Royal Caribbean Group's CEO recently offered three predictions for trends that he's seeing for cruising this year.
During his company's fourth quarter earnings call a few weeks ago, Mr. Liberty pointed to a few trends he expects Royal Caribbean to encounter, and each one is likely to help its bottom line.
Consumers should pay attention to these trends as an indicator of what we can expect from a pricing standpoint. Key indicators such as demand, demographics, and booking volume all contribute to the prices we pay later.
As the cruise industry moves into 2025, there's a lot of momentum from last year, and with record demand, Royal Caribbean appears well-positioned to lead the market.
With the cruise industry experiencing some of the highest demand ever, the price and destinations your next cruise take could be determined by these market shifts.
Travelers want to make memories through experiences
Right at the onset of the call with Wall Street analysts, Mr. Liberty talked about the importance consumers are placing on travel experiences over material goods.
Liberty noted that American households are wealthier than ever, with continued wage growth and low unemployment driving strong consumer spending. This economic strength is leading to a shift in how people allocate their discretionary income.
That wealth growth is fueling this desire among consumers to spend more on a vacation that will deliver wow moments and make memories they can look back on fondly.
He believes a cruise vacation is particularly well-positioned to benefit from this trend, as it offers a blend of adventure, luxury, and relaxation in one package.
Liberty emphasized that consumers are planning to take more trips and increase their vacation budgets, "Consumers plan to spend more on vacations and take more trips in the coming year and our guests over index in their intent to spend more on leisure travel."
"We continue to see very positive sentiment from our customers bolstered by strong labor markets, high wages, surplus savings, and elevated wealth levels, at the same time; they continue to prioritize travel experiences."
He believes the combination of cruise ship diversity and private destinations positions the company well to meet this demand.
Millennials and younger travelers are more interested in a cruise than ever before
A big trend that you may have already noticed is that cruises are no longer for the "newly wed and nearly dead".
Mr. Liberty sees growing interest in cruising among young people, particularly Millennials and Gen Z travelers.
Earlier in 2024, he talked about how impactful younger people have been on a shifting demographic, "Millennials and younger generations have gained 11 percentage points share compared to 2019."
"And today, almost 1 in 2 guests are millennials or younger...it's a very powerful statement."
This shift is driven by several factors, including the affordability of cruises compared to traditional land vacations and the increasing desire for unique, shareable experiences.
Plus, Royal Caribbean has invested a lot of money in tailoring its experiences to younger passengers through technology, onboard activities, and entertainment.
They're using more AI in their business to make it easier to book restaurants, excursions and more, "We launched over 300 new digital capabilities across channels in 2024, improving the overall experience and reducing friction points while increasing spend."
Piggybacking on the first trend, younger travelers see a cruise ship as an easy way to explore different places in one trip, "Consumers place significant value on visiting multiple destinations and this is even more important to Millennial and Gen Z consumers; something that cruising is uniquely positioned to deliver on."
Strong demand is not slowing down
If 2024 was a record year in terms of demand for a cruise, the future looks bright heading into 2025.
Mr. Liberty mentioned at the beginning of the earnings call that Royal Caribbean experienced its best five booking weeks in company history at the start of the year, with bookings outpacing previous years across all key products.
This surge in demand is fueled by a combination of factors, including high guest satisfaction rates, the appeal of Royal Caribbean’s exclusive private destinations, and the growing appeal of short getaways.
This strong demand is helping the company keep their ships sailing completely full and at higher prices.
