How much does a cruise ship cost to operate per day?

Have you ever wondered how much it costs to operate a cruise ship? Spoiler: it’s not cheap!

Operating a cruise ship, let alone an entire cruise line, is no small feat. Feeding, accommodating, entertaining and transporting thousands of passengers around the globe requires serious logistics, planning and execution.

Diving in Royal Caribbean’s annual and quarterly financial statements, we can estimate just how much it costs to operate one of Royal Caribbean’s cruise ships. Although I cruise for both work and leisure, my day job is in the field of data analytics thanks to my background in math and statistics. I wanted to analyze Royal Caribbean’s financial statements to get a better understanding of the operational costs of a cruise ship.

Royal Caribbean is the world’s largest cruise brand and currently operates 26 ships in their fleet. In 2024, this number will increase to 28 ships with the addition of Icon of the Seas in January and Utopia of the Seas in July.

However, Royal Caribbean Group operates more than just Royal Caribbean International. The company also operates two more cruise lines, including the premium brand Celebrity Cruises and ultra-luxurious brand SilverSea. Celebrity Cruises operated 15 cruise ships in 2023 with the addition of Celebrity Ascent in Q4 of 2023. Finally, SilverSea’s fleet is comprised of 12 luxury cruise ships.

Seeing how costly it is to operate a cruise ship was eye-opening to say the least. Come along as we analyze Royal Caribbean’s recent financial statements.

Overview

Each brand of Royal Caribbean Group appeals to a distinct demographic of cruisers, with Royal Caribbean aiming to be the best family-friendly cruise line in the world. The cruise line is designed for those with children, along with old and young couples. 

Those looking for a more upscale, adult cruise experience will want to sail on sister-brand Celebrity Cruises. Finally, SilverSea operates its fleet for travelers looking for an expedition cruise or ultra-luxurious vacation with an all-inclusive style of cruising.

Since Royal Caribbean Group operates three cruise lines, the company releases one financial report for all three brands: Royal Caribbean International, Celebrity Cruises and SilverSea Cruises. Royal Caribbean is the largest of the three brands, followed by Celebrity Cruises and SilverSea Cruises.

Comparing the three brands’ capacities and gross tonnage, we can get an idea of how Royal Caribbean’s expenses and revenues are allocated. According to Royal Caribbean’s investor portal, the breakdown of each cruise line’s total capacity across its fleet based on double occupancy is the following:

• Royal Caribbean International = 92,584 (71.46%)

• Celebrity Cruises = 32,280 (24.92%)

• SilverSea Cruises = 4,692 (3.62%)

Royal Caribbean’s investor portal also provides data for each fleet’s total gross tonnage, which is how cruise ships are measured by size. According to Royal Caribbean Group, the total gross tonnage of each cruise line is the following:

• Royal Caribbean International = 3,823,107 GT (68.97%)

• Celebrity Cruises = 1,384,459 GT (24.98%)

• SilverSea Cruises = 335,400 GT (6.05%)

As expected, Royal Caribbean International makes up right around 70% of the company’s overall gross tonnage and capacity, followed by Celebrity Cruises at 25% and SilverSea at 5%.

What costs are associated with operating a cruise ship?

There are six major areas of operating expenses that are aggregated to calculate a total cruise operating expense both annually and quarterly. According to Royal Caribbean Group’s Form 10-Q for Q3 of 2023, cruise operating expenses are comprised of the following:

1. Commissions and transportation: This consists of expenses directly associated to passenger ticket revenue, which includes travel agent commissions, airfare and other transportation expenses, credit card fees, and varying port costs based on passenger head counts.
2. Onboard expenses: Includes direct costs associated with onboard and other revenues, such as cost of products sold onboard, vacation protection insurance premiums, costs for tours before or after cruises, concession revenues, procurement and management related services.
3. Payroll and related expenses: Salaries for shipboard personnel.
4. Food expenses: Includes cost of food for both guests and crew members.
5. Fuel expenses: This includes any expenses related to fueling the ship, including delivery, storage, emission consumable costs and financial impact of fuel swap agreements.
6. Other operating expenses: A catch-all category that consists primarily of operating costs related to repairs, maintenance, non-variable port costs, vessel related insurance, entertainment and losses/gains related to sale of ships.

For 2023, Royal Caribbean Group reports that 26.36% of operating expenses went to commission costs, followed by 22.80% to other operating expenses, 15.09% to payroll expenses, 14.44% to fuel expenses, 10.88% to onboard expenses and 10.43% to food expenses.

