The revenue train has not slowed down onboard cruise ships.
During Royal Caribbean Group’s fourth-quarter earnings call on Friday, executives said that revenue per passenger cruise day was up 10% from record 2019 levels, driven by strong onboard revenue.
Royal Caribbean Group and Norwegian Cruise Line Holdings both began reporting unexpectedly high onboard spending trends last summer. And in what was an otherwise bleak earnings year for the cruise lines, onboard spending was a bright spot.
When asked what was driving the record onboard spending, Royal Caribbean International CEO Michael Bayley said, “I wish we knew. I can tell you that we’ve been absolutely delighted. When we started operations out of the U.S. back in July, we were initially just shocked. It was really, really positive. And it’s just continued.
“We’ve seen it across the board in nearly every single category where people are just simply spending more in every single revenue stream.”
Bayley said the company’s investments in pre-cruise technology have helped boost onboard spending. Guests are able to book onboard extras prior to the cruise, helping to make “pre-cruise penetration significantly higher than it’s ever been before.”
“As a rule of thumb, every dollar of pre-cruise spend was worth an incremental 50 cents of onboard spend,” Bayley said.
He also noted that in 2020 and 2021, savings rates were significantly higher and credit card debt was much lower. In addition, passengers are buoyant, delivering record-high satisfaction scores across the company’s brands.
“So we’ve got a lot of happy customers, and in that happy frame of mind, they’re opening up their wallets and spending literally all over the place,” he said.
Royal Caribbean Group CEO Jason Liberty said high onboard spending was coming from passengers in inside cabins and the highest suites, and that it’s spread out across every revenue area of the cruise experience.
“Whether that’s spa, whether that’s gift shop, whether that’s casino, F&B and so forth, it is outperforming significantly,” he said. “I don’t know how much of it is just consumers with more money in their pocket or how much of it is just chasing experiences, and as part of those experiences spending money on our ships.”