Are Cruise Ships Profitable 2024?

Cruise Ships are beautiful works of engineering, and they are as lofty and magnanimous from the inside as they are from the outside. Imagine owning a beauty like that? Of course, it comes at a very huge cost. So, are Cruise Ships profitable? You may wonder if you were to invest in one such beauty.

After the Covid-19 pandemic, the Cruise Ship industry has taken a spring. You can’t blame people for trying to make up for the lost travel time. Well, lucky for you, as this gives you an opportunity worth seizing.

But before that, brace yourself to find out the hefty cost of owning and operating a cruise ship and to know whether cruise ships are profitable or not.

Are Cruise Ships Profitable

How Much Does It Cost To Start a Cruise Ship?

The cost to build a Cruise ship could vary depending on the size of the ship, facilities, complexity, etc. But on average, you can expect to spend $1 Billion to build a cruise ship on a mega scale. The average cost for ocean cruise ship sailing today is $496 million.

Here’s a cost breakdown of building a Cruise ship:

Start-up CostAverage range
Purchase of large cruise ship$500 million – $1 billion
Interior designing and furnishing$5 million – $50 million
Recruitment and training staff$5 million – $20 million
Installation and maintenance of entertainment systems$5 million – $50 million
Development of guest safety protocols$1 million – $5 million
Licenses and permits$1 million – $5 million
Storage of food and beverage supplies$2 million – $10 million
Marketing and advertisement expenses$5 million – $50 million
Research and development$10 million – $50 million
Total$534 million – $1.246+ billion

Top 10 Cruise Ships And Their Building Cost

Cruise LineShipCost to BuildGuest Capacity
Royal CaribbeanAllure of the Seas$1.43 billion5,412
Royal CaribbeanHarmony Of The Seas$1.35 billion6,780
Royal CaribbeanWonder of the Seas$1.35 billion5,518
Royal CaribbeanSymphony Of The Seas$1.35 billion6,870
MSCMSC World Europa$1.255 billion5,264
MSCMSC Europa$1.255 billion5,264
NCLNorwegian Epic$1.2 billion4,228
Royal CaribbeanOvation Of The Seas$1.1 billion4,820
MSCMSC Seascape$1 billion4,540
MSCMSC Seashore$1 billion4,540

How Much Does a Cruise Ship Cost To Operate?

How Much Does a Cruise Ship Cost To Operate

The cost to operate a Cruise ship varies depending on where it is going and its size. For example, a ship like Royal Caribbean costs $240 million per year to operate.

Cruise Line Major Expense Breakdown

Here’s a breakdown for you to understand what all costs are involved in operating a Cruise:

Salaries

One of the major expenses of running a cruise has to be staff salary. A cruise typically has thousands of staff members working for them, including:

  • Chefs
  • Hosts/hostess
  • Maintenance
  • Laundry
  • Housekeeping
  • Cruise director
  • Shore excursion directors
  • Guest Relations, and much more

Apart from this, cruise staff also get:

  • Free food
  • A crew area to enjoy themselves when off the clock
  • Drinks
  • Free medical care

These all add up to the expense of running a cruise considerably.

Fuel

Apart from the ship itself, fuel is the most significant expense in running a Crusie. On average, the cost of fuel for running a Cruise Ship is $80,000 to around $2 million per day. That’s a lot of money! We have given a comprehensive breakdown of fuel costs in the article below.

Food & Drinks

Of course, the cost of food and drinks on Cruise accounts for a lot. Feeding quality food to thousands of guests and crew members takes a lot from your profit.

See how world’s largest Cruise Ship makes 30,000 meals every day:

Maintenance And Repairs

When you buy a behemoth such as a ship, you not only are required to slash money on buying the ship itself but also need to keep pumping money for its maintenance and repairs.

In fact, it has been reported that around 7% of a Cruise line’s revenue goes into maintenance. On average, maintenance and repairs take about $19 million a year per cruise ship

Port Fees

Port fees are another mandatory expense that you can’t escape. You can expect to pay $5 to $20 per passenger as port fees. This fee can also include taxes/fees for every passenger on board.

Insurance

Of course, when you are running a billion-dollar business, you cannot ignore insurance. This includes worker’s insurance, liability insurance, and fire insurance, among others.


How Do Cruise Ships Make Money?

Cruise ships make the most money from two things: Onboard Purchases and Ticket sales, which include alcoholic drinks, art auctions, spa treatments, casino gambling, and shore excursions,

On average, ticket sales account for 62% of the revenue earned, while onboard purchases account for 38%. 

Apart from this, Cruise Ships may also make money from advertisements and sponsorships.


What Is The Profit Margin Of Cruise Ships?

What Is The Profit Margin Of Cruise Ships

Despite considerable running and overhead costs such as travel agent commissions, marketing, fuel, and payroll, Cruise Ships are able to enjoy net profit margins of 17%.

