ROICs and competitive advantages, management should consistently seek new sources of competitive advantage to create sustainable value. Empirical evidence indicates that, of alternative growth models to value creation, launching new products or services typically creates more value for shareholders ( Koller et al., 2020 ). In this context, a challenging strategic option for cruise companies remains as to how effectively they can respond towards their competitive advantages, by developing, for instance, alternative diversified bundles of cruise products and services to contain intensified global competition.

5.5. Financial leverage – Solvency

Cruise companies, in line with commercial shipping counterparts, have typically relied mainly on debt (bank lending and bond issuing) to finance their capital-intensive investment projects ( Syriopoulos, 2007 , Syriopoulos, 2010 ). The financial leverage, or debt-to-equity ratio (or debt ratio), is a widely used financial debt burden metric that compares a company's total debt (creditors' financing) to shareholder equity (owners' financing). Based on that, management and investors can evaluate debt contribution into invested capital, signal equity or asset adequacy to fulfill obligations to creditors (particularly under distress conditions), and assess the borrower's credit risk profile.

A debt ratio of 0.5, for instance, means that there are half as many liabilities than there is equity. In other words, shareholder funding is twice as high as creditors funding, implying shareholders and creditors own 66.6% and 33.3% of company assets, respectively. A lower debt-to-equity ratio usually implies a more financially stable business. On the other hand, a high debt-to-equity ratio indicates an aggressively debt-financed business. Companies with a higher debt component must repay their credit obligations to lenders (debt servicing with regular interest payments); hence, debt financing can turn more expensive than equity financing. Highly leveraged companies, furthermore, may run at risk of being unable to adequately service a high debt exposure. As a result, prospective investors may assume a higher risk exposure, refraining from investing their funds on this company. At the same time, financial leverage should not decline excessively, as companies raising equity (by issuing stock) are exposed to high stock market volatility and ownership dilution implications.

Financial leverage contributes to a better understanding of the debt impact on the overall cruise company profitability and growth. It is important to investigate whether debt is high because it supports healthy business expansion and growth. This can eventually generate higher earnings than it would have without this debt financing. If leverage increases earnings by a greater amount than debt's cost (interest payment), then the business and its shareholders should expect to benefit by value creation. On the contrary, high leverage associated with a weak financial performance may result to additional debt financing, as shareholders should be reluctant to contribute additional equity financing. In this case, share prices and corporate value may decline.

The interest coverage or times interest earned (TIE) ratio is another widely popular debt metric. It indicates how many times a company's annual debt obligations (interest and debt service expenses) are covered by the net operating income (income before interest and tax). It is a long-term solvency ratio, expressed in times, to assess a company's long-term solvency ability to pay its debt liabilities as they become due. TIE reveals also whether a prospective borrower can afford to take on any additional debt.

Higher TIE ratios are considered more favorable than lower ones. A TIE at 4.0, for instance, indicates that operating income is four times higher than yearly interest expense liabilities; hence, the company can comfortably meet its debt obligations. On the contrary, a TIE less than 1.0 reflects a company that cannot meet its interest obligations on its debt. Companies with weak TIE ratios may face difficulties in raising funds for their operations. A better TIE ratio implies the company has enough cash after paying its debt to continue investing in the business. However, management should be careful to avoid a very high TIE ratio in case this is due to an unnecessarily conservative stance towards debt and/or absence of policies to take full advantages of debt facilities. Plausibly, a company's capital structure mix has a critical direct impact on TIE ratio.

The leading cruise companies are seen to follow a careful approach towards debt financing and to maintain robust solvency positions over 2016–2019 ( Table 16 ). Carnival exhibits a consistently attractive and stable debt-to-equity ratio, at 0.78 in 2019. This is obviously in line with the higher equity component apparent in its capital structure mix. The same holds for Carnival's solvency position, displaying a comfortable operating profitability position to meet its interest payment obligations, with TIE ratio at 14.4 in 2019. Royal Caribbean and Norwegian are exposed to higher debt financing with a debt-to-equity ratio at 1.49 and 1.57, respectively in 2019. Whereas TIE ratios for Royal Caribbean and Norwegian are well above 1.0, at 5.3 and 4.3, respectively in 2019, these ratios still lag considerably behind Carnival. Broadly, the debt-to-equity and TIE ratios of leading cruise companies reflect balanced financing strategies with manageable debt exposures and adequate solvency positions. This comes in contrast to the typically heavily indebted commercial shipping companies ( Syriopoulos, 2007 , Syriopoulos, 2010 ).

Financial leverage – solvency ratios.

5.6. Earnings per share ratios

Earnings per share (eps) growth is an important financial indicator to measure managerial performance as it reflects a company's growth prospect dynamics. If revenue shows how much money is flowing into the company, eps depicts how much of that money is flowing down to shareholders, as profits per every outstanding share of stock. In other words, eps shows the net earnings contribution generated per share to shareholders, not simply because of changes in earnings but also after accounting for the effects of issuance of new shares. This may be particularly important in case the growth comes because of acquisitions, a strategic path of growth preferred by several cruise companies over the last decades.

A comparison of eps growth for major cruise companies, over 2016–2019, reveals that Norwegian has attained the best performance (eps growth: 56%), and Royal Caribbean follows closely (eps growth: 50%), whereas Carnival is lagging behind at a distance (eps growth: 12%). Broadly, the leading cruise companies exhibit robust profitability and promising growth prospects, rendering cruise company shares a broadly challenging investment choice ( Table 17 ).

Cruise company eps ratios.

6. Managerial implications and conclusion

6.1. a note on the covid-19 impact.

As this study was about to close, the World Health Organization (WHO) declared the COVID-19 outbreak as a global pandemic on March 11, 2020. Most countries around the world introduced restrictions to international travel and imposed bans on non-essential travel to contain the virus spread. To that end, recent UNWTO estimates indicate that the near-complete global lockdown has abruptly halted economic growth, exerting an unprecedented impact on most business sectors, and especially on the travel, tourism, and cruise industries. In fact, these dramatic circumstances resulted eventually to the cruise ship business shutting, inevitably, entirely down. Current forecasts estimate the total industry revenues for 2020 to be 35% lower than in 2019 (from $685 bln. in 2019 down to $447 bln. for 2020; UNWTO, 2020 ; Richter, 2020 ). This translates into a fall of 300 mln. tourists and $320 bln. losses in international tourism receipts, more than three times the losses during the 2008 global financial crisis.

With a focus on the global cruise business, the virus spread led many countries to close their borders, resulting to thousands of cruise passengers kept at sea and vessels seeking a port to dock. Canada, for instance, banned all ships with more than 500 people from docking in its ports (mid-March). Australia, New Zealand, and the US banned all ships arriving from foreign ports and directed all foreign flagged ships to leave the country. Cruise passengers and crew members were quarantined on board and cruise liners had to struggle hard to attain delayed repatriation ( Giese, 2020 ; Ito, Hanaoka, & Kawasaki, 2020 ; Moussali & Tsekoura, 2020 ).