How much did Royal Caribbean spend operating their cruise ships in 2023?

In the same Q3 report for 2023, Royal Caribbean Group spent $5.9 billion on cruise operating expenses. Since this only includes data through September 2023, we can estimate cruise operating expenses for Q4 to be around $1.9 billion.

Based on this estimate for the fourth quarter, we could guess the 2023 annual cost for cruise operating expenses will be around $7.84 billion. This would be an increase from an annual expense of $6.6 billion in 2022 and $6.1 billion in 2019. Of course, this is an estimate based on data given in the report from Royal Caribbean Group.

Similar to many industries, Royal Caribbean Group has dealt with the rising cost of inflation. Moreover, the cruise line reported additional capacity and higher occupancy on its cruise ships, which has also contributed to increased expenses. The quarterly report for Q3 cites the following as major contributors to increased cruise expenses in 2023:

1. $586.8 million increase in Commissions, transportation and other expenses

2. $190.0 million increase in Onboard and other expenses

3. $163.4 million increase in Food expense

4. $136.4 million increase in Other operating expense

5. $70.0 million increase in Fuel expense.

Let’s make a few assumptions about Royal Caribbean’s cruise operating costs

Unfortunately, Royal Caribbean Group does not provide any ship-specific data in their financial reports. Because of this, we have to make some more assumptions regarding operating cruise expenses with the information we are given. Most of these assumptions are based on fleet size and ship size.

Royal Caribbean International operates the largest fleet of the three brands with the most capacity and gross tonnage. As such, we can assume the Royal Caribbean International has the highest overall cruise operating expense. Based on gross tonnage, Royal Caribbean International makes up about 68.97% of the company’s operating fleet.

Because of this, let’s keep it simple and assume that 68.97% of Royal Caribbean Group’s operating costs are spent on the Royal Caribbean International brand. Using this logic, we can allocate 24.98% of operating costs to Celebrity Cruises and 6.05% to SilverSea.

I realize this is a high-level assumption, as one could argue that Royal Caribbean International is cheaper to operate per guest than Celebrity Cruises and SilverSea. Premium and luxury cruise brands are more expensive and likely require more operational spending on a guest-level.

But, I want to keep the math simple and keep the proportions based on overall fleet size, capacity and gross tonnage.

How much does Royal Caribbean spend to operate its entire fleet?

Based on our general assumptions, we can estimate that Royal Caribbean Group spent the following on cruise operating expenses for each brand. Again, these are estimations based on the company’s 2023 quarterly report, along with fleet size and general expense assumptions based on each brand of Royal Caribbean Group.

• Royal Caribbean International = $5.41 billion (68.97%)

• Celebrity Cruises =  $1.96 billion  (24.98%)

• SilverSea Cruises = $474 million (6.05%)

Now that we have a general idea of how much Royal Caribbean Group spends to operate each brand annually, let’s figure out how much it costs for Royal Caribbean International to operate their individual cruise ships.

With little data available from Royal Caribbean Group, we can really only draw assumptions from the gross tonnage and capacity if we want to understand the cost of operating a single cruise ship.

How much does it cost to operate a Royal Caribbean cruise ship based on capacity?

Royal Caribbean operates a fleet of 26 ships currently with 6 different classes of ships. This will change in 2024 with the Icon Class, but we are only looking at operating costs for 2023.

Royal Caribbean’s Vision Class is home to the oldest and smallest ships, which are arguably the least expensive to operate. A smaller ship means less guests to feed, entertain, transport and accommodate. In addition, these older ships have the least amount of crew members to pay.

The oldest ship, Grandeur of the Seas, has an estimated capacity of 1,950 guests with gross tonnage of 74,100 – as reported by the cruise line. On the other end of the spectrum is the Oasis Class, which are the biggest ships in the world (excluding Icon of the Seas for 2023). Wonder of the Seas is currently the largest ship operating for Royal Caribbean International with an estimated capacity of 5,734 guests and a gross tonnage of 236,857.

We can assume Oasis-class cruise ships are the most expensive to operate using similar logic: more guests to feed, entertain, transport and accommodate, along with more crew members to pay. Fuel expenses are likely more for these massive ships as well.

Based on an annual cruise operating expense of $5.41 billion for Royal Caribbean International, we can calculate an estimated cost based on the cruise line’s total capacity of 92,584 guests at double occupancy. This will allow us to get a general idea of how much Royal Caribbean spends annually for each ship based on capacity. Similar rates can be calculated for Celebrity Cruises and SilverSea.