These figures are based on the average net profit earned by some of the most popular Cruise ships:

The profit margin of 17% is almost double compared to the profit margin of some of the biggest chain hotels.


How Cruise Ships Work?


How Much Do Cruise Ships Make Per Passenger?

Let’s do a simple calculation to find out how much a cruise ship makes per passenger on a seven-day trip.

So, on average, a passenger will pay $1,060 or $151/day for the ticket and $650 or $92/day for onboarding expenses. If you subtract the overhead cost, then a ship will make approximately $291 in net profit per passenger per cruise.

This means that at full capacity, a ship like Royal Caribbean’s symphony of the Seas, which has a capacity of 5,400 passengers, will make $9.2m in revenue, of which $1.5m is profit during a 7-day cruise. This equates to a $239k profit per day.


How Much Does a Cruise Ship Make in a Year?

In a year, a Cruise Ship generates a whopping $200 million to $300 in revenue annually. Although the net profits earned can vary depending on the size, capacity, etc., a Cruise Ship makes $20 and $40 million annually in net profits.

To give you an example, In 2019, Royal Caribbean Group made $1.8 billion in profits. If you divide this between all major cruise lines ( Royal Caribbean International, Silversea Cruises, Celebrity Cruises, and other smaller lines), then it will average around $40 million per ship each year.


Are Cruise Ships Profitable?

Yes, running a cruise ship can be really profitable, provided that it is running at at least 70% capacity.

Cruise Ship owners enjoy a profit margin of 17% on average after deducting all the major expenses such as fuel, staff salaries, food, etc., and make $20 and $40 million annually in net profits, as mentioned before.

But remember, the key here is to fill the ship at least 70% capacity. Otherwise, your profits would be low. And if your ship is underfilled, then you might even make a loss because of the hefty expenses.


What Is The Life Span Of Cruise Ships?

What Is The Life Span Of Cruise Ships

On average, a Cruise Ship lasts for 30 years if maintained properly. During this time, you might have to spend on some refurbishments or refit, though.

Having said that, the lifespan of ships can vary greatly, though. For example, the Sea Cloud was built in 1931 and is still running. This ship has not only survived the test of time but also World War II.

Hebridean Princess is another ship that has lived a long life. She was built in 1964 to serve as a Royal Mail ship and car ferry but is now running as a cruise around the islands of Scotland.

Here’s are top 5 Ships that no longer operate but had a long lifespan:

ShipYear LaunchedYear Ended ServiceTotal Years
Black Watch1972202250
Boudicca1973202148
Norwegian Star1973202148
Queen Elizabeth 21969200839
Carnival Sensation1993202231

Which is the Most Profitable Cruise Line?

With average revenue of $22.86 billion, Mediterranean Shipping Company (MSC) is the most profitable Cruise line.

Carnival Corporation is second in line with $12.2 billion in revenue, followed by Royal Caribbean Group with $8.8 billion annual revenue.

Royal Caribbean’s Icon Of The Seas Arrives 2024


How much do Cruise Ship earn as compared to hotels?

Let us compare the two biggest names from both the industry to see the difference between the earnings of a Cruise Ship and a Hotel.

So, in 2019, the Royal Caribbean Group made $1.8 billion in profit, whereas Hilton Worldwide Holdings made $886 million.

Hilton has millions of rooms in its hotels, whereas Royal Caribbean only has 70,000 state rooms only, and despite this, the Caribbean made twice as much money as Hilton.

So clearly, cruise ships make more money than owning a hotel.


Wrap Up

Well, the numbers are clearly quite big in terms of investment, running costs, or even revenue when it comes to Cruise Ships.

It can be quite exciting owning and being on a Cruise ship, meeting new people, and going on new adventures- all this is definitely an expensive pleasure.

We hope after reading this guide, you do not have doubts about- Are Cruise ships profitable.


FAQ’s

Which is the most expensive Cruise Ship in the world?

Royal Caribbean’s Allure of the Seas is one of the most expensive cruise ships in the world. It was built for a whopping $1.4 billion.

What are some risks associated in running a Cruise Ship?

The risks associated in running a Cruise Ship include:

  • Natural disasters
  • Poor economy
  • Outbreaks of sickness
  • The threat of pirates
  • Environmental concerns
  • Poor experience

What are some of the biggest competitors in Cruise Line?

  • Royal Caribbean
  • Norwegian Cruise Line Holdings
  • Carnival Corporation
  • MSC Cruises
  • Celebrity Cruises
  • Holland America Line

These are some of the biggest competitors in the Cruise Line.

Are cruises in high demand in 2023?

The post-pandemic comeback of the cruise industry is breaking records. The cruise industry is seeing a high demand in 2023 primarily because people are seeking “revenge travel” for the time lost during the pandemic.

How big is the Cruise tourism industry in 2023?

The current market value of Cruise tourism is $7.1 billion and is expected to grow at a rate of 12.1% CAGR by 2027.

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