To capture travel demand, Royal Caribbean focuses on shorter cruises and more experiences.

• To capture customers as travel demand increases, Royal Caribbean believes that shortening trips and filling them with activities and exclusive opportunities is the best approach.
• Utopia, the world's second-largest ship with a maximum capacity of nearly 5,800 passengers, is being brought to market by the cruise company. This ship boasts 13 pools, 21 dining options, two casinos, and many other features.
• CEO Jason Liberty informed CNBC that there is no part of the ship where they've observed a shift in their spending habits.

To attract American tourists, cruise lines are offering shorter trips and packing their itineraries with activities and exclusive opportunities.

"Royal Caribbean CEO Jason Liberty stated on CNBC's "Squawk on the Street" that the company has an experience-driven mindset, with over half of its guests being millennials or younger. About 42% of these guests plan to go on shorter vacation experiences in the next 12 months, according to a survey."

Royal Caribbean's Utopia, the world's second-largest ship with a capacity of nearly 5,800 passengers, offers customers 13 pools, 21 dining options, two casinos, and more. This is the second cruise ship Royal Caribbean has launched in just six months, as the demand for cruising post-pandemic remains strong.

"Liberty stated that there is no decrease in consumer spending behavior, whether it's planning vacation experiences in advance or on the ships, they continue to spend."

Royal Caribbean aims to enhance its competitiveness in the vacation market by considering alternative options, such as skiing, casinos, and theme parks.

"Liberty stated that when observing the activities of guests when they are not with us, they are heading to Orlando, Vegas, and all-inclusive resorts. The goal is to ensure that our experience, whether on the ship or at our private islands, is highly competitive with land-based vacation experiences."

Jamie Katz, Morningstar travel and leisure analyst, believes Liberty's approach to attracting Disney theme park travelers is successful.

"Katz stated that American travelers often face scheduling conflicts due to work and school, making it difficult to take a 6- to 8-day cruise. However, a three-day cruise offers more flexibility and options for customers."

Expansion plans

Introducing a new ship to the market allows you to increase your prices.

Patrick Scholes, travel and leisure analyst at Truist Securities, stated that historically, the pricing of a new ship is a 20% premium to existing ships across the industry.

Scholes said the Utopia price bump for Royal Caribbean could be even higher.

Liberty anticipates that higher pricing will persist in the second half of the year due to the "value gap" between cruises and land-based vacations.

Rival , too, has raised prices amid strong demand.

According to CEO Josh Weinstein, who spoke to CNBC after the company's recent earnings report in mid-June, there is no evidence of a consumer slowdown; instead, there is an acceleration.

While prices in the travel and hospitality sector are generally increasing, cruising remains one of the few areas where prices continue to rise sharply. Last week, it was revealed that prices were softer compared to the previous year. HSBC analysts predict that airfares will remain flat or decline in 2024 compared to 2023.

This week, a group of analysts and investors will set sail on Utopia of the Seas to examine what sets the cruise ship apart from its rivals.

Utopia is utilizing cutting-edge technology, specifically artificial intelligence, to reduce food waste by 30% to 40%. Additionally, the company is employing AI for dynamic pricing and smart management of customer data.

The cruise giants are not launching many ships beyond Utopia.

The biggest cruise ship in the world, Royal Caribbean's Icon of the Seas, has helped the company maintain the strongest order book in the industry.

Through 2025, Icon bookings are remaining robust, as stated by Royal Caribbean executives during their recent earnings call.

According to Scholes, the industry is expected to experience a 2- to 3-year period with a minimal number of ships coming online. Typically, the industry grows its supply by 5% to 7% annually.

The construction of a large cruise ship involves a significant amount of work. According to Wall Street analysts, it takes approximately 3 to 5 years to place an order and receive delivery of such a ship.

In the next six years, eight new ships will be introduced to the market by the company.

The company, which has been trading above its IPO price since going public earlier this year, plans to launch three new ocean cruise ships in the next three years, in addition to its existing river-based ships.