Royal Caribbean's cruise prices are higher today than in 2019, and the company wants to raise those prices even more.

Historically, cruise vacations have, in addition to their convenience, been popular because of their value. For one price, you get unlimited food, accommodations, entertainment, and transportation between destinations across the world. 

This price gap between the cost of a cruise vacation and a land vacation grew significantly during the cruise industry shutdown. Since then, cruise fare prices on Royal Caribbean have gone up at the same time demand was also rising.

In the second quarter of 2023, the percentage of guests on Royal Caribbean who were new to the brand or new to cruising in general surpassed 2019 levels. Additionally, those considering future cruises is near an all-time high.

Over the last couple of months, airfare and hotel prices have decreased; the price of a Royal Caribbean cruise, however, has increased.  

Royal Caribbean International's CEO Jason Liberty spoke with CNBC's Seema Mody about the price gap between cruise and land vacations after their Q2 earnings call on July 27. 

"In the earlier part of this year, that value gap was somewhere around 45%. And today, we've closed that value gap by about ten percentage points, so we still think there's a lot of runway that is still there to close," he said. 

This means that the value of a land-based vacation and cruise vacation are becoming more comparable, while you'll still get more bang for your buck on a Royal Caribbean cruise. 

The comment surprised one of the panelists on the CNBC show, Tyler Mathisen, who asked Mr. Liberty doesn't he want to maintain a value gap in order to attract customers and keep demand up.

Mr. Liberty responded, "We always want to be as competitive as we possibly can be, but of course, we want that gap to be much smaller."

"We were able to close that gap to about 10-15 points pre-covid, we think there's a lot of opportunity for us to close that gap even further."

Royal Caribbean is known for having dynamic pricing for their cruise add-ons, such as drink packages. This model extends to their cruise fares, too. They change their prices back and forth based on the demand. As they have continued to increase the cost of their cruise fares this year, they have seen that their customers continue to book into 2024. 

In the earnings call with investors on Thursday, he noted that it's clear that Royal Caribbean guests continue to spend more on their overall vacation experience. 

Additionally, customers continue to book cruise add-ons in advance through their online Cruise Planner, which is essentially passengers' go-to place to see what is available on their upcoming cruise.

You can make dining reservations, look at available onboard activities, and even pre-book drink and internet packages, as well as shore excursions. 

"We know that if we can get them to spend a dollar before they get on the ship," Liberty remarked, "we'll get them to spend somewhere around seventy cents on the dollar more when they get on and enjoy their vacation experience."

Royal Caribbean always wants to be as competitive as they can; however, they are striving to really close to value gap between the cost of a cruise and land-based vacation, and they believe that there is room to close it even more than they already have this year. 

"...cruising remains an exceptional value proposition," Liberty said during the Q2 earnings call, "allowing us to outperform broader leisure travel as we seek to further close the gap to land based vacations, drive better revenue and welcome even more happy customers." 

It's not your imagination, cruise prices are on the increase so now may be the best time to lock in the best price.

January is the start of Wave season, and Royal Caribbean is seeing such strong demand that prices aren't dipping much at all.

Wave season is an industry term for the time of year when cruise lines tend to offer their best promotion. It traditionally takes place between January and March.

A lot of people typically book cruises in the early months of year as a result of wanting to plan their vacations for later, as well as being influenced by cold temperatures now that compel them to think of a tropical cruise vacation.

Like other cruise lines, Royal Caribbean has rolled out new offers since the start of the month, and so many people are booking cruises, that price trends are moving up.

Royal Caribbean's Senior Vice President, Sales, Trade Support and Service, Vicki Freed, told travel agents on Wednesday during a webinar that demand is so strong for new bookings during Wave season that they're seeing higher prices.

"In the past, when the cruise industry has had a strong wave like we're experiencing now... pricing goes up and we don't see all that dilution in current pricing and we're not seeing that now."

"If anything, we're seeing pricing going up."

This pricing trend reinforces an important cruise planning tip: book early to get the lowest price.

"It allows your client to feel confident that the purchase that they make in the beginning of the year is a better value than if they wait till the end," Ms. Freed added when talking about the prices when booking a cruise early.

More record breaking sales for Royal Caribbean

To echo the point how strong Wave season has been so far, Royal Caribbean International President and CEO Michael Bayley shared an anecdote during the webinar how well things have been since the start of the year.

"We have been having record booking day after record booking day," Mr. Bayley said when talking about Wave season so far.