The following points highlight a set of critical implications for the cruise industry due to the coronavirus pandemic ( Giese, 2020 ; Research and Markets, 2020 ):

- most operators have had to suspend all voyages and others have cancelled most cruises;

- cruise companies have experienced detrimental financial implications, in terms of revenue and profits and at the same time of upward additional costs (for instance, costs associated with substantial refunds for cancellations, costs associated with docking ships at ports where ships were quarantined, costs of maintenance even when not sailing for utilizing cruise ship engines to provide power to maintain onboard services, air conditioning, desalination and propulsion);

- the defensive reaction to coronavirus spread has exerted domino effects and provoked far reaching implications for many cruise-linked companies, and cruise destinations, as many small island nations and other local economies rely heavily on the jobs, income cashflows and value chain effects generated by cruise ships and related business; for instance, the cruise industry is estimated to contribute about $2.0 bln. to the Caribbean each year; this results in a 5.9% contribution to some nations' entire GDP, as is the case with St. Kitts and Nevis ( Ship Technology, 2020 );

- it is highly doubtful whether the cruise companies will remain in a position to sustain their robust financial performance, as discussed in the previous sections; liquidity constraints are expected to eventually drug cruise companies into additional debt (with global investors' stock market sentiment remaining low); hence, further deterioration in their funding costs is anticipated ( McKinsey, 2020a ; Syriopoulos & Bakos, 2019 );

- to elaborate the deterioration in financial terms and capital costs, Carnival Cruise Line, the world's largest cruise operator, has lost its investment-grade status in June 2020, after S&P downgraded its rating at BB- (dropped from BBB-); S&P analysts perceive a ‘high level of uncertainty’ for the cruise operator's return to normal services and its ultimate recovery path; furthermore, the firm's credit measures are expected to ‘remain very weak through 2021 because of its plans for a gradual reintroduction of capacity’; the weak demand may eventually force Carnival to speed up removal of older ships and delay new ship deliveries ( Nagarajan, 2020 );

- in sum, the cruise industry faces a long struggle to ensure its survival as a widespread sentiment of concern, uncertainty, and instability has prevailed in the sector ( McKinsey, 2020b );

- these adverse circumstances are vividly reflected on the abrupt share price and market value decline of leading listed cruise companies ( Fig. 4 ).

Fig. 4

Cruise share returns (%) – Post COVID-19 impact.

The detrimental COVID-19 financial implications for cruise revenue, profits and the gloomy business prospects (risk of closure for several cruise companies) are underlined indeed by the highly volatile and dramatic collapse of share prices for the largest listed cruise groups (even by −130% on average in few days; Fig. 4 ). Indicatively, Carnival, Royal Caribbean and Norwegian cruise share prices declined sharply at $7.97, $24.36, and $8.40, respectively, as the virus burst (April 2), recording losses by 70–80% from the beginning of the year (share prices at $51.31, $134.65, and $58.83, respectively, on January 2). Cruise share prices, nevertheless, rebounded impressively recently, returning up at $14.33, $50.83, and $14.22, respectively (July 28), partly mitigating the earlier heavy losses.

6.2. Key managerial implications and recommendations

This study has undertaken a concise, focused, and updated financial performance evaluation of the cruise sector, based on a sample of leading cruise players. Surprisingly, to the authors' best knowledge, relevant studies remain extremely thin on this topic. This paper intends to partially fill this research gap and to offer a set of innovative contributions and managerial recommendations. Cruise companies have shown a consistently dynamic growth performance over recent years, rebounding impressively after the 2008 financial crisis impact. Cruise revenue and profitability are seen on a solid upward trend, diverging from commercial shipping companies. Critical financial performance indicators, such a ROE, ROA and ROIC ratios, are consistently high, reflecting efficient managerial investing, operating, and financing decisions. The leading cruise companies have ambitious and highly capital-intensive investment plans under development, with active newbuilding orderbooks for vessels of larger carrying capacity, expensive technological advances, and modern facilities to cater for diversified cruise passenger needs, complying at the same time with strict environmental conditions. As major international banks are seen to exit ship lending, a critical question remains as of potential alternative capital sources to finance these investments, assuming that cruise vessel construction costs typically range from $0.5 bln. to over $1.5 bln. The capital structure of the leading cruise companies demonstrates a balanced and healthy debt-equity mix, with dept-to-equity ratios and solvency ratios performing impressively.

The global pandemic has hit the cruise sector severely with destabilizing effects to many corporate players as well as to cruise-related businesses even at risk of fatal default. These fragile financial circumstances generate a set of critical managerial implications, recommendations, and potential actions for the cruise companies under pressure to support their business overcome the virus crisis, including the following:

- robust cash liquidity positions supported by the earlier impressive profitability are to benefit the most prudent, well prepared, and forward-looking cruise companies;

- in fact, heavy pressure on cruise revenue and profits is already apparent, as cruise cancellations, customer refunds, additional operational costs and widespread uncertainty have been escalating;

- cruise managers must inevitably proceed towards an extensive reassessment of their investment, financing, and operating plans with a view to curtail the earlier ambitious projects for larger costly newbuild cruise vessels;

- as the pandemic implications affect nearly all business sectors and liquidity turns scarce and expensive, financing strategies have to be redesigned, conveniently tailored under these adverse circumstances;

- the relatively attractive cruise company WACCs, estimated earlier in this study, are hard to maintain further, as funding is turning more expensive, typically in favor of the largest and best reputed players;

- the optimal capital structure mix remains of critical concern, as different capital sources bear different funding costs, diversified among competing cruise companies;

- as a result, the earlier robust and promising financial performance of the cruise companies, as depicted by the ROE, ROA, ROIC, WACC ratios, leverage exposure, solvency, earning per share and stock market performance, is highly unlikely to remain unaffected under the prevailing gloomy market circumstances;

- a vital short-term goal for cruise business is undoubtedly survival; this comes at a severe cost, as government intervention and extensive lending is seen to become imperative to keep cruise companies afloat;

- long term objectives of cruise companies should include the restoration of the disastrous reputational damage that has been caused by the virus effects on the broader cruise business.

Having said that, cruise business has in fact faced hard times and global crises in the past but managed to recover convincingly, demonstrating tough resilience, adaptability, and flexibility. This virus crisis, however, appears to be quite different. The critical question remains as to when the cruise industry is going to return into business operations again ( Calder, 2020 ). Unfortunately, there is no clear answer to that yet, as there are many uncertainties to make rational forecasts for the entire 2020. Fears are that this crisis will affect cruise revenues for a long time, particularly in the Asian region, as this is a dynamic market of growing importance for the cruise industry in recent years ( Moussali & Tsekoura, 2020 ; OMR Global, 2020 ). Obviously, these adverse implications are anticipated to have a tremendous financial impact on all cruise players, inducing downward adjustments in investment, financing, and profitability projections. However, it is for small cruise players that the implications are expected to be even more painful, forcing inevitably several of them to exit the market or to be taken over.

