Bad news, cruisers: Fares are hitting new records — and the trend is likely to continue

03.10.2023 - 15:01 / thepointsguy.com / Cruise Line / Patrick Scholes / Josh Weinstein / News

You're not imagining it, cruisers: Fares for cruises have been jumping this year — to record levels. And it looks like cruise pricing is only going higher, barring some sort of economic downturn that causes a significant dent in demand.

In a conference call with Wall Street analysts Friday, executives at Carnival Corporation — the parent company of nine of the world's largest cruise brands — said it had made $175 million more in the last three months than it had projected just three months ago, in part because revenue from ticket prices was up so much. Rising occupancy on ships also played a role.

"We've consistently been delivering pricing well in excess of 2019 levels, while closing the occupancy gap by 11 [percentage] points over the course of the year," Carnival Corporation president and CEO Josh Weinstein noted during the call.

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Weinstein said the company's per diems for the last three months — a measure of how much ticket revenue it's getting per passenger — was up 5 percentage points as compared to 2019, the last normal year for cruise bookings before the COVID-19 pandemic began.

But that number folded in some one-time factors that mask what was an even bigger rise in pricing on many itineraries. Weinstein noted, for instance, that the company no longer was running cruises to St. Petersburg, Russia, traditionally among its highest-priced itineraries, due to the war in Ukraine.

"Normalizing for this impact, we estimate per diem growth would have been up about 7 [percentage] points," Weinstein noted.

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Carnival Corporation's per diem number also represents an average of ticket prices across its many brands, which include some non-North America-based brands that have struggled more than its North American brands in the wake of the COVID-19 pandemic.

Carnival Corporation is the parent company of four North American brands: Carnival Cruise Line, Princess Cruises, Holland America and Seabourn. But it also owns five overseas brands, including Europe-based Costa Cruises, U.K.-based P&O Cruises and Australia's P&O Cruises Australia.

There's plenty of evidence that cruise pricing across the industry has been rising at a far faster rate than Carnival Corporations' per diem numbers would suggest.

In a recently released research note, Wall Street analyst C. Patrick Scholes of Truist Securities estimated that pricing for 2024 sailings industrywide is now running a hefty 17.5% to 22.5% ahead of 2019 levels. Those numbers include an increase of "high single digits" in just the past year.

Another Wall Street analyst, Brandt Montour of Barclays, recently pegged the rise in ticket prices