"Last week was the biggest booking week in the history of our business. It was absolutely unbelievable and it just seems to be getting better and better."

He also said this bodes well for the rest of the year, but Mr. Bayley feels strongly about how good things will be for Royal Caribbean this year.

"I've got to tell you, I'm turning pretty positive about the year. Obviously, it's just the beginning of the year."

Why booking a cruise as early as possible matters

Royal Caribbean's cruise fare pricing is based on supply, and the quicker cabins sell on a particular sailing, generally the higher prices go.

The key to getting the best price is to book your cruise as soon as you know you want to go on the sailing and lock in the cabin you prefer.

In addition to the lower prices, booking well in-advance of a cruise assures you of the ship and stateroom you want to reserve. 

Suites and some of the higher in-demand cabins are the first to be reserved, and waiting to book usually results in far fewer choices. 

Cruise fares tend to be cheapest the further in advance you book, and despite a few last-minute deals here and there, it’s best to book in advance and lock-in the best price.

Read more: Pros and Cons of booking a cruise early vs last-minute

Royal Caribbean's Wave season 2023 offer

If you're curious, Royal Caribbean is offering a number of discounts on cruises when booked in January.

The current promotion offers 30% off every guest and Kids Sail Free deals when booking a cruise between January 3 to January 31, 2023. 

The deals are good for cruises departing in 2023, 2024 and 2025, and some blackout dates apply. 

Throughout January, the line will also run unannounced flash sales that include offers like $550 instant savings and discounts on beverage and dining packages, shore excursions, internet and more.

More demand for cruises

It's not just Royal Caribbean, because survey data points to a lot of people looking to cruise.

According to a AAA survey, 52% of adults in the United States this year are likely to consider a cruise vacation. That's up from 45% a year ago.

AAA sees the demand jumping because a lot more people are comfortable to travel in 2023 compared to the last couple of years.

Don't expect an all-inclusive price on a Royal Caribbean cruise anytime soon.

Royal Caribbean's sister company, Celebrity Cruises, recently announced it would shift towards more of an all-inclusive pricing structure and many cruise fans were curious if a similar change was coming to Royal Caribbean.

Beginning November 17, 2020 all Celebrity Cruises sailings (except Galapagos cruises) will include WiFi, drinks, and gratuities.  

In the past, Celebrity Cruises would charge extra for these items, just like Royal Caribbean does now.  Going forward, if you book a Celebrity cruise, your fare will include the classic beverage package, Wi-Fi for two devices, and gratuities as part of the price you pay for your stateroom.

Celebrity believes this new pricing makes it simpler to understand the "bottom line price" for a cruise.

Royal Caribbean Director of Revenue Strategy, Brittany Briggs, was asked during a webinar with travel advisors if Royal Caribbean would ever move in the direction that Celebrity Cruises has.

Ms. Briggs confirmed that Royal Caribbean had no such intentions, "At this time we're not considering changing our pricing structure as we are truly focusing our on board experience for all of our guests."

A shift to all-inclusive pricing doesn't make sense for Royal Caribbean's guests, according to Ms. Briggs, "We're a multigenerational cruise line with a lot of family sailing with us, so we do want to continue to be a family brand. I don't think this direction is a good fit for us."

She also added that Royal Caribbean's non-refundable deposit program will continue to be offered, as it has been well-received by travel agents and guests.

Cruise fans mostly seem against the change as well, with plenty of comments on the RoyalCaribbeanBlog message boards and Facebook page.

Nancy Towner thinks it is better to leave the decision of getting add-ons to the guest, "I hope not! We have 2 drinks a day, do not need wifi while we're on vacation and absolutely do not want drinks, wifi, etc. included in the fare. Let those who want the extras pay for them and those of who don't want the extras pay for only the cruise!"

Christine DelRossi also doesn't think this pricing structure would be a good fit for Royal Caribbean, "Gee, I hope not. I would love the fare to include gratuities, but I prefer the option to purchase drinks and wifi ala carte. I think the all inclusive route is more suited to the luxury lines. Royal Caribbean is nice, but let's face it, it's more of a modest line."

Thomas Liddle thought it would be a good change, "I would love it if Royal switched to that, we love the way Celebrity does it. We have usually found that a loaded Celebrity cruise is about the same price as a Royal cruise where you have to pay extra for everything."

One of the few bright spots from the global pandemic has been lower cruise prices than we have typically seen, but don't expect these low prices to stick around for much longer.

