Q – When you look at the three largest cruise lines, NCL, Carnival, and Royal Caribbean, you see a lot of heavy discounting going on. At the end of the day, how much can they make per passenger? Is it 3% or is it actually higher? I’m just curious.
A – It really does vary quarter by quarter, year by year, and line by line. But if you think of the really big competing mega-lines with the ships carrying thousands of passengers each, we see per passenger revenues of around $1700 with total expenses around $1500. The goal is to get enough on-board spending from each passenger on a one week cruise to generate as close to $200 in profit as possible. In times of steep discounting and on-board amenity giveaways, this can be quite challenging. There certainly are sailing like repositioning cruises and off-season sailings where breaking even is a realistic business goal. When, for instance, you are moving a ship from Alaska to the Caribbean in late September or early October headed into hurricane season, ships do not generally sail full and profit expectations have to be adjusted downward.
The Top Ten lines on our annual list have to decline primarily on the price of each ticket as most provide largely inclusive on-board services without the myriad of profit centers you would see on mega-ships.
