Unprecedented Surge in Cruise Ship Occupancy Rates

The cruise industry is witnessing unprecedented growth, with occupancy rates often exceeding 100%. This surge in popularity is leading to a trend of overbookings, where guests are even asked to rebook to a different cruise while being offered onboard credits and many other perks. 

The situation raises concerns about the implications of this increasing demand. Is this trend positive or alarming for the cruise industry and its guests? With 39.5 million guests projected to sail onboard a cruise ship by 2027, there is certainly space for a discussion on whether the cruise industry’s growth is excessive. 

A Cause for Concern?

A surge in demand for cruise vacations has resulted in an unusual phenomenon: occupancy rates on cruise ships that regularly surpass 100%. Notably, Royal Caribbean has an impressive 102.1% occupancy rate, closely followed by Norwegian Cruise Line with a solid 101.5% rate, while Carnival Cruise Line trails slightly with a 91.0% rate.

The occupancy rates over 100% can be explained by how they are calculated. A cruise cabin is typically designed to accommodate two guests, making this the base for calculating double occupancy.

However, when a third or fourth guest is added to the cabin, the occupancy rate naturally exceeds 100%. This becomes pretty normal during school holidays when families come on board with kids.

While this ensures a full ship, maximizing revenues for cruise lines, it can also lead to guest dissatisfaction. When pools, dining areas, bars, and theaters get overcrowded, the comfort and enjoyment of guests will be compromised.

Overcrowding is a common concern during cruises. This issue extends to more than just the pool or dining areas. With large cruise ships typically accommodating 3,000 to 5,000 guests, nearly all spaces on board can become notably congested, causing discomfort among passengers. However, this trend is not new in any way. Prior to the global pause in operations, Royal Caribbean typically reported occupancy rates of 107-108%.

What is new is that cruise ships have sailed with, and guests have gotten used to, far lower numbers over the last two years. Similarly, the pent-up demand that has been lingering is now truly showing its face.

Demand Surge: A Testament to the Industry’s Resilience

Despite the potential concerns, it’s clear that the surge in demand for cruises is cause for celebration in the industry. Royal Caribbean Group and Norwegian Cruise Line Holdings reported high occupancy rates during the first quarter of 2023, showing that the demand for cruises is stronger than ever.

The increasing popularity of cruises is not confined to experienced cruisers. According to Cruise Lines International Association (CLIA), Millennials and Generation Z are demographics that are showing the most interest in cruising. Attracting 4 million new-to-cruise travelers is a key strategy to meet the expected increase in global cruise capacity from 2023 to 2025.

One thing is sure, CLIA president Kelly Craighead doesn’t seem to believe the incredible growth is an issue:

“What this tells me is that all the work the lines did to innovate and make it one of the healthiest ways to travel resonated with people who may have had different ideas at the start of the pandemic,” Craighead said. 

“We’re in a new era. The industry, writ large, was forced to collaborate — cruise lines with cruise lines, cruise lines with ports, with destinations, with suppliers. A very strong community has been built that accelerated innovation and partnerships. We’re all stepping out with much stronger relationships, ones built during the pandemic.”

Cruise passenger volume is forecast to reach 106% of 2019 levels in 2023, with 31.5 million passengers expected to sail. This number is to increase to 39.5 million by 2027.

Growth Amid Challenges

While the cruise industry is undoubtedly facing a high-growth phase, it must address specific challenges to sustain this growth over the long term. The issue of overcrowding, if not handled correctly, could harm guest experience and lead to a decline in popularity.

There is also the concern of overbookings where guests are asked to change their booking to a different cruise, something we have seen on a regular basis from Royal Caribbean in the past weeks, as well as Princess Cruises.

Moreover, environmental concerns are increasingly significant, with cruise lines under scrutiny for their environmental impact. Cruise lines are investing in sustainable technologies to meet these challenges, from cleaner fuel options to waste management systems.

The industry must continue to innovate to meet the evolving expectations of cruise guests. Guests demand that cruise lines offer more than just sightseeing. Instead, guests are coming onboard expecting to be entertained 24/7. If ships continue to be overcrowded and overbooked, keeping all guests happy could soon prove difficult.

The cruise industry is witnessing a surge in occupancy. This trend is a positive sign of the industry’s resilience and growth potential post-pandemic. However, it should also serve as a reminder of the challenges that must be tackled to ensure long-term success. 

While overcrowding and overbookings pose potential challenges, the industry’s response to these issues— and its commitment to sustainability and innovation— will be crucial to its success.