Carnival Cruise Line explains highly debated pricing policy

Cruise prices have gone up. That can't be argued as demand has returned and cruise lines use demand-based pricing.

Passengers have definitely noticed the change, and higher cruise fares have made some people more conscious of the price they pay for extras like internet access, drink packages, excursions, specialty dining and other onboard purchases.

Royal Caribbean Chief Executive Jason Liberty has said that prices are higher for all aspects of cruising — but there's a major qualifier.

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"Consumers are engaging in booking their vacations earlier; 70% book at least one of their onboard activities precruise at higher [average daily prices], and onboard spend continues at record levels and at higher rates," Liberty said during the company's fourth-quarter-earnings call. "This positions us very well to outperform the broader travel industry and narrow the pricing gap to land-based vacations."

Liberty talks a lot about the "price gap," referring to the fact that even at higher prices, cruises cost less than land-based vacations. That's because buying a cabin on a Royal Caribbean or Carnival Cruise Line (CCL) ship comes with all your meals and snacks as well as entertainment included.

There are, of course, lots of ways to spend extra money on a cruise, and Carnival Brand Ambassador John Heald recently addressed a pricing pain point that bothers many passengers.

Carnival addresses onboard pricing    

Heald spends most of his workdays answering questions on his Facebook page. In answering one of them he cleared up a common misconception about onboard pricing.

"Among the 600 comments and questions I answered yesterday was a complaint about the prices in the shops on board for toiletry items," he wrote. "Now we do not own, manage, or operate the shops on our ships, we do not set the prices either."

Cruise-ship shops are essentially like stores in a mall. They're rented spaces where the shop operator controls pricing and inventory.

"And I guess like hotel gift shops those that may have forgotten basic items like toothpaste, shaving cream, deodorant etc will have to pay more than they would at Cvsgreens. But the convenience of having these basic items on board, in the middle of the ocean is a good thing just in case but perhaps a packing list is a good way to make sure you don’t need to buy any forgotten items," Heald added.

The brand ambassador also noted that the cruise line does provide some toiletry basics.

"And remember, we provide soap, shampoo, and shower gel for every guest," he added.

Carnival sees elevated demand

Carnival, like Royal Caribbean, has seen increased demand, which leads to higher prices.

"The booked position for our North American brands remains as far out as we have ever seen and well ahead of last year at pricing that is considerably higher," CEO Josh Weinstein said during the cruise line's fourth-quarter-earnings call. "Our European brands just delivered record fourth-quarter booking volumes at considerably higher prices and with a booking window now fully back to historical norms." 

Carnival has seen increased demand worldwide, and passengers are spending more in all areas.

"As expected, our European brands are poised to become an even greater contributor to our 2024 operating improvement. At the same time, we are continuing to pull forward onboard revenue through bundling and precruise sales," he added.

The cruise line has also benefited from its newer ships, which offer more upsell opportunities. 

"This strategy, coupled with even more features on board our newer ships for our guests to enjoy, positions us well for further onboard revenue growth next year," he said. 

"All told, we expect occupancy for the full year to return to historical levels on 5% higher capacity while delivering nicely higher per diems, building on this year's record results."