Royal Caribbean Blog

As we approach the one-year mark since cruises stopped sailing from North America, lines still find themselves passengerless, staffed by skeleton crews and clinging to revenue generated from bookings that haven't slowed, despite ongoing cancellations.

But booking revenue isn't enough, and parent companies of the world's most well-known brands have had to take drastic measures to avoid completely shuttering operations.

So, how do cruise lines make their money? Here, we'll take a general look at their sources of income and some of the options they have when traditional income sources dry up.

Note: Keep in mind that not all money generated is profit. Cruise lines have many expenses -- payroll, ship maintenance and upkeep, fuel, provisions, port fees and taxes, partnership fees, advertising and marketing costs -- that eat into their bottom lines.

1. Cruise Fares

For most lines, cruise fares -- the bare minimum base prices passengers pay to book cabins, with no extras -- are the main income driver. Rough estimates indicate that bookings usually account for about 75% of money brought in.

Unless a line has solo cabins available to book or there's a sale that discounts or waives single supplements, fares are based on double occupancy -- at least two people to a room.

That means when a line lists a fare for a particular cabin on a particular ship, it expects to receive double that amount when the stateroom is booked.

It's interesting to note that, although ships usually have fewer suites available than other types of accommodations, the money generated from a single suite booking can be the same as what the line makes through the booking of several less-expensive staterooms.

2. Onboard Purchases

Fares account for the majority of most cruise lines' gross income, but strong booking numbers aren't enough to keep the lines afloat without cruisers actually sailing in order to supplement fare-generated earnings with onboard spending.

These expenditures might include alcohol, alternative dining, spa treatments, casino play and Wi-Fi access, among other items that enhance the vacation experience.

Because this supplemental income is so essential, many lines have added lots of new ways for passengers to part with their cash, from arcade games and extra-fee ice cream to skydiving and escape rooms.

3. Add-ons

In addition to onboard purchases, there are plenty of cruise add-ons that passengers can book for use ashore.

Among these are shore excursions, cruise tours (including cruise line-affiliated hotels and train rides in some locations), wedding packages and transportation (such as pre- and post-cruise shuttles).

Combined with the above onboard purchases, these add-ons account for approximately 25% of cruise lines' gross income.

4. Investors and Shareholders

To keep a steady flow of cash that they can, in turn, reinvest back into their brands, publicly owned cruise line parent companies sell stocks -- small pieces of each company -- to shareholders.

On a larger scale, parent companies -- Royal Caribbean Group, Carnival Corp. and Norwegian Cruise Line Holdings, for example -- can bring on larger investors who back them financially in exchange for a substantial stake and, often, decision-making privileges.

5. Loans

Because 2020 was a year like travel has never seen, many lines' parent companies were forced to put themselves tens of billions of dollars in debt to cover operating expenses.

It's not a favorable option, but the cruise industry's recent reliance on credit has helped consumers to maintain confidence in their favorite lines, despite substantial hits that have caused cruise-relate stock prices to plummet.

6. Sales

It's not an ideal situation, but when circumstances warrant drastic action, cruise lines can sell their physical hardware -- ships, usually their oldest vessels -- to decrease operating expenses and bring in a small bit of revenue.

Sometimes those ships are sold to other lines, but often they are sent to scrapyards, where they're beached and crews dismantle them, piece by piece.

Parent companies can also resort to selling off entire fleets, along with the rights to the brand under which they sailed. We saw this happen in early 2021 when Royal Caribbean Group parted with Azamara Cruises, selling it to a private equity firm for just $201 million.

This month marks exactly one year since Royal Caribbean, and the entire cruise industry, shut down due to the global health crisis. As things have not changed, many cruise fans are wondering why other embarkation ports are not being used.

Each week I highlight a question from a RoyalCaribbeanBlog reader that I hope will be helpful to others wondering the same thing.

Why don't the cruise lines use Nassau as a home base to "skirt the CDC"? Close, large harbor that can handle multiple large ships, and larger airport. Seems like a no brainer to me. Am I missing something? - Joe M.

Joe's question is something that has gotten a lot of attention over the last few months.  If cruises are not able to restart in the United States, why not move the ships to another embarkation port and start cruises there.

To some extent, Royal Caribbean has been doing that when the opportunity is just right. 

