Royal Caribbean Delivers Good News for Your Vacation Plans

Is demand slowing at Disney World because airline prices have been high, or has the American public become a bit more cautious about spending? High airline prices lead to package prices — the way many people book a Walt Disney (DIS) – Get Free Report theme park trip — that are higher, perhaps pushing above what people want to spend. 

Most people have an overall number in mind when booking a vacation. You may want to take your family to Disney World or even Disneyland, but if that trip costs $5,000 all-in with airfare, hotel, and theme park tickets, you might look for other options

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Disney, of course, never directly tells the public that demand has slowed at its Florida theme park complex. Instead, it sort of telegraphs that information by offering discounts. Usually, the Mouse House starts with offering package deals including some hotel savings for out-of-towners and selling discounted tickets to Florida residents.

Now, the company has pulled both of those levers, and it’s also taking the much more rare step of lowering its ticket prices for out-of-state guests. That could be a way to bring package prices down, and it may be an admission that cruise lines including Royal Caribbean (RCL) – Get Free Report and Carnival Cruise Line (CCL) – Get Free Report offer vacationers a better value.

Image source: Daniel Kline/TheStreet

Disney World May Have a Value Problem

When you book a cruise on Royal Caribbean or Carnival, you’re not just paying for your cabin and access to entertainment, you also get food included. And while you can spend money in specialty restaurants, you can eat three meals a day (or really as many as you want), along with snacks, 24/7 pizza, and endless trips to the buffet on either cruise line without spending an additional dime.

Essentially, on a cruise with either major cruise line, you are getting an all-inclusive experience minus alcoholic beverages, specialty coffee, soda, and some other beverages. That’s decidedly not how it works at Disney World.  

When you book a Disney World (or really any major theme park trip), you must book a room and theme park tickets while paying extra for food. Disney will soon bring back its dining plans, allowing for a sort of all-inclusive experience, but in general, you’re paying a much higher price than what a cruise would cost.

That’s something — the price gap with land-based vacations — that Royal Caribbean CEO Jason Liberty talked about during his company’s fourth-quarter earnings call.

Royal Caribbean CEO Talks About Value

Liberty made it clear that his company wants to charge higher prices, but also detailed the difference, although he wasn’t specifically talking about Disney World.

“I don’t think we’re going to close that gap in 2023. I’m encouraged by the ability now for us to increase our pricing even more, which I think will give us the opportunity to close that gap. I’m excited about what we’re seeing in the onboard side, which also helps us close that gap,” he said.

In fact, the CEO shared that the gap has actually grown as the impact of the covid pandemic has faded.

“That gap, which used to be 20% is now in the 30% zone relative to pre-COVID,” he said.

That leaves Royal Caribbean with room to both raise prices and still offer a higher perceived value than a Disney World vacation.

“There’s a lot of runway for us, and that just I think through great execution, just broader awareness of our brands and the cruise complex that we see now as being appreciated more and more by our guests helps us lead to getting the pricing and which helps us lead that to that — closing that gap,” he shared. “What we’re not interested in is the gap closing just because their pricing could potentially go down. Like we want to elevate ourselves up to that level, and we think that’s definitely something that’s in our capabilities to do so.”

So, while Disney’s ticket price cuts might not be what Royal Caribbean wants, it will close that gap a little bit. That’s good news for consumers who can pick how they want to spend their money with a cruise still being the better value but Disney getting a little cheaper, which could entice some people.

Airfares, of course, impact both types of vacation, but it doesn’t cost more to fly to Orlando for a cruise than it does a Disney World trip. What happens, however, is that the total price for a cruise remains lower, maybe much lower, and that’s good for the cruise lines and consumers.

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