According to a recent KPMG report ( Giese, 2020 ), a set of direct responsive actions is under play by the cruise industry to keep future business intact, including bonus credit offers (110–125% of booking amount) instead of cash refunds, as an option to cruise passengers whose trips have been cancelled due to the pandemic, providing flexibility for future bookings. Based on recent UBS bank estimates ( Panetta, 2020 ), around 76% of the passengers whose cruises were cancelled due to pandemic have opted for a credit for future trips instead of a refund. Furthermore, based on a recent CLIA survey, 82% of cruisers indicate their interest in booking a cruise for their next vacation. Despite multiple outbreaks of COVID-19 and uncertainty over when sailing will reconvene, several reports record increased bookings for 2021 in comparison to 2019. This reflects a persisting interest of cruise passengers in continuing pursuing cruise travel and tourism services in the future, though it may be harder to convince first-time cruisers ( Giese, 2020 ; Panetta, 2020 ). At the same time, as most countries continue to fight against COVID-19 effects, the virus impact is anticipated to challenge the business model of several industries ( McKinsey, 2020c ). For the time being, there does not seem to be a clear timeline for the restart of cruise operations. To gain customer support after travel restrictions will have been lifted, companies consider promotion campaigns at reduced cruise package prices for 2021, to compete and revitalize cruise demand. In any case, the assessment of the post-COVID-19 impact on the global cruise business can be more accurately evaluated after the pandemic is over. This could well lead to a challenging follow-up empirical study.

Appendix A. 

Source: Authors ‘compilation; www.cruiseindustrynews.com ( Cruiseindustrynews, 2020 ). A summary version is presented in Table 7 .

Author's statement

The authors confirm that their paper entitled ‘The Global Cruise Industry: Financial Performance Evaluation’ (RTMB-D-20-00143R1_R2) is the output of original research and it has not been published elsewhere, nor is it currently under consideration for publication elsewhere.

To the authors' view this manuscript is appropriate for publication in the Research in Transportation Business and Management – Special Issue on Cruise Shipping, Ports and Destinations (Cartagena 2020 Conference) because it covers an unresearched topic and contributes innovative empirical findings and useful policy recommendations.

Declaration of Competing Interest

The authors have no conflicts of interest to disclose.

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Carnival’s 2023 Record Revenue & Capacity

Doug Parker

Doug Parker

  • December 21, 2023

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As the world’s largest cruise operator, Carnival Corporation (CCL) achieved significant milestones in the past year, demonstrating its commitment to providing exceptional cruise experiences while maintaining robust financial health.

Record-Breaking Revenues

Carnival Jubilee exterior

Carnival Corporation’s annual revenues reached an all-time high of $21.6 billion in 2023, thanks to the company’s successful strategies and the growing popularity of cruises.

Notably, the fourth quarter of 2023 saw record revenues of $5.4 billion, emphasizing the strong demand for cruise vacations. Furthermore, the company experienced record-breaking booking volumes during Black Friday and Cyber Monday, both positive signals for future revenue.

Reduction in debt

Carnival Corporation accomplished a significant feat in reducing its debt this year. The company made substantial payments totaling $6 billion, which lowered its debt balance by $4.6 billion from its peak in early 2023.

At the end of the year, Carnival Corporation had $5.4 billion in available cash and credit facilities, placing the company in a strong financial position to face future challenges and take advantage of opportunities.

Passengers capacity up

Caribbean Princess, Carnival Vista, Carnival Horizon

The cruise line has seen a remarkable increase in passenger capacity, with occupancy rates surpassing 100% in the fourth quarter of 2023.

Additionally, customer deposits reached a record high of $6.4 billion in the fourth quarter, surpassing the previous record by 25%. This indicates a high level of consumer confidence and anticipation for future cruises.

Environmental strides

sun princess main dining room

Carnival Corporation continues to make strides in its sustainability efforts. The company reduced its greenhouse gas emissions by over 10% compared to its peak year of 2011, despite a 30% increase in capacity.

It has also made significant progress in reducing food waste and is on track to achieve its ambitious sustainability targets ahead of schedule.

The cruise operator will mark another significant milestone this weekend when Carnival Jubilee enters service from Galveston, Texas. Princess Cruises’ next ship, Sun Princess, will debut early next year in Europe as the line’s first Sphere-class vessel.

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How Much Do Cruise Ships Make A Year

Published: December 19, 2023

Modified: December 28, 2023

by Koo Echeverria

  • Sustainability
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Introduction

The cruise industry is a global phenomenon, attracting millions of travelers each year who seek the ultimate vacation experience on the high seas. Cruise ships, with their luxurious amenities, world-class entertainment, and breathtaking itineraries, have become floating cities that cater to every need of their passengers. But have you ever wondered how much revenue these massive vessels generate? In this article, we will delve into the financial side of the cruise industry and explore just how much cruise ships make in a year.

Operating a cruise ship is no small feat. It involves significant investments in the construction of the vessel, ongoing maintenance, crew salaries, fuel costs, and a plethora of other expenses. However, cruise lines have mastered the art of generating revenue through various channels, making the industry one of the most profitable sectors in the tourism and hospitality sector.

From ticket sales to onboard purchases, there are several factors that contribute to a cruise ship’s annual revenue. By understanding these revenue streams, we can gain insight into the financial success of the industry as a whole, as well as individual cruise ships.

In this article, we will explore the different factors that affect cruise ship revenue, examine the various sources of income for cruise ships, and take a closer look at some of the top earning cruise ships in the industry.

So, if you’re curious about the financial side of the cruise industry and the profitability of cruise ships, read on to discover just how much these floating marvels make in a year.

Overview of the Cruise Industry

The cruise industry is a thriving and ever-growing sector of the global tourism industry. According to the Cruise Lines International Association (CLIA), more than 30 million passengers embarked on a cruise in 2019, and this number has been steadily increasing over the years.

Cruise lines operate various types of ships, ranging from small luxury vessels to large mega-ships capable of carrying thousands of passengers. These ships offer a wide array of amenities, including multiple restaurants, bars, pools, casinos, theaters, fitness centers, and even spas. The goal is to create an all-inclusive experience for passengers, where they can relax, dine, and be entertained while exploring different destinations.

The cruise industry is fueled by the desires and aspirations of travelers seeking unique and hassle-free vacations. Cruises offer the convenience of visiting multiple destinations in one trip, eliminating the need for individual transportation and accommodation arrangements. Passengers can simply unpack once and let the ship transport them to different ports of call, allowing them to experience the beauty and culture of various regions.

Popular cruise destinations include the Caribbean, Mediterranean, Alaska, and the Baltic region, but the industry is continuously expanding into new markets and destinations. From adventure-packed excursions to romantic getaways and family-friendly activities, there is a cruise itinerary for every type of traveler.

Cruise lines cater to a diverse range of demographics, offering cruises tailored to different age groups, interests, and budgets. Whether it’s a luxury cruise for high-end travelers or a budget-friendly option for families, the industry works to accommodate the preferences and needs of a wide range of consumers.

Furthermore, the cruise industry plays a significant role in the global economy. It contributes to job creation, both on board the ships and in supporting industries such as manufacturing, transportation, and tourism. The industry also stimulates local economies in port cities, as cruise passengers often engage in shore excursions, dine at local restaurants, and shop for souvenirs.

As the demand for cruise vacations continues to grow, cruise lines are constantly innovating and investing in new ships and amenities to attract passengers. The industry is also becoming increasingly focused on sustainability and environmental responsibility, aiming to reduce carbon emissions and minimize their ecological footprint.

Overall, the cruise industry presents a unique and lucrative business model, offering travelers unforgettable experiences and contributing to the economic growth of countries worldwide.

