Source: Cruise Market Watch. Note: Excursions only cover those organized by the cruise line. Note: 2018 figures; financial breakdown of typical cruiser worldwide (across all cruise lines); average cruise duration: 8.0 days; median duration: 7.0 days.
While in 2018, the average revenue was about $1,791 per cruiser, the associated expenses were $1,562, implying a profit margin in the range of 12-13%. At the beginning of the decade, these percentages stood at 77% ($1.663) and 23% ($1.485), respectively, indicating that upgrading onboard amenities provides higher yields to cruise lines. The breakdown of revenues and expenses has the following characteristics:
- Revenue. The base fare paid by the average cruiser accounts for 72% of the revenue, implying that cruise lines are able to generate an additional 28% revenue tranche with onboard services, such as gambling, excursions, drinks, and personal services. Additionally, cruisers are spending on goods and services at ports of call, which are not accounted for here.
- Expenses. The main expenses related to the ship operations include port fees and taxes (often levied per cruiser), ship maintenance, fuel (12%), payroll (13%), food & beverages, and the provision of onboard services. A standard cruise package includes food services as well as onboard services such as shows. Since the booking of ships is a marketing-intensive activity involving advertisement, agent commissions account for a notable share of expenses (15%). Cruise ships are capital intensive (a ship carrying 3,500 passengers costs more than $800 million), with approximately 15% of the expenses related to servicing the debt contracted for their purchase.