How Cruise Ships Make A Boatload of Money
The Business Behind The Cruising Industry
Ladies and Gents,
The random thought of the week is all about boats - Specifically cruise ships. If you’re anything like me (who likes big boats and cannot lie), the Lonely Island, or Captain Ahab, then you’re gonna love this week’s random thought. You see, cruising has become an increasingly popular industry and is on the verge of a boom after the pandemic. So, my friends, let's set sail and dive into the often corrupt and unethical ins and outs of the cruising industry.
It’s All About the Money
My friends, we must remember that the cruise industry is all about the money. The only reason why cruise lines care about bringing you a good experience in the first place is because they want you to come back and spend more money.
Today, post-pandemic, we see cruise ships selling almost suspiciously cheap rooms that allow you to cruise for a reasonable price. They do this because, like any good business, it’s the hidden fees that get you (those hidden fees really do a number on the 401K, am I right?).
The 34.2 billion dollar industry makes, on average, 62% of its total revenue from ticket prices and 38% from onboard purchases and fees (although this changes depending on factors such as attractions offered - casinos, high-end jewelry, etc). Because rooms are so cheap (coupled with post-pandemic demand), cruises are being filled to 105%-110% capacity (how that is legal…I have no idea).
Despite each cruise line having different fares, the average passenger will make $650 in onboard purchases. The average ticket fare (this was pre-pandemic, but we are starting to see rates return to normal) is about $1050 per cruise. After overhead costs and labor costs (cruise ships are notorious for dirt-cheap labor), a ship will make about $290 per passenger per cruise. With an average cruise ship holding about 3,000 people, I’ll let you do the math (for the smooth brains out there like me, that comes out to $870,000 per cruise). Of course, this price varies depending on the cruise line (cough, cough, flop cruise line Carnival, aka the Nicholas Cage of cruise lines).
Cruise Ship Mile Per Gallon
Little fun fact for those wondering about overhead and other costs for cruise ships. A cruise ship uses about 40 gallons per mile, which comes out to about 140-150 tons of fuel per day; one ton of fuel costs about $601 (insert political joke about gas prices here). Of course, like everything else, this varies depending on the ship. Largers ships can use upwards of 360 tons per day. This means that on fuel alone, larger cruise ships can pop $200,000 per day.
The Dark Side of The Cruise Line
Little do people know how evil the cruise industry is, and yes, just like the moon, OJ, and Snoop Dogg, there is a dark side (we often forget that Snoop Dogg was charged with double murder). The biggest problem with the cruise line industry is the labor, and although it varies from company to company, it’s a huge problem that often gets overlooked.
Cruise lines are often not based in the U.S. and therefore do not have to adhere to U.S. tax or labor laws. And while there are higher-paid staff members on a cruise ship (captain, director, etc), the average worker makes anywhere from $20/hour down to $2.75/hour.
If you think Amazon’s working conditions are bad, let me introduce you to cruise ship working conditions. It’s not unusual to work 16-18 hours a day for seven days a week. Bedrooms are often horribly small, and let’s be honest about the worst part about it: dealing with guests.
However, I don’t want to end on such a negative note; not everything about the labor is horrible. Many workers on cruise ships are from lower-income countries and send their wages home as remittance. Many times, working on a cruise ship provides significantly more money than any job they could find at home (a fact that still doesn’t outweigh the fact that cruise ship labor needs heavy regulation).
My friends - I hope you enjoyed this week’s publication. This is a completely free newsletter, so please share share share! If you have any suggestions for next week's newsletter, feel free to contact me!
The Truly Random Shower Thought:
When Sweden is playing against Denmark, the three letter abbreviation is SWE-DEN. The remaining letters, not used, are DEN-MARK.
Share this just for that mindblowing fact!
That’s all for this week my amigos. Make sure to stay tuned for next week’s post, but in the meantime, I’d like to end with a quote from two great philosophers, Bill and Ted. “Be excellent to each other, and party on dudes!”
All The Best,
H.R. Berry
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