Factors Affecting Cruise Ship Revenue

Several factors influence the revenue generated by cruise ships. Understanding these factors is essential to comprehend the financial aspects of the cruise industry. Here are some key elements that play a significant role in determining cruise ship revenue:

  • Occupancy Rates: One of the primary factors affecting cruise ship revenue is the occupancy rate of the ship. Cruise lines strive to maximize the number of passengers on board for each voyage. Higher occupancy rates mean more ticket sales and increased revenue. To achieve high occupancy rates, cruise lines employ various marketing strategies, promotions, and competitive pricing.
  • Pricing and Ticket Sales: The pricing of cruise tickets directly impacts revenue. Cruise lines utilize dynamic pricing models, where ticket prices fluctuate based on factors such as demand, time of year, and available inventory. Early booking discounts, last-minute deals, and exclusive packages contribute to ticket sales and overall revenue. Additionally, cruise lines offer different cabin categories, each priced differently, catering to a range of budgets and preferences.
  • Onboard Revenue: Apart from ticket sales, onboard revenue plays a significant role in boosting the financial success of cruise ships. Passengers spend money on various onboard amenities and services, including dining, drinks, casino gambling, spa treatments, and shore excursions. Cruise lines often offer additional packages or exclusive experiences for an extra cost, enticing passengers to spend more during their voyage.
  • Seasonality and Itinerary: The timing and destination of a cruise itinerary impact revenue. Popular destinations and peak travel seasons can command higher ticket prices, leading to increased revenue. Cruise lines carefully plan their itineraries to include in-demand ports and attractive destinations to attract more passengers.
  • Cruise Ship Size and Capacity: The size and capacity of a cruise ship affect revenue generation. Larger ships typically have more cabins and amenities, accommodating a higher number of passengers. This translates to more ticket sales and increased onboard spending. Modern mega-ships have revolutionized the industry, offering larger entertainment venues, water parks, shopping complexes, and a wider range of dining options, all contributing to elevated revenue.
  • Repeat Customers and Loyalty Programs: Cruise lines value repeat customers and often offer loyalty programs to encourage passengers to sail with them again. These programs provide exclusive benefits, discounts, and perks, incentivizing customers to choose a particular cruise line for their future voyages. By fostering customer loyalty, cruise lines can secure a steady flow of revenue from returning passengers.

It’s important to note that the revenue generated by cruise ships is also influenced by external factors, such as global economic conditions, travel trends, and unforeseen events (e.g., natural disasters, political unrest). Cruise lines must adapt to these external factors and implement strategies to mitigate any negative impacts on revenue.

By considering these various factors, cruise lines can optimize their revenue streams and ensure the financial viability of their operations. In the next section, we will delve into the specific sources of revenue for cruise ships.

Examination of Cruise Ship Revenue Sources

Cruise ship revenue is derived from multiple sources, combining ticket sales, onboard spending, and other income streams to create a robust financial foundation. Let’s take a closer look at the primary sources of revenue for cruise ships:

  • Ticket Sales: Ticket sales account for a significant portion of cruise ship revenue. Passengers purchase tickets to secure their spot on a specific cruise itinerary. Cruise lines employ various pricing strategies, offering different cabin categories and promotional discounts to attract a diverse range of travelers. Ticket prices are influenced by factors such as cabin location, cruise duration, itinerary popularity, and demand fluctuations.
  • Onboard Spending: Onboard spending plays a crucial role in boosting revenue. Once passengers are on the ship, they have the opportunity to indulge in a variety of amenities and services, each generating additional income. From specialty dining and beverage packages to spa treatments, casinos, onboard shops, and photography services, passengers have a range of options to enhance their cruise experience. Cruise lines incentivize onboard spending through various means, including exclusive deals, package offerings, and entertainment events.
  • Beverage and Dining Options: Cruise ships offer a wide array of beverage and dining options to cater to passengers’ culinary preferences. While basic meals are typically included in the ticket price, specialty dining venues and premium beverage packages are available at an additional cost. These options provide an opportunity for cruise lines to generate extra revenue by offering unique dining experiences and a variety of beverage choices.
  • Spa and Wellness Services: Many cruise ships feature onboard spas and wellness centers where passengers can indulge in massages, facials, beauty treatments, and fitness classes. These services are charged separately, contributing to the onboard revenue. Cruise lines often promote spa packages and offers to entice passengers to experience ultimate relaxation and rejuvenation during their voyage.
  • Shore Excursions: One of the highlights of a cruise vacation is the opportunity to explore various ports of call. Cruise lines offer a range of shore excursions, allowing passengers to immerse themselves in the local culture, visit popular landmarks, and engage in exciting activities. These excursions are an additional source of revenue, with passengers paying for the privilege of curated experiences and guided tours.
  • Casinos and Gaming: Casinos are a popular feature on many cruise ships, attracting passengers who enjoy gambling and entertainment. Gaming activities such as slot machines, table games, and poker tournaments contribute to the onboard revenue. Cruise lines also offer various incentives, including rewards programs and exclusive events, to encourage passengers to try their luck and spend time in the onboard casinos.
  • Photography and Memorabilia: Cruise ships often have dedicated photography services, capturing passengers’ vacation memories through professional photos. Additionally, onboard shops offer a selection of souvenirs, including clothing, accessories, and branded merchandise. The sales generated from these products add to the overall revenue of the cruise ship.

These revenue sources, combined with ticket sales, form the backbone of a cruise ship’s financial success. By offering a range of amenities and services, cruise lines maximize passenger spending and create a memorable onboard experience. However, it’s important to strike a balance between revenue generation and providing value to passengers, ensuring they feel satisfied with their cruise vacation.

Now that we have explored the various sources of revenue for cruise ships, let’s move on to examining some case studies of top-earning cruise ships in the industry.

Case Studies: Top Earning Cruise Ships

Within the cruise industry, there are several standout ships that consistently generate significant revenue for their respective cruise lines. These vessels offer unique experiences, innovative amenities, and exceptional service, attracting a loyal following of passengers. Let’s take a look at some case studies of the top earning cruise ships:

  • Royal Caribbean’s Symphony of the Seas: As one of the largest cruise ships in the world, Symphony of the Seas is a top earner for Royal Caribbean International. This mega-ship can accommodate over 6,700 passengers and is equipped with numerous attractions, including multiple pools, water slides, a Central Park replica, ice-skating rink, and an array of dining options. Symphony of the Seas generates substantial revenue through ticket sales, onboard spending, and specialty dining experiences.
  • Carnival Corporation’s AIDAperla: AIDAperla, operated by Carnival Corporation’s AIDA Cruises, is a top performer in the European cruise market. This ship offers a variety of itineraries in the Mediterranean, attracting both first-time cruisers and repeat passengers. AIDAperla features enticing amenities such as a water park, sports facilities, specialty restaurants, and a spa. The onboard revenue is augmented by the ship’s vibrant nightlife, including bars, clubs, and live entertainment options.
  • Norwegian Cruise Line’s Norwegian Escape: Norwegian Escape, operated by Norwegian Cruise Line, is known for its “Freestyle Cruising” concept, offering passengers the freedom to design their own vacation experience. The ship boasts a wide range of dining options, including specialty restaurants with celebrity partnerships. Norwegian Escape generates substantial revenue from onboard spending, especially through its varied dining options and premium beverage packages.
  • MSC Cruises’ MSC Meraviglia: MSC Meraviglia, part of MSC Cruises’ fleet, is a top earning ship in the Mediterranean region. With its stunning design and innovative features, the ship offers passengers an impressive array of amenities, including a promenade with LED sky dome, interactive entertainment, numerous pools, and a wide selection of dining options. MSC Meraviglia generates revenue through ticket sales, onboard spending, and popular shore excursions.
  • Disney Cruise Line’s Disney Dream: Disney Dream, operated by Disney Cruise Line, is a highly successful ship catering to families and Disney enthusiasts. The ship offers magical experiences for both children and adults, with themed deck parties, Broadway-style shows, character interactions, and family-friendly dining options. Disney Dream excels in onboard revenue, driven by merchandise sales, character experiences, and specially themed events.

