With the world in fear of traveling, especially cruising, one would think that the cost of cruising would decline due to the age-old law of supply and demand. Many people aren’t willing to cruise (lower demand) which leads to greater supply – meaning the rates should drop. And while there are currently some decent deals out there, they aren’t to the extent that had been seen during other times when people weren’t traveling (think after 9/11 and amid the great recession of 2008). Back then, cruise lines were just about paying people to cruise! That’s obviously an exaggeration but the rates we’re seeing now certainly aren’t in that price range.
Given the end result of the current situation (many people aren’t willing to cruise) is the same as the situations mentioned above, why haven’t the rates dropped as much as they did previously? The answer lies in the same age-old law of supply and demand. Yes, basic rules of economics dictate that fewer people booking cruises should lead to greater supply and thus a lower price. However, due to social distancing measures being taken by cruise ships, they will not be completely filling their ships. Additionally, some cruise lines are offering fewer routes and fewer sailings, opting to keep some ships laid up in storage. Lastly, some cruise lines, and I’ll specifically name Carnival Corporation (the largest cruise company on the seas), are selling off part of their fleet. In mid-June 2020, Carnival, which owns 10 different cruise line brands including Carnival, Holland America, Princess, and Cunard among others, announced plans to sell 6 ships. In a press release announced just today (July 10, 2020), they upped that number to 13 ships.
What all this means is a lower supply to meet the lower demand. Going back to basic rules of economics, when supply meets demand, the product is correctly priced. And with that, don’t expect cruise rates to dip down to the rates we saw after other severe events. Once cruising resumes, I do expect to see some more decent promos to get people interested again, but if you’re waiting for deep-deep discounts, I wouldn’t hold my breath while waiting.
There’s obviously a lot of speculation on my part in this article. But one thing is for certain, though: cruising will return once again. Most likely later rather than sooner but it will be back. Once new ships are built (there are close to 100 ships currently being built or on order across all lines worldwide), people start booking cruises again calling for previously shuttered routes reopen, supply will certainly increase. Only then, I believe, will we see rates in the pre-Covid range. Until then, short of a good promotion, plan on spending a few extra dollars for your next cruise.
-Ray
