Bad news, cruise fans: the days of sailing on less than full ships are coming to an end.
Executives at several of the world’s biggest cruise companies have said in recent weeks that nearly all their ships should be full again by the middle of next year, for the first time since the COVID-19 pandemic began.
For example, Norwegian Cruise Line Holdings Chairman and CEO Frank Del Rio told Wall Street analysts last week that average occupancy on the company’s 29 ships should increase steadily over the next six months and reach 100% by summer.
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In fact, he suggested fleet-wide occupancy could be above 100% for the summer, which is possible when more than two people are staying in a cabin.
Occupancy on Norwegian Cruise Line Holdings ships was around 82% for the three months ending October 31, up from 65% in the previous three months. In both cases, that was well below normal levels.
The company owns three cruise brands: Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises.
“We expect load factors to continue to improve sequentially through the mid-high 80% range in the [current quarter] …and the steady increase in occupancy is expected to continue until we reach historic levels of over 100% as of the second quarter of 2023,” Del Rio said during a conference call to discuss the company’s third-quarter earnings .
Del Rio’s comments came just days after Royal Caribbean Group Chief Financial Officer Naftali Holtz told Wall Street analysts that the company expected occupancy levels to return to historic occupancy levels at luxury brands. company cruises for spring 2023.
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Royal Caribbean Group is the parent company of Royal Caribbean, Celebrity Cruises and Silversea Cruises, and is also a co-owner of the German lines TUI Cruises and Hapag-Lloyd Cruises.
Holtz said Royal Caribbean Group ships ended the third quarter with an occupancy level of 96%, which was significantly higher than the 82% occupancy level in the second quarter, but still below normal.
Royal Caribbean Group ships normally sail with more than 100% occupancy.
The world’s largest cruise company, Carnival Corporation, also forecasts a return to 100% occupancy on ships by summer 2023. The company reported 84% occupancy for the summer months of July, August and September, compared to 69% occupancy during the three months. before.
Carnival Corporation owns nine cruise brands, including Carnival Cruise Line, Princess Cruises, Holland America, and Seabourn.
In normal years, most major cruise lines typically report 100% or higher occupancy for their ships. The business model followed by most major lines is to set prices and invest in marketing at levels that ensure such high occupancy, since the economics of cruise ships work best when they are full.
However, occupancy levels on cruise ships dropped dramatically after the start of the COVID-19 pandemic in 2020. At first, cruise ships were not operating at all, and when they began to resume operations, they were sometimes sailing with less than the half capacity. full cabins; cruise ships were slow to come back and cruise lines struggled to attract people, even with unusually low prices.
Occupancy levels on some lines at the beginning of 2022 were below 50%.
While this was a dire situation for cruise lines, which reported massive financial losses in 2021 and for much of this year, it was a boon for cruise ships that wanted to experience ships with much smaller crowds than normal.
In 2021, some cruise ships sailed with less than 30% of the normal number of passengers while still operating with a normal crew contingent; this has resulted in extraordinary service levels in some cases.
Cruise occupancy has been increasing throughout 2022 and has already returned to normal in some regions, for some lines.
Royal Caribbean Group, for example, reported earlier this month that its occupancy levels on Caribbean voyages were close to 105%, which is in the normal range. Occupancy for Alaska travel for the past quarter was around 96%, which is below normal, the company said.
Royal Caribbean Group reported occupancy levels on Europe cruises of just under 90% for the third quarter.
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