Royal Caribbean is positioning itself to have a combination of port options no other cruise line can rival.
Private islands have been part of every major cruise line's game plan for decades, but Royal Caribbean is embarking on something different that will make it stand out. They're investing in their private islands while building out a collection of beach clubs.
Last Friday, Royal Caribbean announced it would open a beach club in Cozumel, Mexico in 2026, and that's the latest in the line's salvo of upgrades and additions aimed at making it the market leader in what a cruise vacation is all about.
Cruise ships have long been seen as floating destinations, but the ports of call are just as important to what vacationers are looking for in their cruise. Last year, Royal Caribbean's Senior Vice President and Chief Product Innovation Officer Jay Schneider, said the top two reasons people book a cruise are the destinations and food.
While a cruise line has control over the onboard experience, a poor experience on shore still reflects on the overall cruise experience. To that point, Royal Caribbean seems to want to improve that aspect of the overall vacation by giving guests more in-house choices to enjoy.
This strategy has a multi-faceted approach in how it benefits passengers and the company at the same time.
More ports, more choices
From the cruise passenger standpoint, offering beach clubs add to a growing collection of Royal Caribbean branded and operated spots in the Caribbean.
New cruisers, which are the burgeoning market for any cruise line, struggle mightily with finding good choices for shore excursions. Even excursions sold through a cruise line can have its issues, as they're all operated by third-parties. There's a lack of consistency in the product.
With Royal Caribbean's traditional private islands, it offers passengers a safe place they can rely on to deliver a certain quality of experience.
Private islands are wonderful, but very expensive. Plus, you can't just buy up a private island anywhere, especially along routes already frequented by cruise ships.
Enter the beach club.
Royal Caribbean now has two beach clubs set to open in the next two years, in Nassau, Bahamas and Cozumel. Each addresses a need Royal Caribbean's customers have.
The Royal Beach Club in Nassau is located on a strip of land near where the cruise ships dock, which makes it extremely convenient.
More importantly, Nassau is a port is one of the worst rated ports by Royal Caribbean's passengers.
Royal Caribbean International President and CEO Michael Bayley said in April 2023 "Nassau is in the bottom ten percent," of customer feedback.
Mr. Bayley said cruise ship passengers have, "come here many times before and there’s nothing new, fresh or innovative. Secondly, there needs to be more product, more experience, more uniqueness, more options."
A beach club adds a quality product that passengers can trust, along with the sort of experiences Royal Caribbean already knows its customers want.
It will be 17 acres in size and there will be pools, beaches, dining experiences, and live entertainment too.
In 2026, the Royal Beach Club in Cozumel will open, and that serves a need for a different market.
Royal Caribbean is investing heavily in the Galveston, Texas cruise market. They've built a brand new terminal, and deployed some of its newest and biggest cruise ships there.
The need for a cruise from Galveston is something else to do, as ships sailing from Texas are limited to a handful of ports in this region.
Cozumel is a very common port of call for any ship sailing the Western Caribbean, similar to Nassau in how much traffic it gets.
Opening a second beach club in Cozumel means a new option exclusively for Royal Caribbean's ships, and a trusted spot.
While Cozumel is not as poorly rated as Nassau, there's always going to be subset of customers who greatly prefer cruise line-run operations. And it's something flashy that will get the attention of the highly sought-after new cruiser market.
Keeping more money
Besides guest satisfaction, Royal Caribbean stands to improve its bottom line with beach clubs.
If there's been one lesson the company can glean from Perfect Day at CocoCay it's that running a highly rated destination brings in a lot of money.
CocoCay has drawn a lot of interest from new cruisers, and it was designed to attract customers who otherwise wouldn't be taking a cruise.
Adding beach clubs to the mix means more money spent by customers that goes to Royal Caribbean. Ever since Perfect Day at CocoCay opened in 2019, it's been responsible for higher returns to the line, thanks to higher pricing.
Royal Caribbean Group estimates 3 million guests will visit the island in 2024, which is up from 2.5 million in 2023. Mr. Bayley spoke of the island’s success, "The demand for that product [Perfect Day at CocoCay] is exceptionally high. The demand not only is there from a volume perspective, but the rate is there and that rate has been going up again in a very healthy way."
When the new Hideaway Beach expansion went on sale in 2023, sales were described as "gangbusters" by top officials.
Clearly the company is seeing a correlation between high guest satisfaction, premium prices, and better profits.
Something other cruise lines don't offer
Another competitive advantage of Royal Caribbean's plan is it gives them something other lines can't offer.
Royal Caribbean wants to be the top choice for anyone considering a cruise, and in a crowed market, having both private islands and beach clubs could be a difference maker.
Cruise lines don't usually compete with each other for established customers because the new-to-cruise market is enormous and cheaper to attract. People that have never cruised before certainly take note of what stands out, whether it's a new ship or something fun to do.
While other cruise lines have their own private islands, none have announced plans similar to Royal Caribbean's beach club strategy.