These case studies highlight the diverse ways in which cruise ships generate revenue. By offering exceptional onboard experiences, unique amenities, and a range of dining and entertainment options, these top earners capture the attention of passengers and encourage them to spend on additional services.

It’s worth noting that the top-earning cruise ships are often part of larger cruise line fleets, benefiting from the brand recognition, loyalty programs, and marketing efforts of their parent companies. The success of these ships contributes to the overall revenue and profitability of their respective cruise lines.

Overall, the top earning cruise ships exemplify the industry’s ability to provide exceptional experiences and generate substantial revenue, supporting the continued growth and success of the cruise industry as a whole.

The cruise industry is a thriving sector that generates significant revenue through a variety of sources. From ticket sales to onboard spending, cruise ships have mastered the art of maximizing their financial potential. Factors such as occupancy rates, pricing strategies, onboard amenities, and destination choices all contribute to the revenue generation of cruise ships.

The diverse sources of revenue, including ticket sales, onboard spending on dining, beverages, and services, shore excursions, casinos, and merchandise sales, collectively form the financial backbone of the cruise industry. The top-earning cruise ships, such as Symphony of the Seas, AIDAperla, Norwegian Escape, MSC Meraviglia, and Disney Dream, exemplify the success and profitability of the industry.

These ships offer passengers a range of amenities and unique experiences, enticing them to spend on additional services and creating a memorable vacation. The revenue generated by these ships not only sustains the operations of cruise lines but also contributes to job creation and stimulates local economies in port cities.

The cruise industry continues to evolve and innovate, adapting to consumer demands and global trends. Cruise lines are committed to providing exceptional experiences while also focusing on sustainability and environmental responsibility. As the industry expands into new markets and regions, the revenue potential of cruise ships is expected to continue to grow.

In conclusion, the financial success of cruise ships relies on a combination of factors, including ticket sales, onboard spending, and strategic decision-making. The industry’s ability to constantly attract passengers and create unforgettable experiences positions it as a profitable player in the global tourism and hospitality sectors. Whether it is through the grandeur of mega-ships or the intimate luxury of smaller vessels, cruise ships continue to captivate travelers while generating substantial revenue for the cruise industry as a whole.

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Cruises are more popular than ever—and investors are late to the party

On board Royal Caribbean’s Icon of the Seas. Cruise operators have increased revenue by selling more high-margin products, such as drinks packages and shore excursions. (Bloomberg)

Still looking for an amazing deal on a cruise?

Four years after Covid-19 shut the industry down, a brief golden age of uncrowded decks and deep discounts has come to an end. With ships sailing at capacity and prime cabins selling out quickly, grabbing an offer as the industry’s traditional “wave season" winds down this month might be wise.

Investors are in more luck than travelers: Even though the lowest prices are off the table, bargains remain available in the shares of cruise lines—especially for those not put off by a bit of choppiness.

“Wave season" is the term for the window of time at the beginning of the year when the cruise industry offers its best rates. During 2023’s season, executives were all but shouting to Wall Street that they were seeing monster demand. 

Analysts were slow to take the hint: More than two-thirds of those covering industry giant Carnival, for example, rated its stock a “sell" or “hold" early last year. Its shares, along with Royal Caribbean and Norwegian Cruise Line Holdings, were the top three performers in the S&P 500 during the second quarter of 2023.

Since then, though, only Royal Caribbean has been able to keep rallying, coming close to erasing its pandemic losses. The other two are still down by more than half. Further gains look likely for all three as anecdotes trickle in about what is shaping up to be the industry’s best wave season ever.

“The wind is behind their sails—pun intended," says Michael Erstad, a senior analyst covering the consumer sector at research firm M Science.

Cruises have long been affordable compared with land-based alternatives. That is especially true during bad economic times due to the unique economics of cruise ships—last minute deals abound because it makes no sense to leave cabins empty. Even today, though, cruises offer a lot of bang for the buck. The all-in cost of shore-based hotels, flights, restaurant meals and vacation rentals have all risen more.

“We are nowhere near our ceiling when it comes to the price environment" says Carnival Chief Executive Josh Weinstein.

And more of cruisers’ dollars are hitting the bottom line as operators have become leaner and smarter. For example, they have gotten better at selling onboard, high-margin goodies such as drinks packages and shore excursions typically responsible for more than a third of revenue—often before the ship even leaves port. 

Royal Caribbean’s CEO, Jason Liberty, gushed to investors last month that his company had 40% more pre-cruise revenue booked in 2024 than in the same period of 2023.

Another way cruise lines boost sales while also cutting costs is directing ships to their own private ports or islands. Often located a short sail from Florida, ships burn less fuel and nearly every dollar spent on drinks or souvenirs is captured by the cruise line. With many older ships retired during the pandemic, their fleets are also more fuel-efficient.

The best way to compare today’s profitability with the carefree days before the pandemic is net yield—money left over per available passenger cruise day after paying travel agents and other operating expenses. Royal Caribbean, which recently launched the world’s largest cruise ship, Icon of the Seas, says its net yield rose by nearly 18% in constant currency terms compared with 2019 during the fourth quarter.

Things should be even better this year as passengers cruise in record numbers. One sign of a tighter market is how early they are making reservations. 

For example, Royal Caribbean’s cruises were being booked 202 days in advance on a rolling 12 month basis in December, according to Erstad. That was 11% longer than in the same month before the pandemic. He says that, partly as a result, pricing began a sharp improvement during 2023’s wave season that has continued.

So what’s the catch? A big one: Cruise lines had to borrow heavily to stay afloat financially when their ships were idle or half-empty. Between 2019 and the end of fiscal year 2022, net debt on the three largest cruise lines’ balance sheets more than doubled to $63 billion. All carry junk credit ratings.

But as any sailor knows, exciting things happen when you release ballast. Carnival has a set of Wall Street-friendly financial targets dubbed SEA Change. The most interesting one, “E," stands for a 50% bump in a company-specific measure of earnings before interest, tax, depreciation and amortization by 2026 compared with what the company had been expecting last June for all of 2023. Much of that would be available to pay debt because Weinstein says the company is only taking delivery of three new ships between now and 2027.

“That is a remarkably small order book for this corporation, and that’s a good thing."

Carnival’s free cash flow was more than $2 billion last year. Analysts polled by FactSet see it more than doubling by 2027. If Carnival meets its goals and reaches investment grade in a few years then it can also refinance expensive loans more cheaply, though much depends on how quickly the Federal Reserve cuts interest rates.

The cruise line that has made the most progress on its balance sheet and that analysts single out for navigating the pandemic best is Royal Caribbean. Its debt has been upgraded twice by Moody’s in just the past year. Though it has fewer ships and less revenue, it has gone from a market value half as high as Carnival’s in 2018 to one-and-a-half times as high today.