Most notably, Quantum of the Seas was able to restart operations in Singapore after the government there approved that ship for pilot sailings.  Since then, Royal Caribbean cancelled the entire Alaska cruise season in 2021 for Quantum so that it could remain in Singapore longer.  

In addition, Grandeur of the Seas will begin offering cruises from Barbados in December 2021, which will be a brand new homeport for the cruise line.

And just this week, Royal Caribbean announced Odyssey of the Seas will sail from Israel in May 2021 for the summer, replacing the European cruise season.

So why not expand that concept to other ships and, as Joe suggested, begin sailing from other ports?

There are a couple of good reasons why that idea is not as simple or easy as it sounds.

First and foremost, the United States is the biggest cruise market in the world, and offering cruises from the U.S. is the most lucrative option for Royal Caribbean. Domestic travel for passengers is always going to be cheaper, easier, and more readily available than traveling internationally.

No matter which port you pick outside of the country, you are forgoing a large percentage of potential customers because many are either unwilling or unable to travel outside the U.S.

Not to mention the fact that whenever cruises are able to restart in the United States, suddenly sailings from other countries will be instantly not as profitable.

Even if you disregard the logistics involved in getting passengers to other countries, offering cruises from a place like Nassau is not necessarily possible.

To offer a cruise from any port, you need more than a pier and a deep harbor.

There needs to be facilities to accommodate embarkation, check-in, and security. There needs to be facilities to bunker fuel, remove waste, replenish supplies and more.

In the case of Nassau, the cruise docks are set up for ships to visit, but embarkation and disembarkation is a different story.

While I do not claim to have intimate knowledge of the inner workings of Nassau's port facility, I have not seen check-in desks, security, and other necessary functionality for a cruise ship of thousands to be processed.

Recently, the Mayor of Cozumel proposed cruise lines using that port as a new homeport.  

Cozumel is building a new pier that could have the necessary facilities for a cruise ship embarkation, but details were light from the Mayor.

Moreover, Cozumel has its own logistical challenges, such as very few direct flights.

Considering the orchestration required to get a new port set up, arrange new cruises, and market them for booking, it is no simple task.

In addition, the global health crisis finally seems to be getting better, and there is real talk of the cruise lines being able to move towards test sailings resuming.

With momentum starting to shift back towards cruises resuming, it seems to me trying to get new homeports set up outside the United States just isn't practical.

In the case of Odyssey, Grandeur, and Quantum, these situations seem to be more unique than planned.  

Grandeur of the Seas was recalled after almost being sold to Pullmantur Cruises after they went out of business and literally had no where to go.

Quantum of the Seas began sailing from Singapore during her scheduled season, but extended her stay because staying there was a sure bet in terms of revenue.

Just like the other ships, the opportunity to sail from Israel provided another safe bet for Royal Caribbean rather than waiting and seeing if scheduled Mediterranean sailings would or would not be possible.

In the case of all three ships, none were planned as a means to circumvent U.S. regulations.  It just worked out for different reasons why they could offer cruises, and offering cruises from outside the United States is not logistically simple.

Working towards getting cruises back in the U.S. and Europe is still the best strategy from a long term business perspective.

More mailbag questions:

• Should I book flights for my cruise if I'm not sure my cruise ships will sail?
• What are the chances my cruise will sail?
• What's worth paying extra for on a cruise?

Royal Caribbean's next new cruise ship successfully reached the ocean to reach a major milestone in her construction.

Odyssey of the Seas completed her conveyance over the weekend, which means the ship is now in position to enter the open ocean.

Odyssey completed a journey that took over 10 hours to traverse 20 miles from Papenburg, Germany up the Ems River, to her current position in Eemshaven, Netherlands.

The conveyance is a process unique to ships built at Meyer Werft, as the shipyard is situated inland along the Ems River, and the ship must make the journey backward and down the river to get to the North Sea.

Fun fact: Now that Odyssey of the Seas has completed her conveyance, she can never return down the river back to the shipyard because of the added weight in new features, fuel and other enhancements.

Since arriving in the Netherlands, she has conducted a variety of work already, including pendulum slip tests and lifeboat tests.

