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Is the outlook for the cruise industry plain sailing?

Key takeaways

• While Baby Boomers once formed the core consumer base for the cruise industry, an increasing number of younger travelers and first-time passengers are now coming on board.

Cruise operators are investing in new hardware, including mega-ships and private destinations, to acquire new customers.

• Against a tighter consumer spending backdrop, cruise voyages — which often work out cheaper than land-based vacations — are growing in popularity.

Looking ahead, J.P. Morgan Research estimates the cruise industry will capture ~3.8% of the $1.9T global vacation market by 2028.

The cruise industry has markedly picked up speed after taking a major hit during the COVID-19 pandemic. According to the Cruise Lines International Association (CLIA), about 35.7 million passengers are expected to set sail in 2024, 6% more than in 2019. Indeed, major cruise lines have enjoyed a successful 2024 wave season — the period from January to March, when operators offer their best deals.

“An important point underscoring our more constructive view of the cruise industry post-pandemic is market share gains from the larger $1.9T global vacation market and accelerated new-to-cruise customer acquisition,” said Matt Boss, Head of Leisure and Retailing (Department Stores & Specialty Softlines) at J.P. Morgan. “Demand remains robust, with not a single historical lead indicator in the business, notably booking curve and on-board spend, signaling any softening.”

Ahead of the summer travel season, what is the outlook for the cruise industry, and what’s driving its rebound? 

The cruise industry is picking up speed, with about 35.7 million passengers expected to set sail in 2024. (Source: Cruise Lines International Association)

While Baby Boomers once formed the industry's core consumer base, an increasing number of young travelers and first-time passengers are coming on board.

The number of cruise passengers is growing 

The annual number of cruise passengers from 2023 to 2027 is expected to exceed pre-COVID levels. 

Positive demographic shifts

In the past, Baby Boomers formed the core consumer base for the cruise industry. Today however, an increasing number of younger travelers are coming on board. According to the CLIA, 73% of Millennials and Gen X travelers say they would consider a cruise vacation. And during its first-quarter earnings call, Royal Caribbean International noted that half of its cruise customers are Millennials or younger.

This is in part due to rising affluence. “Importantly, the spending capacity of the Millennial customer has grown ~49% since 2019, with the average net worth today for an individual aged 40 or under now standing at ~$259K,” Boss observed. 

Cruises are also attracting more first-time passengers. During its first-quarter earnings call, Carnival Cruise Line noted there was a healthy mix of “new-to-cruise” in its 2025 bookings to date, with the customer group increasing by over 30% versus a year ago. 

Elevated product and destination offerings

Cruise operators are overhauling their offerings in order to appeal to consumers. “Key operators are investing in new hardware, notably mega-ships and private destinations. This is driving more eyeballs to the industry, accelerating new-to-cruise acquisition,” Boss said.

In April 2024, Norwegian Cruise Line placed the largest ship order in its history to meet rising demand for cruise travel. The company will receive eight new vessels between 2026 and 2036.

Investments in land-based offerings are burgeoning, too. For instance, Royal Caribbean’s private island in the Bahamas, Perfect Day at CocoCay, is expected to draw over 3 million visitors in 2024. In the same vein, Carnival Cruise Line is developing a private beach destination, Celebration Key, on Grand Bahama. Opening in 2025, it will feature five areas, each with its own distinct amenities. “Investments in such attractions provide the cruise industry with the improved ability to give customers an experience that is better able to compete with land-based alternatives,” Boss added. 

“Key operators are investing in new hardware, notably mega-ships and private destinations. This is driving more eyeballs to the industry, accelerating new-to-cruise acquisition.”

Head of Leisure and Retailing (Department Stores & Specialty Softlines), J.P. Morgan

Consumers favor cruises over land-based activities

According to J.P. Morgan Research’s recent Cost of Living survey conducted in April, only 29% of respondents still have excess savings, and 45% expect to spend less in discretionary categories over the next 12 months. This illustrates an increasingly cautious spending environment even in the face of moderating inflation.

This puts cruise voyages, which often work out cheaper than land-based vacations, in good stead. “We see the consumer increasingly focused on value within discretionary categories, with the value spread between cruises and land-based alternatives standing at 25–30% today versus 10–15% pre-pandemic,” Boss noted. “Cruise lines have focused on improved experiences with no step down in quality or service despite inflation, further amplifying their value.”

Despite the tighter consumer spending environment however, both ticket and onboard prices have increased in recent months. Royal Caribbean International cited that in addition to record ticket pricing, consumer spending onboard and pre-cruise purchases continue to exceed prior years. In the same vein, Carnival Cruise Line’s onboard revenue in the first quarter of 2024 was +17.6% versus the first quarter of 2019. 

Overall, the demand backdrop remains robust for the cruise industry. “We estimate that 85%+ of tickets have been booked for 2024, and the focus is turning to 2025, with bookings to date already ahead of historical levels,” Boss said. “Looking ahead, we see the industry growing revenues by high-single digits over the next five years, capturing ~3.8% of the global vacation market by 2028.” 

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Why Cruise Demand Is Even Bigger Now Than Pre-Pandemic

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When the Grand Princess — a cruise ship that carried thousands of passengers bound for Mexico — instead sailed into an Oakland, California, port in early 2020, the ship quickly became a symbol of the COVID-19 pandemic. The vessel's passengers were among the first documented cases of coronavirus in the U.S. And as they waited — quarantined in their onboard staterooms — the image of a floating city-state adrift in a sea of uncertainty became a defining image of the era.