Royal Caribbean has momentum and is the safe choice. Investors with strong sea legs should consider Carnival, the cheapest of the bunch on a debt-adjusted basis. All three large cruise lines still trade below their 10 year average prior to the pandemic as a multiple of forward Ebitda.

This wave hasn’t crested yet.

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Shirley maclaine says ‘the glamours gone out’ of hollywood: ‘100 percent different’.

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Shirley MacLaine is back on the silver screen as she marks a milestone career anniversary this year.

The 89-year-old actress is starring opposite Peter Dinklage in the dark comedy “American Dreamer,” which premiered in theaters on Friday ahead of the 96th Academy Awards. Forty years ago, MacLaine won her first best actress Oscar for her performance in 1983’s “Terms of Endearment” after receiving four previous nominations.

MacLaine, who made her acting debut in 1955, recently told Extra’s Billy Bush that she still loves her profession as much as when she first started in the entertainment industry. However, MacLaine shared that Hollywood has significantly changed over the years with the advent of streaming platforms.

“The glamour’s gone out of it, I’m afraid. I think it’s entirely different,” MacLaine said. “It’s 100% different.”

Bush noted that movie stars’ privacy was more protected by studios in the Golden Age of Hollywood and asked if MacLaine was bothered by the prevalence of “prying eyes” today.

“It’s all right,” she said, “I’m kind of open anyway and I don’t have much to hide.”

“I sometimes have a lot of explaining to do,” MacLaine quipped.

Actress Shirley MacLaine wearing a purple coat and pink hat, posing for a portrait during a Sundance Film Festival promotion in Park City, Utah.

In “American Dreamer,” Dinklage, 54, plays Dr. Phil Loder, a low-paid and frustrated college professor whose dream of becoming a homeowner remains out of reach. He seizes the opportunity when elderly widow Astrid Fanelli (MacLaine) offers to sell her sprawling estate “for pennies,” only to discover that the “deal is too good to be true,” per a logline for the movie.

MacLaine said she was drawn to the role of Astrid since she “liked the way she was dealing with age.”

When asked how she planned to celebrate her milestone 90th birthday in April, MacLaine, who has continued working steadily over the years, explained that she would be busy with her next project.

FILE - This Feb. 22, 2015, file photo shows Shirley MacLaine at the Oscars in Los Angeles. MacLaine was honored for career achievement by the AARP, the organization for retired persons and its AARP, The Magazine. The awards show will be broadcast Feb. 15, 2019, on PBS.  (Photo by John Shearer/Invision/AP, File)

“I’m going to be on a set,” MacLaine said. “I’ll be in Atlantic City.”

The actress also weighed in on whether achieving the “American Dream” remains a reality for most people.

“I think that we should care more about what the American democracy means,” she responded. “We seem to have forgotten what it means, and I think it’s time we get back into the level of reality of understanding American democracy.”

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Dinklage said he found the “notion” of the American Dream “fascinating.” “I think what the point of this movie, though, is: be careful what you obsess over too much because you meet somebody like Shirley and her character and it just completely upends what you’ve always thought and makes you see things a whole new way,” he said.

The “Game of Thrones” star added that he believes viewers will find “American Dreamer” to be “a fresh perspective on romance.”

Though she and Dinklage had never worked together before, MacLaine told Bush that the two “really hit it off.”

Peter Dinklage

For his part, Dinklage said starring alongside the acting icon was “one of the greatest experiences of my career.”

MacLaine made her big screen debut in Alfred Hitchcock’s 1955 black comedy “The Trouble with Harry,” earning the Golden Globe Award for new star of the year – actress. She received her first Academy Award nomination for her role in Vincente Minnelli’s 1958 film “Some Came Running,” starring opposite Frank Sinatra and Dean Martin.

Following her early career success, MacLaine skyrocketed to stardom after playing elevator operator Fran Kubelik in Billy Wilder’s 1960 romantic-comedy drama “The Apartment.” She earned her second Oscar nomination for her performance and was heavily favored to win the trophy, but lost to Elizabeth Taylor.

Shirley MacLaine in "Irma la Douce."

MacLaine was nominated for her third Oscar for her portrayal of the titular prostitute in Wilder’s 1963 film “Irma la Douce.”

Though her acting career declined for a period in the early to mid 1970s, MacLaine and co-director Claudia Wells received an Academy Award nod for best documentary – feature for their 1976 film “The Other Half of the Sky: A China Memoir.”

MacLaine resurged to prominence after starring in 1977’s “The Turning Point.” The actress, who had originally aspired for a career in ballet, earned her fourth Academy Award nomination for her performance as retired ballerina DeeDee Rodgers.

In 1984, MacLaine finally took home her first best actress Oscar after starring as widow Aurora Greenway in Jim Brooks’ “Terms of Endearment.” Her fellow nominees included her co-star Debra Winger, who played her daughter Emma in the family comedy-drama.

Upon accepting her award, MacLaine joked about how long she had waited to receive the honor. “I have wondered for 26 years what this would feel like,” she said. “Thank you so much for terminating the suspense.”

During her acceptance speech, MacLaine noted that she had been looking forward to working with her co-star Jack Nicholson, quipping “to have him in bed was such middle-aged joy.”

MacLaine also remarked on her desire to work with the “turbulent brilliance of Debra Winger.” The pair, who reportedly stayed in character during the film’s entire production, had a notoriously stormy on-set relationship.

“She literally inhabited the character so thoroughly that I thought for four months I had two daughters,” MacLaine said of Winger.

“I’m not going to thank everybody I’ve ever met in my entire life – although, with the way my mind has been going lately probably everybody I’ve ever met in my entire life and in the other life I might have had had something to do with this,” MacLaine said.

Shirley MacLaine and Jack Nicholson smiling for a picture in "Terms of Endearment".

She continued, “You know, if ‘Terms of Endearment’ had happened to me five years ago, I think I would have called it a thrilling, commercial, artistic accident. But I don’t believe that anymore.

“I don’t believe there’s any such thing as accident. I think that we all manifest what we want and what we need. I don’t think there’s any difference really between what you feel you have to do in your heart and success. They’re inseparable.”

MacLaine’s Oscars speech is widely considered most memorable for her closing lines. “Films and life are like clay waiting for us to mold it,” she said.

Shirley MacLaine holding her Oscar trophy at the 56th annual Academy Awards show in 1984.

“And when you trust your own insides, and that becomes achievement, it’s a kind of a principle that seems to me is at work with everyone,” MacLaine added. “God bless that principle. God bless that potential that we all have for making anything possible if we think we deserve it.”

“I deserve this. Thank you.”

Since receiving her Oscar, MacLaine has continued to star in major feature films and television projects. She most recently appeared in two episodes of Hulu’s hit mystery comedy-drama series “Only Murders in the Building.”

Dolly Parton, Sally Field, Olympia Dukakis, Shirley MacLaine, Julia Roberts and Daryl Hannah posing for a photo in Steel Magnolias premiere.

One of MacLaine’s most beloved performances was her turn in the classic 1989 romantic-comedy drama “Steel Magnolias.” Along with MacLaine, the film featured an A-list ensemble cast, including Dolly Parton, Olympia Dukakis, Dolly Parton, Julia Roberts, Sally Field and Daryl Hannah

The film will mark its 35th anniversary this November. During a 2019 interview with People for the 30th anniversary of “Steel Magnolias,” MacLaine shared that she still stays in touch with her co-stars.