Odyssey of the Seas is a 169,000-gross-ton ship that measures 1,138 feet (347 meters) long and 135 feet (41 meters) wide.

What's next for Odyssey

Now that Odyssey of the Seas is at the North Sea, she will conduct a few more tests and have some other work done onboard.

The next major milestone for Odyssey will be sea trials, where the ship will go out to sea to test out her engines and navigational ability.

If all goes well, delivery to Royal Caribbean would soon follow.

A big debut

Almost as significant as the movement itself, is the other big Odyssey of the Seas news that the ship will begin her career sailing with Royal Caribbean in Israel in summer 2021.

In lieu of her scheduled European season, she will shift her homeport to Haifa, Israel, where she will offer sailings beginning in May 2021.

Israeli residents will be able to choose from 3- to 7-night roundtrip cruises to the Greek Isles and Cyprus.

Photo by Jeroen Houtman

Odyssey will then cross the Atlantic to begin its inaugural North American season in November, offering 6- to 8-night itineraries from Fort Lauderdale and visiting far-flung destinations, including Curacao and Aruba. 

Royal Caribbean Group Chairman and CEO Richard Fain posted a new video update talking about a variety of topics, including if passengers will be required to get the Covid-19 vaccine to sail.

The debate among cruise fans of if cruise lines will or will not require a vaccine to cruise has been a hot topic, and it comes on the heels of Royal Caribbean announcing Odyssey of the Seas will sail from Israel this summer and require all guests to have the vaccine.

Read more: Royal Caribbean will debut new Odyssey of the Seas cruise ship sailing from Israel

Mr. Fain repeated the fact no decision has been made yet on if Royal Caribbean will require its guests to be vaccinated in order to cruise.

"So this raises the question of whether we will require vaccines on all of our sailings. The answer is, we don't know yet."

Mr. Fain is a major support of the vaccines, and believes they are the fastest and best method to get Covid-19 under control.

He added that all Royal Caribbean crew members will be vaccinated as well.

"Whether we will require vaccines of all of our guests on all of our ships hasn't been decided yet, but we are prepared to go where the science leads us."

The overwhelming message in his eight minute long video is not to prematurely start going back to normal and let a resurgence in the virus disrupt all the progress that has been made so far.

"These are the most hopeful days we have had in a long time. But as we get closer to our goal, we inevitably also get more impatient to reach it."

"I know that we thought we were closer to the end before, but the vaccines really have changed the game. And despite all the blows our industry has taken, it is clear that there will be a huge demand when we open our doors."

Mr. Fain sees "a rapid and dramatic decline in cases and fatalities", which he alluded to in his November update.

"It's exactly what we need to reopen society. However, this is the current trend and we need to be careful that we don't screw it up."

Mr. Fain sees the key to getting cruise ships sailing again is getting the disease under control, and the vaccines are the "ultimate weapon" to reach that goal.

Speaking of ships restarting, Mr. Fain reiterated cruise ships will be phased back into service slowly, instead of the entire fleet coming back at once.

"You will hear a growing cacophony of happy vacationers who can finally leave their homes as we gradually phase in more and more cruises."

So far Odyssey of the Seas is the first ship to require the vaccine for its sailings from Israel. Cruises on Quantum of the Seas from Singapore do not require the vaccine.

None of the other major mainstream cruise lines have committed to any decision on requiring a vaccine either, although some are also requiring their crew members to be vaccinated.

The global health crisis has wreaked havoc with Royal Caribbean's plans, including its schedule of new cruise ships.

One of the big questions throughout the cruise industry shutdown has been what impact will there be on new cruise ship orders.

As part of Royal Caribbean Group's fourth quarter 2020 earnings filing, the company included an updated schedule for new cruise ship deliveries.

For a while we have known Odyssey of the Seas was delayed until 2021, and Wonder of the Seas delayed until 2022. But what about the rest of the schedule?

Prior to the global health crisis, Royal Caribbean had orders placed for a number of new cruise ships, including a brand new class of ships, known as the Icon Class.

As of December 31, 2020 the schedule for new ship order delivery is as follows:

"Wonder of the Seas and our sixth Oasis-class ship, which are expected to be delivered in the first quarter of 2022 and the second quarter of 2024, respectively, and the first three ships of a new generation, known as our Icon-class, which are expected to be delivered in the third quarter of 2023, and the second quarters of 2025 and 2026, respectively."

