2010 Summer Cruise Prices Going Up

| April 7, 2009

NCL announces fleet-wide price hikes, following the same announcement by Carnival.

Just two weeks ago we got a formal announcement from Carnival Cruise Lines that demand for cruises is higher than it has been for the last two years and that they plan to impose an "across the fleet" price hike. Now we have another cruise line telling us the same thing.

Norwegian Cruise Lines (NCL) is reporting that cruise prices are going up an average of 7% for the entire NCL fleet on April 2. The ships with the strongest demand are the brand new Norwegian Epic set to debut in June 2010, and the Hawaii-based Pride of America.

Pride of America is the only full sized cruise ship with the legal authority to cruise exclusively in the Hawaiian Islands - because it is an American-flagged cruise ship - the only ship of its size that can make this claim. Pride of America actually belongs to subsidiary company to NCL-America, created in 2003 and at one time an ambitious project that once included a fleet of three ships.

Over time that number was reduced to just one ship, with Pride of Aloha being traded to Malaysian Star Cruises, and the newer, specially built Pride of Hawaii being re-flagged as non U.S. and renamed Norwegian Jade for year-round Mediterranean cruising.

NCL president and CEO Kevin Sheehan said, "Our first-quarter wave season promotion definitely persuaded consumers to book a Norwegian cruise vacation as we saw heavy call volumes translating to exceptional bookings. As we move out of wave season, consumers and travel partners can expect to see our prices rise across the fleet, especially for our new, highly anticipated ship Norwegian Epic."

Speaking of cruise fares for the Hawaii-based Pride of America, NCL also said, "We've seen strong bookings for Pride of America and have already seen significant price increases. The ship is largely sold out for the next eight weeks, and the lead-in rate for summer cruises is up substantially. For example, prices for an inside stateroom on a summer cruise in Hawaii have risen to as high as $1,489 per person."

That is a very high price for a 7-day cruise, and one that I am sure NCL is very happy to see. This means balcony cabins are likely selling for close to $2000 per person. It is just too bad for NCL that they only have one ship in Hawaii now after the significant growing pains NCL suffered attempting to create the world's largest America-flagged cruise fleet.

With three ships, they had to manage an all-American crew of almost 3000 people qualified and willing to handle the challenges of shipboard life - even though the crew was receiving wages negotiated by the a U.S.-based seafarer's union. Persistent overturn and complaints from passengers, along with the higher salary requirements made NCL-A an unprofitable enterprise for several years - until the other two ships were moved out of the Hawaii market. It is good for NCL that they can now claim success for NCL-America.

Higher Prices Everywhere

As we mentioned last week, we often give notice to our readers when we believe they should be booking cruises. We said in late December "this could be your last chance to get a good cruise bargain." At this point, prices are set to go higher on Carnival Cruises on March 20. NCL has said they go up in April 2. So there is still some wiggle room if you act now.

Cruise Lines don't generally announce price increases, so don't think they will be limited to just these two cruise lines. In general, prices rise gradually on a ship by ship basis driven purely by regional demand. These fleet wide announcements are unusual and were most likely done to give notice to shareholders and market investors that the companies are doing well.

We also advised our readers back in September, 2009, to "book your summer 2010 cruises now," in an interview with Michelle Fee of Cruise Planners. If you had done so you would have paid significantly lower prices than we are seeing now. Michelle noted back then that September represents what the industry calls "value season" - the period between school summer break ending and the holidays starting.

January represents the beginning of "wave season," traditionally the strongest booking season of the year. This year has been an especially strong wave season due to one of the coldest winters in history.

We expect cruise prices to remain strong beginning with these price hikes and continuing through the summer. The first break in prices we see begin with the next occurrence of the next "value season" at the end of this summer's break from school. Where prices will go next autumn depends largely upon a number of factors like the economy and the price of fuel.

Fuel Surcharges Possible

All of the cruise lines invoked fuel surcharges on all cruises in 2007 when oil was $105/barrel and the economy was stronger. The average surcharge was $10 per person per day. All of the cruise lines took the surcharges away after about one year, as promised, based on complicated formulas such as "oil trading below $70/barrel for 30 days in a row." Oil dropped as low as $50 barrel last year.

But the lines have all said they reserve the right to reinstate these fuel surcharges at any time if the price of oil goes over $70/barrel. Oil prices have been holding steady between $70 to $80/barrel since January, but so far none of the cruise lines have reinstated the surcharges largely because of the weak economy.

But, if cruise bookings remain strong enough that the cruise lines can announce across the board fare hikes, it also stands to reason that they could feel confident about reinstating the fuel surcharges again if oil prices go up further or the economy gets significantly stronger. This is yet another reason to book a cruise now.

Disney Cruises quietly reinstated their fuel surcharge for just one month back in December when oil stayed over $80/barrel. The price of oil today is exactly $81.04/barrel. Disney has a policy to re-evaluate whether or not to invoke the surcharge on a month by month basis, making the decision at the end of the previous month - even if you have already paid in full.

Fuel surcharges can now be imposed at any time by any cruise line, even if you have already paid in full for your cruise, because the cruise lines have given prior notice. A year ago many cruise lines had to refund the surcharges they put on many cruisers who had already paid in full because they had not given prior notice and extracted the fuel surcharge retroactively. That would not happen again, every cruise line reserves the right to invoke them at any time.

Book Your Cruises Right Now

Once again, if you are in the market for a cruise now you should book one as soon as possible - before prices go up even more beginning in two weeks. Admittedly, you missed the biggest bargain window ending in the fall of 2009, but there are still bargains out there if you shop around. But if you do not book now chances are prices will not drop again until next autumn, if ever, depending upon where our economy is headed.

Norwegian Epic Cabin Renderings: Click on the pictures for the full versions.

NCLs New F3 Balcony Cabin 1   NCLs New F3 Balcony Cabin 2
NCLs New F3 Deluxe Balcony Cabin 1   NCLs New F3 Deluxe Balcony Cabin 2
NCLs New F3 Inside Cabin 1   NCLs New F3 Inside Cabin 2

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