3 Reasons Why Cruise Lines Are All Private Islands

• Cruise lines are spending millions on exclusive private islands and marinas for their guests.
• These private Caribbean properties are cash trees for companies like Carnival and Royal Caribbean.
• Domestic destinations are becoming increasingly necessary amid rising fuel costs and port restrictions.

About 140 miles east of Miami, Royal Caribbean’s private Bahamas island, Perfect Day at CocoCay, welcomes thousands of eager families almost every day of the year.

The cruise line and its competitors don’t just have ships — they also have land-based portfolios. Throughout the Caribbean and in places like Honduras and Belize, almost every major cruise line has snapped up and developed beachfront properties exclusively for their guests.

For travelers, these isolated ports of call are convenient, safe and loved: “The vast majority of people love islands,” Patrick Scholes, a lodging and leisure research analyst at Truist, told Business Insider in March. Securities.

For cruise lines, they are cash cows. And now, perhaps more than ever, a necessity as operators seek profits amid rising operating costs and ever-constraining ports.

The industry is undergoing a private island renaissance

Cruise lines such as Princess, Holland America and MSC collectively own 17 ports and private destinations in the Caribbean (including properties still under development).

Michael Bayley, president and CEO of Royal Caribbean International, told analysts in 2023 that CocoCay had seen strong demand, including from repeat travelers. As such, the financial returns on the $350 million investment have been “extremely high and significantly above its target,” Royal Caribbean Group CFO Naftali Holtz said a few months ago.

Keeping in mind travelers’ appetites, the cruise giant has continued to expand its full Bahamas getaway.

The most recent expansion opened in January, adding the adults-only Hideaway Beach to CocoCay’s 14-slide water park, luxury beach club, massive pool and umbrella-lined beaches. Perfect Day Mexico is set to open in 2027.

Carnival is also growing its real estate portfolio — next with Celebration Key, a $600 million Grand Bahama Island resort slated to open in 2025, and expansions to its private Half Moon Cay a year later.

Private marinas have become a cruise line gold mine for three main reasons.

1. Fuel is expensive

Fuel is a major expense for the cruise industry. Fortunately, most private Caribbean destinations are just a night’s sail from Florida’s main ports.

Amid rising fuel costs, it’s easy to see why cruise lines are increasingly focusing their itineraries on these nearby stops.

In September 2023, Josh Weinstein — president, CEO and chief climate officer of Carnival Corp — called the upcoming Holiday Key a “win-win for the environment, our guests and the people of the Bahamas,” citing the property’s proximity to its ports. in Florida and subsequent reduced fuel costs.

It certainly could be a “win” for travelers: On the same call, he told analysts that a guest fuel surcharge “is certainly not off the table.”

Similar stories

2. Private destinations keep their profits in-house

These private marinas offer plenty of opportunities for guests to spend big. And without the need for third-party excursion operators, cruise lines can keep more profits at home.

Ahead of its debut, pre-cruise bookings for CocoCay’s new Hideaway Beach exceeded the company’s expectations, Jason Liberty, president and CEO of Royal Caribbean Group, told analysts in October 2023.

Admission can cost up to $89 per person during peak season. Nearby, entry to the most exclusive beach club can be triple that cost.

Even the otherwise complimentary parts of the island have tempting options, such as cabana rentals and snorkeling equipment.

Travelers content with a basic beach chair and buffet lunch don’t have to splurge on these loaded luxuries. But they’re certainly hard to resist, especially as cruisers have become eager to spend more on their vacations.

For families, skipping CocoCay’s water park can be as sacrilegious as skipping Disney World on an Orlando vacation, Scholes said. A day pass to Thrill Water Park can run over $100 per person—that’s more than $400 for a family of four in one afternoon.

3. Some popular ports are saying ‘no’ to giant cruise ships

The world’s largest cruise ship, Royal Caribbean’s Icon of the Seas, can carry 7,600 guests and 2,350 crew.

This sudden influx of travelers can overwhelm smaller destinations and their locals, such as the more than 25,000 residents of Santorini, Greece, and the 25,600 from Key West, Florida.

With concerns like pollution and over-tourism, it’s no wonder the popular Greek island limits daily cruise visitors, while its Florida counterpart has faced an uphill battle to limit cruise tourism.

They are not alone. Cities across the US and Europe have increasingly restricted travelers arriving by sea — either through size restrictions, daily visitor limits or outright bans. This includes desirable ports like Juneau, Alaska, French Polynesia and Venice, Italy.

Ironically, at the same time, mass-market cruise lines have continued to increase the size of their ships—so much so that some of these new mega-ships are now simply too big to fit in some ports.

So if you can’t beat the ports, why not join them? Especially if you can equip your private properties with dozens of profit-enhancing devices.