• Odyssey of the Seas delivery in 1st Quarter 2021
• Wonder of the Seas delivery in 1st Quarter 2022
• Unnamed first Icon class ship delivery in 3rd Quarter 2023
• Unnamed sixth Oasis class ship delivery in 2nd Quarter 2024
• Unnamed second Icon class ship delivery in 2nd Quarter 2025
• Unnamed third Icon class ship delivery in 2nd Quarter 2026

This filing confirms that orders are still in place for the three Icon Class ships, as well as a sixth unnamed Oasis-Class ship. Moreover, the original plans for these ship deliveries is essentially pushed back by a year across the board.

Read more: Why are new cruise ships still being built?

In addition, the filing adds some details about the next new class of cruise ship.

Ever since Royal Caribbean announced the Icon Class would be its next-generation of cruise ship, details have been scarce.

The Icon Class ships will be built at Meyer Turku and be powered by liquefied natural gas (LNG) and fuel cell technology.

Liquefied natural gas (LNG) is envisioned as the primary fuel for the new vessels, which would dramatically reduce or even eliminate emission of nitrogen oxide (NOX), sulphur oxide (SOX) and particulates, as well as cutting carbon dioxide (CO2). The ICON Class will also introduce fuel cell technology, which in combination with hull air lubrication means that the ships could potentially be some of the most fuel efficient cruise vessels ever constructed. 

With the new filing, we know its capacity will be 5,600. In the original announcement, Royal Caribbean said it would accommodate approximately 5,000 passengers. This would make the Icon class ships larger than the Quantum Class ships, but slightly smaller than the Oasis Class ships.

We now know which Royal Caribbean cruise ship will be the next to sail again, and it will be the newest ship in the fleet.

Odyssey of the Seas will join Royal Caribbean's fleet and offer her very first sailings from Israel in May 2021.

Royal Caribbean announced Israelis can sail on 3- to 7-night sailings departing from Haifa, Israel to the Greek islands and Cyprus. 

At this time, only Israeli residents living in Israel and who are vaccinated will be able to sail.

The new sailings will go on sale on Tuesday, March 9.

In addition, both guests and crew members above the age of 16 will be required to to be fully vaccinated against COVID-19. Royal Caribbean says more details on additional health and safety measures to be implemented will be announced at a later date.

"We are thrilled to debut Royal Caribbean cruises from Israel with our newest and most innovative ship, Odyssey of the Seas. Israeli travelers will be looking to get away, relax with total peace of mind, and enjoy the travel experiences they are missing dearly; and that is what we do best," said Michael Bayley, president and CEO, Royal Caribbean International. "Sailing from Israel is an opportunity we have had our sights on for quite some time. We greatly appreciate the government of Israel for their collaboration and confidence in us to deliver memorable cruise experiences to their residents, and look forward to delivering on that promise aboard our newest ship – the first 'Green Island' at sea." 

Royal Caribbean's announcement of Odyssey sailing from Israel comes a week after cruise line executives dropped a major hint the next ship to restart cruises would likely restart outside the United States.

According to Israeli travel agents, here are some of the sailings:

• 3 night seas days  only 4-June, 11 June
• 4 night seas days only  7-June
• 4 nights Haifa ,Limassol , Rhodes , Haifa 28-June
• 4 nights Haifa, Rhodes , Mikonos ,Haifa 14-June, 12-Jul, 27-Aug , 5-Sep , 9-Sep, 13-Sep , 22-Sep, 26-Sep
• 5 nights Haifa, Rhodes , Athens, Mikonos, Haifa 18-June , 2-Jul
• 5 nights Haifa, Athens  ,Mikonos, Haifa 23-June 17-Sep
• 5 nights Haifa , Rhodes, Santorini Athens, Haifa 7-Jul , 31-Aug
• 7 nights Haifa, Limassol , Athens , Santorini , Mikonos , Haifa  16,23,30 – Jul  6,13,20 Aug

Cancelled European season

As a result of the redeployment, previously scheduled Odyssey of the Seas sailings in Europe are cancelled.

Royal Caribbean issued this statement about making the change, "The current situation throughout Europe is still uncertain, and Israel has been praised for their effective COVID-19 management by global experts and communities, and thus is well-placed to resume cruise operations."

