Cruise Lines Invest in Private Destinations to Boost Revenue and Attract Travelers

Major cruise operators are investing millions of dollars into their own private destinations, filled with excursions, beaches, bars, and restaurants. This trend began with Royal Caribbean Group’s “Perfect Day at CocoCay” in The Bahamas, which has proven to be a successful business move. By operating their own private destinations, cruise operators like Royal Caribbean can increase revenues by avoiding passenger fees and government taxes.

Royal Caribbean’s investment of $250 million in renovating CocoCay has paid off, with a 41% increase in third-quarter expenses and a 48% rise in ticket revenues since its opening in 2019. Competitors Carnival Corp and Norwegian Cruise Line Holdings are now trying to replicate this success. Private destinations are driving significant returns for cruise companies, attracting a record number of travelers with three- and four-day itineraries.

The rise in direct bookings allows Royal Caribbean to save on commissions, which are typically 10% to 20% of the ticket price. The company is planning to open three more private destinations between 2025 and 2027, with significant investments in Mexico and the Bahamas. This shift towards private destinations is impacting public Caribbean destinations, with some experiencing declines in cruise visits compared to pre-pandemic levels.

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