Falling demand, along with hesitation in the marketplace, has caused Royal Caribbean to cut prices on its sailings in the short term. but these low prices will be going up sooner than we think.

Michael Goldner, Royal Caribbean Vice President of Revenue Management, commented on the nature of pricing today and why he believes prices will go up soon.

"I don't expect we're going to be at these prices very long. Our intention was to get our prices to a place where I would say our rock bottom, and then as we see business improve, which we're seeing each and every week, our intention is to raise prices."

Traditionally, Royal Caribbean cruise prices are generally set the lowest when a new sailing becomes available, and then prices increase over time.  Royal Caribbean calls this pricing model "low to high".

The idea behind the low to high model is it provides consumers with the confidence that they are getting the best deal.

With Royal Caribbean struggling, as so much of the travel sector is, with lower demand in spring 2020, Mr. Goldner indicated Royal Caribbean wanted to "reach our low point with pricing now."

With increasing demand for cruises in 2021 and beyond, it appears pricing we are seeing now will give way to higher prices soon.

"Our pricing is very attractive right now, especially if you compare to where we were in prior years. And I don't think we'll be here long. I think as business comes in, pricing will go up."

Strong demand pushing prices up

Despite the pandemic and months of cancelled cruises, prices going up may sound odd, but the cruise line is reacting to what it is seeing in the marketplace.

At the onset of the pandemic, many wondered if Royal Caribbean would offer deep discounts for their sailings. In fact, a lot of Wall Street analysts predicted the need for discounts to drive slumping sales.

While prices did go down, especially for certain sailings in 2020 and early 2021, rising demand for cruises in 2021 are behind why Mr. Goldner believes prices will only go up from here.

"The majority of the business that we're getting for 2021 is new bookings, new business. And I think this bodes really well for all of us because I believe there is a lot of pent-up demand for next year."

Mr. Goldner stressed that while Royal Caribbean is seeing a lot of bookings from guests who had cruises cancelled in 2020, the majority of business that Royal Caribbean is seeing from new bookings. 

Last week Royal Caribbean expanded the option to take advantage of a price drop up until 48 hours before the start of the cruise.

The Best Price Guarantee allows guests to take advantage of a better price up to 48 hours before your sail date. If there is a better price, you can contact your travel agent or Royal Caribbean and have the new price applied.

If there is a price drop and you re-price the cruise, you will receive the difference as a non-refundable onboard credit inside final payment or rate adjustment outside final payment.

This is significant because prior to this announcement, once guests hit final payment date, it was not practical to make price changes past the final payment date.

The Best Price Guarantee is part of Royal Caribbean's Cruise with Confidence program, that aims to offer guests more flexibility and assurance that they can cancel or rebook if they so change their mind later.

Like other aspects of the Cruise with Confidence program, the Best Price Guarantee covers sailings departing on or before April 30, 2022.

Best Price Guarantee FAQs

If I am issued onboard credit, when will I get it?

The difference in pricing will be added to the booking as an onboard credit and it’ll be applied within 14 business days, and a new confirmation will be generated with the Onboard Credit value.

If there is a price reduction, will it automatically be applied to my reservation?

No, pricing will remain unchanged unless you contact your travel agent or Royal Caribbean to reprice the reservation.

If I reprice my cruise under Best Price Guarantee, will I be able to keep promotional onboard credits previously confirmed on the reservation?

When you re-price a cruise, you accept the new promotional incentives, which replace any onboard credit or promos that came with the previous booking.

Do all rate codes qualify for Best Price Guarantee?

Select restricted rates are ineligible for Lift & Shift and Best Price Guarantee - including but not limited to Net rates, Casino rates, Travel Agent Friends & Family rates, Travel Agent Reduced rates, and complimentary staterooms. 

Among the many unanswered questions RoyalCaribbeanBlog readers have had over the last couple of weeks, it has been "will Royal Caribbean cruise prices go up to make up for lost income?" and "will Royal Caribbean cruise prices have lots of discounts after they start cruising again?".

The impact of the voluntary suspension of cruises is only starting to be felt by the company, with concerns more sailings could be canceled as well. Needless to say, things are far from ideal for Royal Caribbean and they have a lot of tough choices ahead of them.

If you are also wondering what to expect, there is some compelling anecdotal evidence to consider.

Market impact

Perhaps the most noticeable way to gauge Royal Caribbean's plight in recent weeks has been to watch its stock price.  