Guests currently confirmed on an impacted European cruise departing May 9 — October 28, 2021 will have the option to request a refund of the funds paid or leverage Lift & Shift to move to any 2022 sailing of their choice; otherwise, a 125% Future Cruise Credit (FCC) will be automatically administered.

A special $100 Onboard Credit per stateroom will be issued to those guests selecting a Future Cruise Credit or the Lift & Shift option. 

Hint of this news

During Royal Caribbean's fourth quarter earnings call, Chief Financial Officer Jason Liberty told investors a second ship could sail outside of the U.S. soon, "We are already operating Quantum of the Seas in Singapore, and our second ship in the water could also be outside of the US."

Jason Liberty told investors during the call his company is working with governments around the world about opening back up, "With regards to ship starting in Australia or China or Europe or elsewhere, for example, we literally are in discussions globally around the world with different governments and looking at where they are with COVID and vaccines, et cetera, et cetera."

"I think the point is that there's a lot of opportunity that's starting to open up globally in terms of what's occurring with COVID. And so we are in discussions around the world."

Odyssey of the Seas just completed her conveyance, marking a major milestone in her construction.

Odyssey of the Seas comes in at 169,000 GT and measures a length of 347.1 meters, and has a capacity of more than 5,000 passengers.

She is scheduled to come to the United States for her North American debut in November 2021, where she will sail from Port Everglades.

Happy Sunday, and I hope you had a great week. It was a busy week of Royal Caribbean fun, and I have a round-up of all of it in this hand-dandy blog post.

We might finally be getting close to test sailings beginning.

Royal Caribbean International President and CEO Michael Bayley told Wall Street investors during an earnings call an update on where things stand with the CDC.

Mr. Bayley said that Royal Caribbean has been in "regular communication" with the CDC and expects to get technical instructions on what each ship needs to do in order to prepare itself for test cruises.

"We're literally expecting the technical specifications any day soon," Mr. Bayley told investors.

Royal Caribbean News

• Odyssey of the Seas began her conveyance
• Royal Caribbean's second cruise ship to restart sailing "could be outside the U.S."
• Royal Caribbean talks vaccine impact, Cruises to Europe in 2021, Cuba and more
• CDC asks Royal Caribbean to share covid safety technology from its cruise ships
• Royal Caribbean Group lost over $5.8 billion in 2020
• New study shows "exceptionally low" risk of airborne particles on cruise ships
• Congress sends bipartisan letter to Canada asking for compromise on cruise ship ban
• Mailbag: Should I book flights for my cruise if I'm not sure my cruise ships will sail?
• Royal Caribbean Group CEO talks when we can start having serious conversations to restart
• Royal Caribbean begins to roll out My Royal Cruise cruise planner upgrade
• Where are Royal Caribbean's cruise ships right now?
• Why did Royal Caribbean's stock go up after losing a billion dollars?
• Carnival cancels May 2021 cruises
• Azamara cancels all cruises through June 2021

New RCB Video: How to get a FREE Royal Caribbean cruise

Have you subscribed to the Royal Caribbean Blog YouTube Channel? We share some great videos there regularly, all about taking a Royal Caribbean cruise! This week, we are sharing our latest video — How to get a FREE Royal Caribbean cruise — and don’t forget to subscribe here.

Royal Caribbean Blog Podcast

The 395th episode of the Royal Caribbean Blog Podcast is now available featuring a look at Bronwynn's sailing to the ABC islands and Labadee.

In this episode, we have a cruise story from Navigator of the Seas in 2017 on a fantastic itinerary to the Southern Caribbean.

Please feel free to subscribe via iTunes or RSS, and head over to rate and review the podcast on iTunes if you can! We’d appreciate it.

Royal Caribbean releases Short Caribbean 2022-2023 cruise sailings

Royal Caribbean has released its Short Caribbean sailings for Summer 2022 - Winter 2023, which are now available for booking.

These new getaway cruises have more ships sailing with more frequent sailings in 2022-2023 across eight ships from Florida and Texas.

The most noticeable change for these short sailings is all three Freedom Class cruise ships will sail from Florida.

Royal Caribbean's next new cruise ship is on the move!

