How Much Does Royal Caribbean Actually Make Per Passenger?

Royal Caribbean Group posted their Q1 earnings a few weeks ago, reporting $4.5 billion in total revenue, with about $1billion of that in net profit.

That got some cruisers looking into the numbers and wondering what those profit margins look like on a passenger-by-passenger basis. In other words, how much money does Royal Caribbean actually make per cruiser?

A recent social media post breaking down how much Royal Caribbean Group (RCL) profits from each cruise passenger has been getting some attention.

Some people are looking at the math and arguing that cruise lines actually lose money on the initial fare price, saying they rely almost entirely on onboard spending just to make a buck.

Others pointed out some creative pricing tactics, like keeping daily gratuities separate from the base fare, which can hide the real cost of the original price of the cruise.

But what do the actual numbers say? If you look directly at Royal Caribbean’s audited, full-year SEC earnings reports, the math tells the entire story.

The Individual Passenger Breakdown

To find out how much money an individual passenger on average generates for the company, you have to divide the company’s revenue by the actual number of humans who stepped onboard.

Across all of Royal Caribbean Group’s brands (which includes Royal Caribbean, Celebrity Cruises, and Silversea), the company carried exactly 9,446,010 passengers over the fiscal year.

During that time, the company pulled in a total revenue of $17.935 billion and reported $4.268 billion in net income after all expenses were paid.

When you divide those numbers down to a per-passenger level, here is exactly where the money goes:

• Passenger Ticket Revenue: $1,299.91 – This is the average amount a passenger pays just to book their cabin.
• Onboard & Other Revenue: $598.77 – This is what the average passenger spends on things like drink packages, Wi-Fi, the casino, spa treatments, and shore excursions.
• Total Revenue Collected: $1,898.68 – This is the total amount of money Royal Caribbean gets out of each person, combining the ticket and onboard spending.
• Total Overhead & Operating Expenses: $1,446.85 – This is the per-passenger cost of operating the cruise ship, including fuel, food, crew payroll, marketing, and a ton of other stuff.
• Pure Net Profit: $451.83 – This is the profit left over for Royal Caribbean Group.

Royal Caribbean clears about $452 profit for every single passenger that boards their ships.

If you take a family of four on a week-long sailing, the company walks away with about $1,800 in profit after every ribeye steak and drop of fuel is paid for.

Of course, this is on average, and that number is considerably higher with a brand like Silversea.

Do They Really Lose Money on the Fare Price?

The Reddit post claimed that because the average cost to run the business per passenger ($1,446.85) is higher than the average ticket price ($1,299.91), Royal Caribbean is technically losing about $147 the moment you book your vacation.

But the “cost per passenger” includes corporate expenses, depreciation, and loan payments. Those expenses exist whether a specific cabin is empty or full.

The actual cost of adding you to an empty stateroom is pretty low and your fare easily covers that.

But one thing is true: Royal Caribbean (and other cruise lines) don’t get their profit from the fare price alone.  The base fare price is aggressively low so that cruise ships can fill every cabin on every sailing.

Royal Caribbean’s capacity hovers around 108% because rooms are regularly filled with third and fourth passengers.

The extra revenue comes from the extra stuff.

The Power of the Captive Audience

Once the ship leaves the port, you are a completely captive audience for the next 7 days. Something I gladly welcome on every cruise by the way.

As the numbers show, the average cruise passenger drops $598.77 on onboard extras. That is nearly half the price of the original cruise ticket itself.

Even better for the cruise line, onboard revenue is high margin. When you purchase a $14 beverage, pay for a Wi-Fi package, or book a specialty dining experience, it’s mostly gravy for the bottom line.

According to Royal Caribbean’s earnings data, nearly 50% of all onboard revenue is now booked pre-cruise through their digital apps and websites.

By the time a passenger even packs their bags, they’ve already paid for their drink packages and shore excursions.

So, while some might complain about the extra costs associated with cruising, it’s those onboard expenses that keep cruise lines profitable and allow us to enjoy incredible vacations.