3 reasons cruise lines are in a race to open more private island resorts

26.12.2024 - 01:03 / insider.com / Royal Caribbean / Michael Bayley / Holland America / Patrick Scholes / Josh Weinstein / Disney Cruise Line

About 140 miles east of Miami, Royal Caribbean's private Bahamas island, Perfect Day at CocoCay, receives thousands of eager families virtually every day of the year.

The cruise line and its competitors don't just own ships — they also have land-based portfolios. Across the Caribbean and in countries like Honduras and Belize, almost every major cruise company has snatched up and developed beachfront properties exclusively for their guests.

To travelers, these secluded ports of call are convenient, safe, and cherished: "The vast majority of people love the islands," Patrick Scholes, a lodging and leisure research analyst at Truist Securities, told Business Insider in March.

To cruise lines, they're cash cows. And now, maybe more than ever before, a necessity as operators seek out profits amid rising operating costs and ever-restrictive ports.

Cruise lines like Princess, Holland America, and MSC collectively own 17 ports and private destinations in the Caribbean (including properties still under development).

Michael Bayley, president and CEO of Royal Caribbean International, told analysts in 2023 that the CocoCay had seen robust demand, including from repeat travelers. As such, the financial returns on the $350 million investment have been "exceptionally high and significantly above its target," Naftali Holtz, CFO of Royal Caribbean Group, said a few months prior.

Given travelers' appetite, the cruise giant has continued to grow its splashy Bahamas getaway.

The most recent extension opened in January, adding the adult-only Hideaway Beach to CocoCay's 14-slide waterpark, upscale beach club, massive pool, and umbrella-lined beaches. Perfect Day Mexico is set to open in 2027.

Carnival is also growing its real estate portfolio — next with Celebration Key, a $600 million resort on Grand Bahama Island scheduled to open in 2025, and expansions to its private Half Moon Cay a year later.

Private ports have become a cruise line goldmine for three major reasons.

Fuel is a major expense for the cruise industry. Fortunately, most Caribbean private destinations are only a night's sailing from Florida's major ports.

Amid rising fuel costs, it's easy to see why cruise lines are increasingly focusing their itineraries on these nearby stops.

In September 2023, Josh Weinstein — president, CEO, and chief climate officer of Carnival Corp — called the forthcoming Celebration Key a "win-win-win for the environment, our guests, and the people of the Bahamas," citing the property's proximity to its Florida homeports and the subsequent reduced fuel expenditure.

It could certainly be a "win" for travelers: In the same call, he told analysts that a guest-fronted fuel surcharge is "certainly not off the table."

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