• Royal Caribbean International = $58,449

• Celebrity Cruises = $60,718

• SilverSea Cruises = $101,171

Using this calculation, Wonder of the Seas would have an annual operating expense of $335.15 million based on capacity. This is nearly $1 million dollars per day! We can also calculate the rate for Grandeur of the Seas too with an annual operating expense of $113 million. Here are the average annual cruise operating expenses by ship class based on capacity for Royal Caribbean International:

• Oasis Class: $322 million

• Quantum Class: $243 million

• Freedom Class: $221 million

• Voyager Class: $188 million

• Radiance Class: $123 million

• Vision Class: $119 million

Looking at the entire fleet of 26 ships and calculating the annual cost per ship, we can calculate an average estimate of $208 million to operate one of Royal Caribbean’s cruise ships each year.

How much does it cost to operate a Royal Caribbean cruise ship based on size?

Now that we’ve looked at cost based on capacity, let’s look at some estimates based on gross tonnage. We can calculate the operational cost based on gross tonnage under the assumption that larger ships are more expensive to operate.

In this case, Royal Caribbean’s total gross tonnage for its entire fleet is 3.8 million (excluding Icon of the Seas). Taking into account the annual operating costs for each cruise line, we can estimate that Royal Caribbean International spends approximately $1,415 per gross ton annually.

Using this rate, the biggest ship, Wonder of the Seas (236,857 gross tons), would show a similar annual cost around $335.26 million. The smallest ship in Royal Caribbean’s fleet, Grandeur of the Seas (74,100 gross tons), would have an annual operational cost of $104 million.

How much does it cost to operate a cruise ship daily?

Here are the average daily cruise operating expenses by ship class based on capacity for Royal Caribbean International:

• Oasis Class: $883,440

• Quantum Class: $667,768

• Freedom Class: $605,849

• Voyager Class: $517,240

• Radiance Class: $338,288

• Vision Class: $328,279

While these are simply estimates, other sources online have provided similar values for the daily annual cost to operate one of Royal Caribbean’s cruise ships. For example, Business Insider reported in 2022 that Symphony of the Seas costs $1 million each day to operate. My calculations show an estimated daily cost around $883,440 for an Oasis-class ship.

How much will it cost to operate Icon of the Seas?

No one knows how much it will actually cost to operate Icon of the Seas – and we may never know the exact cruise operating expense unless Royal Caribbean provides that number. We might get a better idea of Icon’s operating expense when Royal Caribbean Group releases their quarterly reports in Q1 or Q2 of 2024.

However, Icon of the Seas is expected to cost Royal Caribbean a whopping $2 billion. In comparison, Allure of the Seas held the previous record for most expensive cruise ship to build at $1.43 billion. Due to its sheer size, we can assume Icon of the Seas will be the most expensive cruise ship for Royal Caribbean to operate in 2024.

Based on size and using our previous assumptions, Icon of the Seas at 250,000 gross tons would have an estimated operational expense of $355 million annually or a daily cost of $920,000.

I would venture to guess the actual cost of operating Icon of the Seas will be more than $355 million; however, without any further data from Royal Caribbean Group, we really cannot forecast accurately.

Final Thoughts

At the end of the day, I’ve simply drawn a few high-level assumptions and calculated estimates based on these assumptions. I would love to see more brand, fleet and ship specific data from Royal Caribbean Group regarding operating cruise costs, as it would be fascinating to see.

My estimates show that the average annual cost of operating a cruise ship for Royal Caribbean is around $208 million. The biggest cruise ships in the Oasis Class are likely the most expensive to operate while Royal Caribbean’s Vision Class ships are the most affordable. We can estimate that Oasis Class ships cost $322 million, which is around $1 million to operate daily. On the other hand, Vision Class ships might cost closer to $119 million annually. 

When it comes to data analytics, it’s important to remember not everything is as black and white as we want to believe. Royal Caribbean Group operates three distinct cruise lines between Royal Caribbean International, Celebrity Cruises and SilverSea. Each of these brands offer very different cruising experiences at drastically different price points. In the same way, Royal Caribbean Group has differing expenses to ensure each brand is successful.

I will be interested to see Royal Caribbean Group’s annual financial report for 2023 to see the operating cruise expense for the year. Of course, with a new ship class launching in 2024, Royal Caribbean International’s expenses will certainly increase.