Like the entire travel sector, Royal Caribbean's stock price has lost a tremendous amount of value in a very short time. Shares were trading at $28.19 when the market opened on March 24. That's down from a 52-week high of $135.32.

The cruise line has been fighting tooth and nail to reduce the impact of the shut down, as well as restore confidence and financial balance to their operations. They increased credit capacity, took out a $2 billion loan, and reduced 2021 capital expenditures and operating expenses.

On the bright side, Royal Caribbean's business was booming before everything changed. Royal Caribbean Cruises had about a $2 billion profit in 2019, and things looked promising for an even better 2020.

The damage, however, is done and it may take years for their share price to recover.

The Motley Fool characterized their stock outlook as:

"It's not pretty but Royal Caribbean can survive a lost quarter of revenue and, eventually, it can return to being profitable. It may have to put off building some new ships and it's certainly going to have to offer discounts to casual customers (and very good deals or comps to regulars) but the company will come through this."

Getting people back

Even if someone snapped their fingers and every cruise in 2020 that has not been cancelled goes forward, 2020 will be a down year in terms of annual passenger count. But there is no doubt when cruising returns, Royal Caribbean will work diligently to get passengers back onboard.

Barron's took a look at Royal Caribbean's position and estimates things will bounce back in the next two years, but that does not mean it will be an easy road.

I assume that in 2021 and 2022, the company will recover close to historical passenger counts, but negative sentiment will still linger, resulting in a below-100% average occupancy. 

The other major factor working against travel is a recession. When times are good, people spend money more freely, but when they feel the pinch, consumers cut back. Nonessentials, like vacations, go out the window for many folks.

A piece written by Bill McGilton for Daily Wealth compared what happened to Royal Caribbean back in 2009 during the Great Recession, and the cruise line strategy back then was to offer deep discounts to get people onboard, and make up the revenue with onboard spending.

During the last recession, a seven-day cruise to Alaska (normally more than $2,000 per person) was going for $499 per person on Holland America and $399 per person on Carnival. A four-day trip from Miami to the Bahamas (normally around $1,000 per person) was going for $200 per person on Norwegian Cruise Lines.

Once the passengers are onboard, the cruise lines nickel-and-dime them with extras like alcohol, specialty restaurants, and gambling. On paper, it sounds like a decent strategy. After all, cruise lines generate almost a third of their sales from onboard spending. And the deals are fantastic for the customers. But it doesn't work.

Even with these massive 75% to 80% booking discounts, onboard traffic fell at least 25% across the industry in 2009. Royal Caribbean's sales fell 10%. That might not sound like much, but it only takes a small decrease in sales to crush its profits... Sure enough, profits fell 75% in that same year.

Concerning ourselves with the consumer side of things, deep discounts for cruise fares in an economic downtown similar to the one we are experiencing in 2020 is a strategy we may very well see coming our way.

Dr Christopher Muller, a senior professor at Boston University’s school of hospitality administration, told The Guardian that he believes the cruise industry will bounce back from all of this as well, and also pinned the industry's rebound on pricing.

“The logical thing is they will have to have very deep discounts, and those deep discounts will be especially present in the next cycle of cruise seasonality in September,” he said.

“By August and September the consuming public will be enticed to go back on cruises because the pricing is going to be outrageously good with enormous discounts.”

Not out of the woods yet

Of course, we are still knee-deep in a cruise shutdown, the markets are anything but consistent, and consumers are not sure what they will be doing tomorrow, let alone this summer.

One the one hand, some people will be quite eager to get out of their homes and put all of this in the rearview mirror as they drive to the cruise port.  On the other hand, others may not be rushing to get back onboard so quickly.

Ultimately, we will have to wait and see if Royal Caribbean does offer discounts across the board, special promotions, or just targeted offers to bouy specific sailings.

Your Thoughts

Do you think Royal Caribbean's prices will rise or fall once cruises resume? Are you anticipating deep discounts on hotels, cruise fare, or airfare? Will you be ready to pounce on deals–or will you wait for a full economic bounceback? Share your thoughts with everyone in the comments!

Have you booked a Royal Caribbean cruise (or about to book one) and wondered if the price of the cruise could drop later? 

Prices of Royal Caribbean cruises have a tendency to fluctuate quite a bit, very similar to airfare pricing, and that kind of fluid price changes may concern some cruisers with fears of not getting the lowest price.

There are a few tips and strategies you can use to lock in a great price, and protect yourself in case there is a price drop later.

