Profitability

Is there a known measured amount of profitability between 3/4 day cruise vs 7/8 day cruise or the 10+ day cruise for the cruise lines.

I'll try to find an actual source, but in past sec earnings reports longer cruises typically have a smaller profit margin. Not sure if it holds for 7 days over 3 days, but on significantly longer cruises customers tend to spend less as the cruise goes on.

Sent from my SM-G955U using Forums mobile app

Questions like this always intrigue me.:confused:

It's an important question - for anyone planning to start a cruise line!

How many ships are you planning to buy? ;)

JB :)

By pure observation 2-14 day cruises out of Los Angeles on Carnival and Princess.

On the 3&4 day cruises we’ve been on the photo walls are full, the overflow bin is getting full. Similar on the 7 day cruises. The longer cruises rarely use the bin, a few cruises barely fill up 1/3 of the photo displays.

Using the ‘photo standard’ seems like their more profitable but probably has to do with port location. For us, it’s cheaper to go on a cruise than a weekend in Vegas (excluding gambling)

Also, the fare per diem is usually higher on the shorter cruises.

Questions like this always intrigue me.:confused:

 

It's an important question - for anyone planning to start a cruise line!

How many ships are you planning to buy? ;)

 

JB :)

It's also an interesting question for shareholders. You see cruise lines like MSC offering 120 night around the world cruises while Royal rarely has anything longer than 16 nights. As a shareholder it would be good to know if Royal is missing out on a major profit opportunity by limiting their longer cruises, or if MSC is offering something unique for minimal profits for the PR or a variety of other reasons.

Even just from a cruiser perspective, it can help you estimate what will be available in the future. If longer cruises are less profitable and you really want to do one, it would probably be better to get it out of the way sooner rather than later. No telling when or if the cruise lines will stop offering them, or greatly increase the price to bring profits up.

Is there a known measured amount of profitability between 3/4 day cruise vs 7/8 day cruise or the 10+ day cruise for the cruise lines.

Questions like this always intrigue me.:confused:

 

It's an important question - for anyone planning to start a cruise line!

How many ships are you planning to buy? ;)

 

JB :)

caribsun, or should I say Mr. Branson, you really should have been asking these types of questions before you started building that new ship. :D

But seriously folks, while people do spend less on longer cruises, and this spending is very profitable, the costs are likely less for longer cruises also. Those turnaround days must cost the cruise lines a pretty penny. Do the cruise lines save fuel on longer cruises? i.e. fuel cost per passenger per day because of a reduced speed. Do they reduced costs offset the reduced contribution? I have no idea.

I have no idea but the good thing about a short cruise is it provides many people the chance to first find out if cruising is for them and if they like it they are more likely to book a longer one.

Keith

Lots of ideas have been bandied about on these boards over the years. One is that short cruises attract more new cruisers, and new cruisers spend more onboard - pictures, souvenirs - than experienced cruisers. As to the photo thing...On my first HAL cruise (32 days) I had a stuffed animal I needed to document in each port, and after about the third stop, the photo people were not taking gangway pics. I asked why - they said nobody wanted them.

As for the world cruises, the lines that do them use smaller ships - presumably because it is a niche product and the demand is finite. Except for Cunard, which uses all of their ships and seem to have no trouble filling them. Costa has done several world cruises on Luminosa - don't know how well they fill them. MSC has yet to do their first world cruise, although it is scheduled. Costa and MSC are using ships similar in size to QE and QV of Cunard. I can't see the client base of Carnival or Royal Caribbean booking a world cruise. EM

Thank you all for your contribution to my question.

It does seem likely that 7 days probably yields the highest profit - the drop in on-board spending must plummet on longer cruises, while the turn-over costs are probably best covered. Certainly the overwhelming number of cruises of that length seems to indicate that the lines see it that way.

I think the reason you see so many seven day cruises has more to do with vacation time than profitability.

Here in Australia we see very few seven day cruises. I think the median is closer to 10 to 14 days.

I think the reason you see so many seven day cruises has more to do with vacation time than profitability.

 

Here in Australia we see very few seven day cruises. I think the median is closer to 10 to 14 days.

A very intuitive answer. Cruise lines are vacation providers and 7-nights is a typical vacation timeline for most people. Shorter cruises accommodate long weekends and similar shorter vacations, while longer cruises appeal to those with more time available such as retirees, as example. I would think that spending and resulting profitability would follow suit.

The cruise lines respond when something affects their bottom line, negatively or positively. Most cruise lines offer longer cruises only out of necessity (repo/trans) or something once a year that is unique and will fill up the ship.

We were on a transpacific this fall and they did away with the cruise DVD video because they said so much effort went into the production and no one bought it. I imagine the photo area was unprofitable since the ship was filled with very experienced and Diamond and above cruisers. I think Diamond and above get a free photo, so that was likely the main draw. After many cruises, the draw to buy a photo wanes.

It does seem likely that 7 days probably yields the highest profit - the drop in on-board spending must plummet on longer cruises, while the turn-over costs are probably best covered. Certainly the overwhelming number of cruises of that length seems to indicate that the lines see it that way.

Even if 7 day cruises were less profitable, on an individual basis, vs longer cruises, market demand, particularly in North America, would result in the cruise lines offering the large number of 7 day cruises.

Ships based in Europe head for winter warmth, so most lines have world cruises, or long journeys such as round Africa, or to South America. Lines based in the UK all have world cruises; Cunard sends all 3 ships away; P&O also does a series of month long cruises to the Caribbean and back as well as world cruises, and Fred Olsen and Cruise and Maritime also have world cruises. There's a few ships sailing to the Canary Islands, and some lines will base a ship there over winter.

Even if 7 day cruises were less profitable, on an individual basis, vs longer cruises, market demand, particularly in North America, would result in the cruise lines offering the large number of 7 day cruises.

That’s what I said earlier seven days sells in the USA, so I guess could be said to be most profitable.

But in other parts of the world where holiday time is more generous longer cruises sell better, so are more profitable, but neither of those facts show that either length cruise is more profitable per day, just that they sell better in that market.

Even if 7 day cruises were less profitable, on an individual basis, vs longer cruises, market demand, particularly in North America, would result in the cruise lines offering the large number of 7 day cruises.

Regardless of the reason - the large number of 7 day cruises has to result in their being a major (if not the major) source of profit overall.

That’s what I said earlier seven days sells in the USA, so I guess could be said to be most profitable.

 

But in other parts of the world where holiday time is more generous longer cruises sell better, so are more profitable, but neither of those facts show that either length cruise is more profitable per day, just that they sell better in that market.

Of course, as N.A. is currently 50% of sailings for the industry, 7 day cruises are the majority. In 10 years it will tilt towards whatever the most popular Chinese cruise length is at that time. I'm not expecting a major lengthening of the N.A vacation time.... except mine! :D

If the ship is full, it's profitable. Only half full, not so much. Length of the cruise is secondary.

Huh, my thought was best margins are from bar sales. If we accept that then, booze cruises are going to be most profitable. :D

Huh, my thought was best margins are from bar sales. If we accept that then, booze cruises are going to be most profitable. :D

I always thought those art auctions would be the most profitable. I mean, how much do one or two bananas cost that they use to pay those 'artists' ? :D