“We check in with each other,” MacLaine said. “Not all the time, but we know what we’re doing.”

MacLaine told the outlet that Parton “impressed” the most out of all her acclaimed castmates while they were filming the movie in Natchitoches, Louisiana.

“She was the only one who didn’t complain about the heat,” she recalled with a laugh. “And she was the one wearing the 10-inch heels and the waist cincher of 18 inches. And she never complained about a thing. And a wig that was huge!”

The actress played town grouch Louisa “Ouiser” Boudreaux, the best friend of Dukakis’ character Clairee Belcher. MacLaine said the late “Moonstruck” star, who died at the age of 89 in 2021, was the actress that she was “closest” to on set.

“First off, all our scenes were almost all together,” MacLaine told People. “Julia was going through what she was going through in her young life. And Dolly, I think, was writing songs up in her bedroom in her house, or something.”

Roberts, who was 23 at the time, made her career breakthrough after starring as the young diabetic Shelby Eatenton-Latcherie. Roberts earned her first Academy Award nomination for best supporting actress and won the best supporting actress Golden Globe award.

Though Roberts was a relative newcomer to the industry, MacLaine remembered that she saw the young actress’ star potential from the moment they met.

“We were rehearsing on a sound stage, I can’t remember where, and she walks in,” MacLaine recalled. “And the way she walked into the room and sat down and said hello… I got up from the table and called my agent before we even started to rehearse.”

She continued, “I said, ‘There’s a woman here and she’s going to be a huge star. You should handle her,’ I told him. She was amazing. The energy that she had just walking into the sound stage.”

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Actress Shirley MacLaine wearing a purple coat and pink hat, posing for a portrait during a Sundance Film Festival promotion in Park City, Utah.

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Cruzely.com | Everything Cruising

How Much The Biggest Cruise Ships (And Cruise Lines) Make Each Day

Step onto a cruise ship, and the first thing that you likely notice is how luxurious — and big — cruise ships really are.

From grand promenades like something you’d see in a Las Vegas hotel to ships that measure 20 decks and more than 1,000 feet long, it’s obvious that cruise lines spend a lot of money building the vessels. In fact, some of these newest ships cost more than $1 billion to build.

Of course, cruise lines wouldn’t spend that much money if they didn’t know they could earn it all back… plus a tidy profit. And with thousands of people on a ship, each trip made by the ship brings in hundreds of thousands — and even millions of dollars — in revenue.

But have you ever wondered just how much the cruise lines are really making each day? With dozens of cruise ships holding tens of thousands of people, the numbers have to be astounding. Meanwhile, how much are individual cruise ships making for every day that they sail?

Given that we’ve covered how much cruise lines make from each passenger in the past, we decided to see just how much cruise lines and the biggest cruise ships make each day they operate.

Liberty of the Seas in Cozumel

How Much Money Cruise Lines Make Each Day

Major cruise lines are publicly traded companies, with stock on the major exchanges. As such, they are required to file regular financial results. We took a look at the latest yearly results for three major cruise lines: Carnival, Royal Caribbean, and Norwegian to dive into exactly how much money they make.

Before we get too far, you should know that these calculations represent “back of the envelope” math . Today’s cruise lines are highly complex organizations with a number of different assets.

For example, Carnival Corporation actually encompasses a number of different lines, including Carnival, Princess, Holland America, and more. Meanwhile, financial reports usually don’t break down figures based solely on individual cruise lines. Therefore, we have to look at the company as a whole to get an idea of what it earns from each cruise line.

Carnival Corporation As the largest cruise company in the world, Carnival Corporation is famous for the Carnival brand, but also features other lines including the aforementioned Princess and Holland America, and AIDA, Seabourn and others.

All told, Carnival Corp. brought in a staggering $18.9 billion in revenue across all of its lines for the 2018 fiscal year. Divided by 365 days, that comes out to $51,728,767 in revenue earned each day .

How much of that turns into profit? The cruise line had a total profit of $3.15 billion last year. Divided by the days in a year, that comes out to a daily profit of $8,635,616 .

Royal Caribbean Cruises LTD Royal Caribbean Cruises LTD is famous for the largest cruise ships on the planet, but did you know it is also the parent company of Celebrity Cruises, Azamara Club Cruises, and Silversea Cruises? It also has joint partnerships in TUI and Pullmantur. In total, the cruise line operates nearly 60 ships that cover the world.

As you might expect, all those ships bring in a lot of money. In the past year, Royal Caribbean saw revenue of $9.5 billion from its business. That’s a total of $26,010,545 divided out for each day of the year .

Royal Caribbean is also highly profitable. With 2018 profits of $1.82 billion, the cruise company earned a profit of $4,974,773 per day across its fleet .

Norwegian Cruise Line Holdings Norwegian Cruise Line Holdings has made waves recently with the introduction of its largest ships, including Norwegian Bliss, Norwegian Joy, and the Norwegian Encore. However, it also operates cruises under the Oceania and Regent brands.

While Norwegian is the smallest of the “big three” cruise companies, it still brings in a healthy amount of money. Last year saw revenue of $6.1 billion, or $16,589,386 each day . As for profits, the company had a bottom line of $954.8 million — or $2,616,008 per day .

To summarize, here’s how much these three cruise companies earned in 2018:

How Much Money The Biggest Cruise Ships Make Each Day

While it’s interesting to see how much cruise lines are making per day, the numbers are so large that they can be difficult to wrap your head around. What is more approachable is how much the cruise lines make from their individual ships.

Again, before we get too far, you should understand this is a “back of the envelope” calculation. Cruise lines don’t break down their revenue or profit from individual ships. Specific trips will earn more or less, so these figures are just an estimate.

To calculate how much a ship makes, we first calculated how many people sail on each ship. Cruise lines report an occupancy rate for the entire cruise line.

This figure is usually between 105-108%, indicating that all rooms have at least two guests on average, and some also have a third.

From there, we multiplied the number of guests by the revenue per passenger a ship makes each day. Revenue per passenger is calculated by dividing total revenue earned by the number of passenger cruise days during the year.

For example, if a ship holds 4,000 passengers and sails on a three day cruise, that’s 12,000 passenger cruise days.

Side of the Carnival Horizon in port in Nassau

Carnival Horizon Carnival Horizon represents Carnival’s newest and largest ship in its fleet. First launched in 2018, the ship is homeported in Miami. It has 3,960 berths, but in 2018 Carnival saw an occupancy rate of 106.9%. Using these figures, we can estimate that the typical cruise on this ship has 4,233 passengers.

Meanwhile, given that Carnival brought in revenue $18.9 billion across its fleet and had 89.7 million “passenger days” on its ships, we can estimate the cruise line earned $211 per person, per day.

With 4,223 passengers spending an average of $211 per day, that would mean the Carnival Horizon earns an estimated $891,053 each day .

Royal Caribbean’s Symphony of the Seas Symphony of the Seas is Royal Caribbean’s newest ship and the largest in the world. All told the ship carries 5,518 passengers at double occupancy. But according to its financial reports, Royal Caribbean sees occupancy levels of 108.9%. So the estimated number of passengers in our calculation would actually be 6,009.