Royal Caribbean's best price guarantee

In most countries, Royal Caribbean will allow you to re-price the cost of your cruise up until the final payment date.

It's up to you to spot the price drop and then request a change in price. Royal Caribbean will not do this for you automatically.

If you spot a lower publicly advertised rate available to the general public for the cruise fare you booked, Royal Caribbean will honor the lower rate by refunding you the difference in price. 

If you are past final payment date, then you will not be able to re-price the cruise any longer. There was a policy during the Covid-19 pandemic that allowed for price checks after final payment date, but that policy has since ended.

Group rates, membership programs, charters or other Travel Agent promotions not offered by Royal Caribbean to the general public, including but not limited to travel agent rebates are ineligible.

The lower rate must:

• Be for the same ship, sail date, stateroom category and number of guests.
• Be available for reserving at the time Royal Caribbean reviews your submitted Royal Caribbean Best Price Guarantee claim form

If you booked your cruise on your own, call the cruise line to request the lower rate. You will be asked to provide the lower rate amount and where the rate can be found.

If you booked with a travel agent, request your travel agent to handle it for you.

Book early and reprice often

The tried and true strategy for cruisers who live in a country that allows price adjustments (United States, Canada and others) is to book a cruise as soon as they know they want to go on that sailing, and then re-price if the fare drops.

Royal Caribbean allows cruisers to reprice their cruise at the lower cruise fare if the price for that cruise goes down at any time before final payment date. As long as the price drops for the same ship and sail date that has been booked previously, and it is before final payment date, guests can reprice their cruise as many times as they want.

The final payment date for Royal Caribbean cruises is 75 days prior to the sailing date for 1 - 4 night cruise vacations and 90 days prior to the sailing date for 5-night or longer cruise vacations. The payment schedule for groups is different from that of individuals. 

The strategy of booking early and then taking advantage of price drops ensure you always have the lowest price, as opposed to trying to time a price drop later (which may or may not happen).

Don't forget your booking incentives

If you spot a lower price and want to re-price, make sure you consider the perks included in your original booking reservation versus what is included with the new price.

Any onboard credit, instant savings or booking promotions can be lost if you rebook at the lower price. Weigh the value of your perks before pulling the trigger on a price drop.

How to check for price drops

The tried and true way to check for price drops is to periodically make a mock booking on Royal Caribbean's website and see if the price has changed. This is the most straightforward approach and works quite well for verifying the current pricing. 

Of course, manually checking the price means you have to take the initiative to regularly verify current pricing. Some cruisers make this easier by joining a Facebook group for their specific sailing and sharing information when a price drop is observed.

Some travel agents (the great ones) will check for price drops on your behalf.  In our experience, travel agents that take the extra step to check for price drops on behalf of their clients tend to do this when new sales and promotions are announced. Here is one such recommended travel agency that specializes in Royal Caribbean. If you are not convinced using a free travel agency that is recommended by Royal Caribbean is right for you, read our post discussing the benefits they offer.

There are websites that claim to check for you as well, but I have not used any of these to verify their claims. CruiseFish.net and Ship Mate offer price tracking tools, that may be worth investigating.

What if there is a price drop after final payment?

Once you are past the final payment date, price adjustments are not allowed.

The only exception is if you booked your cruise while under the Cruise with Confidence program before it ended. Check with your travel advisor on if your sailing qualified for that.

Many Royal Caribbean Blog readers have reported recently prices of certain alcoholic beverages have increased to the point they are no longer included with the unlimited alcohol package.

This first reports occurred on Royal Caribbean cruises that sailed around Christmas and New Years, and it was thought the price increase was a result of holiday demand.  Yet, the drink price changes remain in effect on cruises beginning after the holidays.

Royal Caribbean's deluxe drink package only covers beverages that are $12 or less ($13 on Oasis class ships).  Drinks priced higher than the included threshold are charged the difference to the guest.

Pub drink menu on Allure of the Seas. Photo taken January 4, 2017

Pub drink menu on Independence of the Seas. Photo taken January 5, 2017

Olive or Twist bar menu on Independence of the Seas. Photo taken January 6, 2017

Pub drink menu on Adventure of the Seas. Photo taken January 7, 2017

The drink package policy may change in the days or weeks to come to match these drink price increases. However, this is the first time since Royal Caribbean introduced its drink packages that we are seeing a notable amount of drinks priced outside the drink package allowances.