Highlights from Truist Securities’ May Cruise Demand & Pricing Survey

Cruise bookings show no signs of slowing down and pricing remains robust for the rest of 2024, according to Truist Securities’ cruise analyst Patrick Scholes.

In his latest cruise demand and price survey, Scholes wrote, “We think overall booking and pricing trends continue to look encouraging with the greatest opportunity for potential 2024 earnings upside continuing to come from elevated pricing on near-in bookings given the limited inventory left to sell for 2024.”

Here are some of the main highlights from Scholes’ report.

• There was an acceleration in booking volumes in April and early May, up low 20% year over year, following a strong January to March Wave season that averaged up low teens year over year. – “Importantly we did not observe any material fall-off in pricing concurrent with this demand acceleration.”
• Cancelled bookings are down “significantly.” According to Scholes, this trend is “driven by customers realizing the best price is the one they received when they initially booked as opposed to seeing cheaper prices as departure dates get closer.”
• Middle East-related cancellations are “in the rear-view mirror” and Northern Med itineraries have captured much that demand.
• More cruisers are choosing to go direct than book with OTAs. For RCL, for instance, ticket revenue was up 34% year-over-year for Q1 of 2024, whereas commission paid-out on tickets was only up 24% year over year. [Scholes did not mention more traditional travel agencies in his analysis.] – “… cruise lines’ television commercials have been well-received and have helped keep cruisers booking-direct,” Scholes said.  
• Cruise pricing is starting the bridge the gap with land-based resort hotels. Historically, cruises have been priced at an approximate 15% to 20% discount when compared to land-based vacations. Since the pandemic, that rose to near 50%, however “today” the discount has been reduced to about 25% to 30% and is expected to fall to pre-COVID levels by 2025.
• Retailers are not reporting any “last minute discounting” at the moment.
• The booking window has grown to about 200 days vs. approximately 150 days pre-COVID and 180 days a year ago. Scholes attributes this to a combination of limited inventory close-in and elevated airfare prices, especially to Europe. – “That said, due to an increase in ‘new to cruise’ bookings (these customers typically book closer to departure), we would be surprised if the booking window expanded much from here.”