Partner Interview
Published October 4, 2024
Royal Caribbean: Cruise Ship and Private Destination Economics
inpractise.com/articles/royal-caribbean-cruise-ship-economics
Executive Bio
Former VP at Royal Caribbean Group
Interview Transcript
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When you think about the captive audience part, that's one of the more fascinating aspects of the cruise business. You get paying customers to come into your moving resort and spend money in various venues. When you extend those venues into private destinations onshore, how does the team underwrite to the onboard or the per diems at the private destination? Since the beverage package extends there and there's free food, obviously CocoCay has the water park, Hideaway Beach, and cabanas, but do these other private destinations have as many spending options?
Let's say Royal Caribbean did not do that project and went to Nassau. Most of the time, they go to Nassau. Those customers have a couple of choices. One, they stay on the ship. The casino is not open, so there is no revenue from that. Most of the retail outlets are closed, so there's no money being spent there either. Guests are either at the pool, in their rooms, or doing something else. That "something else" often involves paid products, like shore excursions. We looked at comparable beach resorts and different areas in Nassau, and they're not cheap. I don't know the exact dollar amount now, but let's say it's $50 or $75 per person for a trip. That's purely incremental to what you would be losing if you didn't have this beach resort. You're just losing your audience to other activities. So to me, it's all upside. There will be some sort of per diem or ticket price to get in. Perhaps it will be packaged as a Perfect Day experience or a private destination experience when booking the cruise. It might not be like, "Hey, give me your $75 when you enter." It could be a bundled ticket pricing type offering.
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