You may have been asking yourself… why have cruise prices risen so dramatically year over year?
It’s a great question and one we’ve explored and challenged thoroughly as businesses start to emerge from the pandemic. There are multiple factors at play and we’ll discuss three of the key reasons here:
- The Cruise Industry Lost Billions During the Pandemic
- The Price of Nearly All Goods Has Increased
- There’s a Global Shortage in Hospitality Labor
The Cruise Industry Lost Billions During the Pandemic
With a nearly 2-year shutdown, the cruise industry was hit harder than nearly every other segment of the travel market. If you remember back to the earliest days of the shutdown, cruise companies were made to be the villains in regard to Covid-19. Of course we’d all later learn that it was more media hype than anything else. Covid-19 was EVERYWHERE, but cruise ships provided a great and captivating villain that was ready-made for TV.
It’s estimated the cruise industry as a whole lost over $70 billion (that’s billion with a b) over the past 2.5+ years. In order to make up for that enormous loss, prices have risen steadily and unrelentingly as cruise lines have come back online. Nowhere is that more prevalent than in the charter cruise world, where we’ve seen year-over-year charter pricing increase over 35%. You might ask why has charter cruising risen so much? Put simply, it’s because it’s guaranteed revenue for the cruise lines, and after so much uncertainty in the market throughout the pandemic, charter cruises carry almost zero risk for the cruise lines – it’s guaranteed capital.
In addition to those losses sustained over the past couple years, the cruise lines now have to process several billion dollars in future cruise credits they issued for cancelled 2020 and 2021 cruises. This has made available charter options even tighter. VACAYA could either go with older ships (many of which are now in line to be retired) that didn’t get big pick-up as “replacement cruises” by standard cruise guests who’d been displaced in 2020/2021 or we could go with the higher end premium ships, which are generally more available for chartering. Considering all the factors at play, after first sailing the Millennium Class (with Summit and Millennium), then moving to Solstice Class (with Reflection), it made the most sense for us to take the next step up to Edge Class (with Apex). We were going to be charged a premium charter price regardless, and with our choice of Apex, we get a new premium ship to go along with that price.
Chartering a cruise ship has always come at a premium price. Standard cruising is based on a dynamic pricing model. Standard prices rise and fall depending on sales. And any loss by the cruise lines on an individual standard sailing can be amortized over 52 weeks and their entire fleet. Chartering a ship, however, comes at a fixed price – a fixed premium price – and represents a single sailing at a specific fixed point in time. If you’re familiar with dynamic pricing, it might be easier to think of the price to charter a ship being at the top of any dynamic pricing arc. Companies like VACAYA pay the top premium price for the privilege of taking over the entire ship and effectively rewriting how that ship operates for the week.
To give you a comparison in prices between our first big-ship charter cruise on Summit versus our latest on Apex, we’ve seen the charter price increase over 150% from 2019 to 2024. Even still, we’ve kept our retail pricing as low as we possibly can to still serve our community and make enough money to keep the wheels turning as a for-profit LGBT+ owned and operated business.
The Price of Nearly All Goods Has Increased
Consumer prices on nearly ALL goods have risen dramatically as supply chain issues continue to challenge nearly every industry. Since February 2022 alone, food prices have risen 8.3% year over year. Fuel prices have risen 25.6%. We share these numbers specifically because food and fuel are two of the largest expenditures in operating a cruise ship. Those hard costs are part of the reason we’ve seen such arresting increases in the price to charter a ship. Inflation is non-discriminatory. It affects every single industry in myriad ways, and the charter cruise industry is one of the most affected.
There’s a Global Shortage in Hospitality Labor
While most cruise lines tried to keep their staff on payroll in the early days of the pandemic, as the weeks turned into months and the months turned into years, they had no choice but to let many of them go. Re-staffing entire fleets has been an extraordinary HR challenge for the cruise lines and it’s cost millions and millions to source, train, and onboard all-new crew members.
The fact that many who worked in the service industry prior to the pandemic have now moved onto other careers helps explain why restaurants, hotels, airlines, tour companies, and cruise lines have all struggled to get their feet back under them. It’s truly been an unprecedented challenge, one where wages have continued to spike to keep pace with the other industries that have drawn those former service industry workers away. Higher wages mean higher retail prices all around. We’ve seen it in higher airfares, higher meal costs at restaurants, and higher room costs at hotels. It is a fundamental shift that is resetting consumer costs across the board. Even at higher prices, though, big-ship cruising remains an incredible value – especially in comparison to the skyrocketing costs of non-cruise rooms, meals, entertainment, and parties.
Add up these key factors, as well as the many minor challenges at play, and you can quickly see why prices have risen so steeply. We are all caught in an interconnected global web that may or may not ever return to “the way things used to be.” We remain hopeful, of course, that these increases are only temporary, but leading indicators tell a different story – that a new normal is setting in.
We recognize, too, that others in the market are in different financial positions and can continue to undercut pricing. That’s business. But we hope our persistent transparency and honesty with how the charter cruise business and VACAYA work will help you better understand our position and then choose to travel with us. Because it is a choice. And yes… you can pay less elsewhere, but the old adage couldn’t be more true: “You get what you pay for.”
We are eternally grateful so many of you stuck by our side throughout these intensely tough years. We wouldn’t be here without you. So from the entire V Team… thank you.