Journalists , politicians and infectious disease experts have referred to cruises as “petri dishes.”

Yet, despite the early skeptics and pandemic-induced challenges, the cruise industry has not only survived but thrived. In fact, demand for cruises is now even higher than it was before the pandemic.

Cruises make a comeback

The number of cruise transactions worldwide in the first quarter of 2024, including bookings and onboard purchases, was about 16% more than the same period in 2019, according to a 2024 report from the Mastercard Economics Institute.

More money is floating into cruises, too. Mastercard found that, as of May 2024, nine out of the last 10 all-time record spending days in cruises occurred in 2024.

Spending on cruises is not just up pre-pandemic, but over the past year. According to Bank of America credit and debit card data from May 2024, spending on cruises is up 12% year-over-year.

Why are cruises so hot in 2024?

A few factors indicate why cruises are sailing toward growth:

Pent-up demand: Cruises are, in part, riding the general wave of pent-up demand for travel. People who skipped cruises (or trips as a whole) in the early years of the pandemic might now be ready to return.

Appeal to older demographics: While there are certainly great cruises for families or cruises for young couples, cruises tend to have special appeal to older folks. According to Bank of America’s internal data from January through May 2024, baby boomers, (which the company defines as people born between 1946 and 1964) make up around half of total spending on cruises.

Unique offerings: Cruises these days are appealing to younger demographics, too.

Disney Wish, which is the newest in Disney Cruise Line’s fleet, capitalizes on "Frozen" fandom with a one-of-a-kind “Frozen”-themed restaurant that includes an Olaf puppet, live music (performing songs from the film, of course) and technology such as invisible fiber optics embedded in the ceiling designed to look like Elsa’s magic.

That’s not the only example of unique experiences that can only be had at sea.

The Sun Princess by Princess Cruises offers a cruise line version of the Magic Castle, which is a famously tough-to-get-into, exclusive club in Los Angeles. The cruise line version, called Spellbound by Magic Castle, guides guests through magic-themed rooms and serves them clever cocktails. The biggest difference between the Los Angeles version versus the cruise version is that the latter is quite easy to get into. All you need is to book a sailing on the Sun Princess and reserve your spot, which means paying an additional $149 admission fee.

Other unique cruise line bars include the Skyy Vodka Ice Bar aboard certain Norwegian Cruise Line ships. The entire bar (including seats and glasses) is made entirely from ice.

More cruises on the horizon

As many of the biggest cruise operators are expanding their fleets, cruisers now have even more choices. Disney’s current fleet of five ships is an example of an operator in the midst of massive growth.

Among the new ships to join Disney’s fleet include a Japan-based cruise, which is expected to launch in early 2029. Then in August 2024, Disney announced four additional ships, which are expected to be ready between 2027 and 2031. That means Disney’s fleet of five will grow to 13 by 2031.

The first of those new ships, the Disney Treasure, will take its maiden voyage in December 2024. The Haunted Mansion Parlor, which is a bar themed to the iconic theme park attraction, is among the ship’s most-anticipated features.

Carnival Corporation, the world's largest cruise company, also made waves this year when it announced a new ship would join its namesake Carnival Cruise Line brand. The ship, which is expected to be ready by 2027, marks Carnival’s first newbuild order in five years — suggesting the company is ready to invest after a pandemic-era lull.

Sure, the pandemic cast a long shadow over the cruise industry. But going forward, the industry appears to be full steam ahead.

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Arcadia September 2024

At a glance.

Learn about the gastrointestinal illness outbreak on the P&O Cruises ship Arcadia, including outbreak details and actions taken in response.

Outbreak Details

Cruise line: P&O Cruises

Cruise ship: Arcadia

Voyage dates: September 3–October 3, 2024

Voyage number: J415

Number of passengers who reported being ill during the voyage out of total number of passengers onboard: 65 of 1,959 (3.32%)

Number of crew who reported being ill during the voyage out of total number of crew onboard: 10 of 799 (1.25%)

Predominant symptoms: diarrhea and vomiting

Causative agent: unknown

Actions in response to the outbreak

In response to the outbreak, P&O Cruises and the crew aboard the ship reported the following actions:

• Made announcements to notify onboard passengers and crew of the outbreak, encourage case reporting, and encourage good hand hygiene
• Collected stool specimens from gastrointestinal illness cases for testing
• Increased cleaning and disinfection procedures according to their outbreak prevention and response plan

VSP is conducting a field response for an environmental assessment and outbreak investigation to assist the ship in controlling the outbreak.

Tips for healthy cruising

Learn how passengers can protect themselves .

More information

Gastrointestinal illness is a commonly used term for acute gastroenteritis (AGE). Cruise ships report cases that meet our case definition for AGE. We define a reportable case of AGE as:

• Three or more loose stools within a 24-hour period or what is more than normal for that person OR
• Vomiting along with one of the following symptoms: diarrhea, muscle ache, headache, abdominal cramp, or fever

Case totals

Cases reported are totals for the entire voyage. It does not mean all people are sick at the same time, such as when they arrive or leave a port or ship.

The Vessel Sanitation Program helps the cruise ship industry prevent and control the introduction and spread of gastrointestinal illnesses on cruise ships.

For Everyone

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