With revenue of $9.5 billion and 41.85 million passenger days on its ship, that means Royal Caribbean brings in an average of $227 per person each day on its ships.

In total, 6,009 passengers times $227 each gives a total estimated revenue of $1,364,043 each day aboard the Symphony of the Seas .

Norwegian Bliss Launched in 2018, Norwegian Bliss made headlines not only due to its size (nearly 1,100 feet) but also its features. Notably, the ship offers a go-kart track at sea; one of the most unique features ever seen.

All told, the Norwegian Bliss has room for 4,004 guests, assuming double occupancy. However, like other cruise lines Norwegian sails above 100% capacity. In 2018, the occupancy figure was 107.6%. If Norwegian Bliss sails at this level, it means 4,308 passengers on the ship.

According to financial reports, Norwegian brought in just under $6.1 billion last year with 20.3 million passenger days. Quick division shows that the cruise line earned $299 per person, per day in 2018.

With 4,308 passengers on the Norwegian Bliss bringing in $299 per day, that would mean revenue of $1,288,092 for each day .

Here’s how the estimated revenue figures we calculated stack up:

Are these numbers higher or lower than you thought? Do they surprise you? Let us know in the comments below.

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now how can trump explain helping them money wise just like the blood sucking airlines

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This is the highest-rated cruise destination in the world — and it's not what you think

Gene Sloan

What's the highest-rated cruise destination in the world?

If you guessed Barcelona; Rome; Athens, Greece; or Amsterdam — four of the most iconic cruise destinations in Europe — you'd be wrong. Ditto if you named Sydney or Tokyo.

It's also not Jerusalem (reached from the port of Haifa, Israel) or Buenos Aires, Argentina.

For more cruise news, guides and tips, sign up for TPG's cruise newsletter .

In fact, it's not any of the world's most famous travel destinations that are filled with historic sites, cultural attractions, great restaurants and world-class entertainment, as you might think it would be.

It's a decidedly more laid-back — and recently created — getaway: Perfect Day at CocoCay .

That's the word from Royal Caribbean Group, which has been telling Wall Street analysts lately that the recently revamped and expanded private island in the Bahamas has been knocking it out of the park when it comes to passenger ratings.

Related: How to visit Perfect Day at CocoCay on zero dollars

In a research report released this week, Barclays analyst Brandt Montour said Perfect Day at CocoCay's growing dominance as a destination was a topic of discussion this week during a meeting with Royal Caribbean Group chief financial officer Naftali Holtz, who noted it was now "the highest rated destination in the company's portfolio."

Royal Caribbean Group is the parent company of the world's largest cruise line Royal Caribbean , as well as Celebrity Cruises and Silversea Cruises . It's also a part owner in Germany-based lines Hapag-Lloyd Cruises and TUI Cruises.

cruise ship revenue per year

The ships operated by the five brands collectively account for a significant portion of the cruise business worldwide and stop at just about every major destination around the world accessible by water. That gives the company unique insight into the preferences of cruisers, which it mines by seeking feedback from every customer after every sailing.

Until recently, only the company's Royal Caribbean ships had been visiting Perfect Day at CocoCay, but the company's Celebrity Cruises ships are beginning to stop at the island this year, too.

Over the past few years, Royal Caribbean Group has poured hundreds of millions of dollars into overhauling and expanding Perfect Day at CocoCay, including adding a major new adults-only zone called Hideaway Beach this year that makes room for another 2,000 people a day.

Related: Royal Caribbean debuts Hideaway Beach: See photos of the adults-only beach club

The revamping of Perfect Day at CocoCay (which until a few years ago had much less infrastructure and was just known as CocoCay) also has included the addition of the biggest water park in the Bahamas or Caribbean and the region's largest freshwater pool .

The additions have turned the destination into a massive beach and amusements escape for cruisers on a scale not seen anywhere else in the world. With the addition of Hideaway Beach this year, it now has room for around 13,000 people at a time. It's expected to draw about 3 million visitors this year — a new record.

The additions also are turning cruises that include a stop at the destination into an increasingly popular alternative to a trip to such land-based mega destinations as Disney World near Orlando and the megaresorts of Las Vegas, Royal Caribbean executives have noted in recent conference calls with Wall Street analysts.

Related: Labadee vs. CocoCay: Which Royal Caribbean beach is right for you?

That may be giving Royal Caribbean Group a leg up on some of its cruising competitors.

In his research report this week, Montour noted Royal Caribbean Group felt that the success of Perfect Day at CocoCay along with the debut of blockbuster new Caribbean-based Royal Caribbean ships such as Icon of the Seas — the largest cruise ship ever — had given the company a "sustainable competitive advantage" in the Caribbean versus other cruise companies.

Royal Caribbean Group in recent months has been reporting record bookings and pricing for cruises, with voyages booking out further in advance than ever .

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USA TODAY

'Love Boat' theme cruise setting sail later this year

A new “ The Love Boat”-themed cruise will set sail later this year on the actual Love Boat – or as close as fans can get.

Princess Cruises , whose ships served as the backdrop for the beloved 1970s and ‘80s series, will offer the itinerary in August. The sailing marks the line’s second Love Boat cruise following its first outing in 2022, and will feature members of the original cast.

“We had such a blast connecting with fans on our theme cruise in 2022, so bringing it back in 2024 feels like it was meant to be, especially with the addition of some surprise guests,” Jill Whelan, who played Vicki Stubing in the show and serves as Celebrations Ambassador for the line, said in a news release . “Sailing with our fans brings us so much joy and this cruise will undoubtedly be a special reunion, taking us back to where it all began – on a Princess Cruise.”

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When is the 2024 Love Boat cruise?

The week-long cruise will sail round-trip from New York on Aug. 31. The voyage will take place on the line’s 3,660-passenger Enchanted Princess ship, which launched in 2021 (the line has retired the vessels actually used in the show).

Where will the cruise sail?

The ship will visit Newport, Rhode Island; Boston; Rockland, Maine; and Saint John and Halifax in Canada.

Along the way, guests will get face time with the cast, including Whelan; Bernie Kopell, who played doctor Adam “Doc” Bricker; Fred Grandy, who played purser Gopher, and Ted Lange, who played bartender Isaac. Ezra Freeman, the bartender from “The Real Love Boat,” a reality dating show inspired by the original series, will be on hand as well.

Activities include a sailaway party, meet-and-greet photo and autograph sessions and a cocktail demonstration hosted by Lange and Freeman. Passengers can also test their knowledge at “Love Boat” trivia and even participate in a symbolic vow renewal ceremony officiated by the stars, among other programming.

The line will also offer a VIP package that gives guests access to a cocktail party with the cast, move them to the front of the line for photos and autographs, and other parks.

Finding community on a theme cruise: From 'Star Trek' lovers to motorcycle enthusiasts

How much does the Love Boat cruise cost?

The sailing currently starts at $568 per person based on double occupancy, according to the line’s website . The fare includes the cruise’s themed activities, many restaurants on board, entertainment and more.

Princess will announce pricing for the VIP package at a later date.

Nathan Diller is a consumer travel reporter for USA TODAY based in Nashville. You can reach him at [email protected].

This article originally appeared on USA TODAY: 'Love Boat' theme cruise setting sail later this year

The line's Enchanted Princess ship.

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