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The Truth About How Much Money a Cruise Line Makes From Each Passenger

Many people go on cruises because it’s an affordable way to vacation. Depending on the deal, you can travel the Caribbean for a week for as little as a few hundred dollars.

Of course, that’s just the base cost. While there are plenty of “freebies” included in your fare, there are charges for drinks… shore excursions… photos… and more. In fact, many people report that their total cruise cost can be double (or more) the base fare by the time they are done.

On the other side of the equation, cruise lines have to pay for port fees, millions of gallons of fuel, tons of food, and of course, those massive ships.

So it begs the question — how much profit do cruise lines actually make from a passenger? Well, Royal Caribbean just gave us an answer.┬áThe company just announced its second-quarter earnings to the public, and there are some interesting tidbits.

During the first six months of the year, Royal Caribbean earned a staggering $3.9 billion in revenue, from 2.56 million passengers. That means each passenger generated an average of $1,510 in revenue. About 72% of revenue comes from cruise fares. The rest from other sources, including onboard activities.

So how much does that mean in profit? Royal Caribbean earned a profit of roughly $164 million during the first six months of the year. That sounds pretty big, but it actually isn’t?

Divide that profit figure by the number of passengers, and you see that the line earned only $64 per person in profit. That’s about 4% of every dollar it earns in revenue.

ship-profit

To see all the numbers for yourself, visit Royal Caribbean’s investor relations here.

2 Responses so far.

  1. ricky tan says:

    so why build a cruise ship if is not profit

  2. Greg says:

    Actually a 4% net profit from any Fortune 500 company is about average.

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