News Analysis: Too Many Cruise Ships in the Caribbean?

August 18, 2014

sailboats and surf boards on the beach in Grand Cayman

(1:35 p.m. EDT) -- On any given day, three to four cruise ships line the dock at the Port of Miami, nearly all bound for the Caribbean. Another five homeport 30 miles away in Fort Lauderdale, and nine homeport at Port Canaveral, farther north on the Atlantic coast. And let's not forget about other ports that send cruise ships south, including Norfolk, New York, Tampa, Galveston and New Orleans.

In the 2014 cruise season, 235 ships, with more than 367,000 beds sail Caribbean itineraries -- up from 212 ships in 2011, according to Cruise Line International Association. And 2015 looks to have even more Caribbean capacity, as 239 ships with a total of 378,256 beds are scheduled.

And that's great for cruisers.

The glut of ships this year forced many lines to drop their prices to fill cabins, particularly during the summer and fall low season. On Cruise Critic's Find-a-Cruise tool, eight-night Eastern Caribbean trips in September cost as little as $41 per night. A week on the world's biggest cruise ship, Royal Caribbean's Allure of the Seas, can be booked throughout the fall for less than $100 a night.

While that's good news for passengers looking for a bargain, those in the industry are a little less thrilled. "They say a bad day in Europe (revenue-wise) is better than a great day in the Caribbean," said Michelle Fee, cofounder of Cruise Planners/AMEX, one of the largest sellers of cruise travel in the U.S. "It's the No. 1 destination because it's a full-year itinerary, but we definitely see those times of year where, unfortunately, the rates are too low."

Adds Terry Thornton, senior vice president of itinerary development and port operations at Carnival Cruise Line: "All of the cruise lines will say the pricing we're dealing with in the middle part of this year was not something we were happy with."

Predicting capacity -- essentially how many ships are in a region -- is tricky business for competing cruise lines. Too many ships, and the prices go down. Too few ships, and prices could go up too high too fast, turning off core customers.

To regain traction and lure new markets, several cruise lines have announced they are moving ships out of the Caribbean in 2015. Carnival Legend is leaving Tampa for Australia, MSC Divina and Allure of the Seas are moving to Europe for the summer, and Royal Caribbean is moving its newest ship, Quantum of the Seas, to Shanghai.

For 2015, Carnival Cruise Lines is also focusing on basing ships in a variety of homeports so it can capture passengers around the country, Thornton said. Carnival Freedom will move from Fort Lauderdale to Galveston, for example, to draw the Texas and Midwest market. (Sister company Princess Cruises is making a similar move, placing Caribbean Princess in Houston.) Carnival Miracle will run year-round cruises on the Mexican Riviera, a strategic itinerary for people living in California, Arizona, Nevada and Washington, he said.

"We know that if we can get a ship close to a good-sized population base, the convenience and affordability helps us draw business," he said. Scattered homeports also draw first-time cruisers by removing a pricy obstacle -- the flight -- from booking, he said.

Still, for every ship that leaves the Caribbean, it seems a replacement isn't far behind. "Each and every cruise line has orders in for new ships," Fee said, noting that once Quantum leaves, sister ship Anthem of the Seas will be right behind it. (After its April 2015 debut in Southampton, Anthem will run Caribbean itineraries out of Bayonne for the winter season.)

That means prices are likely to remain about the same. Plus, customers should continue to look for the "value added" and all-inclusive packages that the cruise lines have been coming out with, Fee said. "Those are the best deals out there," she said.

Besides being a good deal, customers like value-added packages because it removes the feeling of nickel-and-diming, Fee said. And cruise lines like them because it keeps them from bringing their price tag too low; it's a strategy similar to what hotels used during the recession.

In the end, capacity issues tend to balance out, Thornton said. "There will always be ebbs and flows of capacity in and out of the Caribbean," he said. "We're trying to guess what's going to happen with very long lead times."

--By Chris Gray Faust, Destinations Editor