Cruising has become a popular vacation option at least partly because of the value proposition it offers compared to a land-based vacation.
Value is consistently among the top three reasons people board one of Royal Caribbean’s 68 ships, Royal Caribbean Group CFO Naftali Holtz told the Wall Street Journal.
“The cost of a cruise is typically part of the consideration along with the amenities passengers get for what they pay,” the CFO said.
For a family weighing a theme park trip versus a cruise, the savings can be considerable.
A five-day single park Disney World ticket for use the week of August 2, 2026, costs $641.43 per person over age 9. That’s more than $2,500 before you book a hotel room or buy a single thing to eat.
A six-night cruise on Allure of the Seas, a remodeled Royal Caribbean ship that’s one of its biggest and best during the same week, costs $3,452 for a family of four in an interior cabin, but that also includes food and lodging.
It’s worth noting that the same sailing, booked a year ahead, would likely cost significantly less, but even at the current price, the value is clear. It would be very hard not to spend more than the roughly $1,000 difference between the cost of the theme park tickets and the cruise on the needed hotel and meals for your Disney World trip.
Cruise ships, however, face a cost increase that hotels, since they stay in one place, never face — the rising cost of gas. That’s something both Royal Caribbean and Carnival Cruise Line Executives talked about during their most recent earnings calls.
Fuel prices are rising
“The most notable financial impact from the Middle East conflict has been on fuel costs. While we are approximately 60% hedged for 2026, fuel prices at current spot levels are expected to increase costs by roughly $0.62 per share this year,” Royal Caribbean CEO Jason Liberty shared during the company’s first-quarter earnings call.
Fuel hedging allows cruise companies to “lock in” future fuel prices using derivatives contracts to reduce exposure to sudden oil-price spikes.
“Oil prices have risen more than 35% since the beginning of the conflict in Iran, as attacks on oil and transport facilities across the Middle East and disruptions to energy flows through the Strait of Hormuz raised concerns about global supply,” according to Reuters.
Unlike Royal Caribbean, Carnival does not have a large hedge position.
A 10% change in fuel cost per metric ton would reduce Carnival’s 2026 net income by $145 million, compared with $57 million for rival Royal Caribbean, according to the company’s latest SEC filings.
“During 2022’s oil spike, Carnival’s fuel costs rose more rapidly than its peers,” CFRA analyst Alex Fasciano told Reuters.
In 2022, when oil prices rose after the Ukraine conflict broke out, Carnival’s fuel costs were 17.7% of its total revenue, compared with 12.1% for Royal Caribbean and 14.2% for Norwegian, according to the news site.
Image source: Carnival Cruise Line
Cruise lines share fuel warnings
Even with its well-hedged position, Liberty sees fuel costs as a drag on Royal Caribbean earnings for the rest of the year.
“Our earnings guidance includes a $0.62 headwind from fuel rates for the remaining of the year,” he shared.
Carnival CFO David Bernstein noted that the expects some relief in fuel prices from current highs. He shared how prices impact the cruise line’s bottom line during its first-quarter earnings call.
“A 10% change in our fuel cost per metric ton, excluding emission allowances, for the remainder of the year impacts our bottom line by $160 million or $0.11 per share,” he said.
Neither company, it should be noted, made any comments about adding a potential fuel surcharge. Cruise contracts give the cruise lines the right to add a fuel surcharge, even after most cruises have been paid for.
The last time fuel surcharges were widely imposed across the major cruise industry was during the 2007-2008 oil spike. Major operators, including Carnival Corporation, Royal Caribbean Group, and Norwegian Cruise Line Holdings, added fuel supplements of roughly $5-$10 per passenger per day starting in late 2007, according to Cruise Industry News.
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