These days, everything gets more expensive, right? From going out to eat to watching a movie to buying a gallon of milk, we’re used to steadily rising prices.
It’s the same with cruises right? As time passes, cruises are continually getting more expensive, aren’t they?
The amazing thing is that they aren’t. In fact, cruises appear to be getting cheaper… and have been for years. This comes even as more people than ever are taking cruises and ships become more and more luxurious and expensive to build.
Rising Revenue and Passengers
To get a hint at what cruise prices are doing over the long term, we looked at the financial results of Carnival Corp. This is the parent company of Carnival Cruise Lines, and also well-known cruise lines such as Princess, Costa, Holland America, Cunard, and AIDA. In total, the company brings in more than $15 billion in revenue each year, thanks to its roughly 100 ships.
With so many ships and cruise lines, the company is a good barometer for the cruise industry. And because it’s a public company, Carnival Corp. reports annual results each year. We can get a close look at how the industry is doing based on its business.
As you can see in the chart below, Carnival’s passenger count has steadily risen. Since 2002, passengers on the ship’s lines have grown from roughly 4 million to more than 10 million annually.
At the same time as passenger counts have risen, however, revenue has stayed relatively flat since 2011. In other words, with more passengers and the same amount of revenue, the amount spent per passenger has been falling for years.
Much Less Spent Per Passenger
In fact, with the total amount of revenue and the number of passengers sailing each year, we can use simple arithmetic to see how much money is made per guest.
Now, this isn’t the price of cruise fare. Revenue per guest includes everything from cruise fare to drinks bought on board to excursions to souvenirs from the ship’s stores.
That means this number can be affected by lots of different things than just lower prices on cruises. A lower number can be the result of people buying fewer drinks, taking fewer excursions, or simply a rise in popularity of shorter cruises, which have a cheaper overall price than longer trips.
Still, this measure gives us a good idea of how much cruises are costing on a per person basis. And as you can see, the price has been declining sharply since peaking just at the start of the Great Recession. In 2015, the average cost of a cruise per person was $1,455. That’s nearly $400 less than the peak of $1,827 in 2008.
Seeing this chart, there’s little doubt as to why the number of passengers on cruise ships continues to soar. As the costs of nearly everything rises, the falling cost of a cruise lets more people take an affordable vacation. At some point however, the rising number of passengers will likely lead to rising prices, if it hasn’t started already.