Odyssey of the Seas began her conveyance to the North Sea early on Saturday morning to delight of many cruise fans.

The ship began her slow journey down the Ems River in Germany, and local photographers have begun sharing photos.

Photos by Jeroen Houtman

RoyalCaribbeanBlog reader Marga has also been sharing photos from the conveyance on our forums.

Odyssey of the Seas is moving backwards down the Ems River on her way to Eemshaven, Netherlands.

The river has been cleared of obstacles and other traffic to make way for the massive new cruise ship.

Once Odyssey of the Seas reaches Eemshaven, she will begin her sea trials in the North Sea to test out the ship's functionality and ensure all systems are working properly.

Planning your next Royal Caribbean cruise is going to look a little bit different.

Royal Caribbean is beginning to debut its next generation cruise planning software, called My Royal Cruise.

My Royal Cruise is a new look to the website guests access to browse options and add-ons for their sailing.

It will replace the existing Cruise Planner platform on a roll out schedule beginning with Mariner of the Seas departures that sail departing October 2021, Symphony of the Seas & Odyssey of the Seas departing January 2022, Oasis of the Seas  & Harmony of the Seas departing February 2022 and beyond.

My Royal Cruise will eventually roll out to more ships across the fleet, with the intention of replacing the legacy Cruise Planner site.

The cruise line indicated a similar option will become available for sister brand Celebrity Cruises with the My Celebrity Cruise site.

Read more: Everything you should book before the cruise to avoid it being sold out

What's different

New look

Old look

My Royal Cruise features a cleaner look, which takes advantage of contemporary web design.  It is simple and functional, while still visually appealing.

Read more: The Worst Ways to Spend Your Money on Royal Caribbean

There is also a tighter integration between cruise add-ons, check-in, and more. The goal was to make it more intuitive for guests to plan their sailing.

You can still do all the things before, but with a new look to it that makes navigation simpler.

Why should you plan your cruise with My Royal Cruise?

Royal Caribbean regularly offers discounts when guests purchase certain packages and add-ons before the cruise.

Booking shore excursions, drink packages, wifi and more is simple, and it is the best way to save money on the overall cost of the cruise.

Everything you purchase before the cruise is fully refundable if you change your mind, or if you spot a better price later.

In addition, Oasis and Quantum Class cruise ships allow you to pre-book entertainment on My Royal Cruise. This will ensure a spot for the most in-demand activities onboard.

What do you think of the new look? Let us know in the comments.

It now appears Odyssey of the Seas will begin her journey to the sea this weekend.

A public notice for sailors in Germany confirms a series of closures to facilitate the transfer of Royal Caribbean's next new cruise ship from her shipyard in Papenburg to the North Sea.

The conveyance will take place on the Ems River beginning at 4am on February 27, 2021. The ship is expected to pass through the Gandersum Ems barrier on February 28, 2021 at around 00:30 a.m.

A conveyance is the process of moving a cruise ship from an inland shipyard to a coastal port.

According to the waterway and shipping administration, the Ems will be dammed from Friday noon to Sunday. Damming the river will raise the water level between Papenburg and Gandersum to assist with the movement.

Neither Meyer Werft nor Royal Caribbean has publicly commented on the conveyance, but it is believed Meyer Werft does not want to make a big deal about the event in order to prevent crowds gathering as the ship passes by.

How Odyssey of the Seas will get to the sea

The journey to the sea for Odyssey of the Seas is a mix of engineering, science, and a lot of coordination.

Two tugs will take Odyssey in reverse up the river Ems to the North Sea. 

Schedule: February 27, 2021

Approx. 04:00 a.m.: ship passage begins (Papenburg)
Approx. 12:00 p.m.: ship passes the Jann Berghaus bridge (Leer)
Approx.  00:30 a.m.: arrival at the river Ems barrier (Gandersum)

After completing technical and nautical sea trials on the North Sea, the ship will be handed over to Royal Caribbean in April.

Odyssey of the Seas comes in at 169,000 GT and measures a length of 347.1 meters, and has a capacity of more than 5,000 passengers.

When she joins the fleet, Odyssey of the Seas will be the fifth cruise ship in the Quantum/Quantum Ultra Class to be built at Meyer Werft.