The Carnival Miracle cruise ship is anchored in the Pacific Ocean near Kailua Bay during a 15-day cruise, in Kailua-Kona, Hawaii, on Jan. 14, 2024.
Kevin Carter | Getty Images
The global cruise industry is reporting record demand and renewed consumer enthusiasm, but the leaders helming the world’s largest cruise companies say the sector is also facing some of the most complex challenges it has seen in decades.
“We are not an alternative vacation anymore. We are a vacation,” Carnival Corporation CEO Josh Weinstein said during a keynote panel Tuesday at Seatrade Global, a cruise industry conference.
As demand rises, passengers are getting younger; one-third of cruise travelers are now under 40, according to the 2026 State of the Cruise Industry report released by Cruise Lines International Association (CLIA). One-third of trips are multi-generational, often families traveling together. And nearly a third of cruisers take vacations by ship multiple times a year, according to the report.
The cruise industry hosted 37 million passengers worldwide last year and anticipates reaching 42 million annually by 2029, CLIA found.
“That mainstream demand sets us up very well for volatility,” Weinstein said.
A resilient business in an uncertain world
At least six cruise ships remain stranded in the Persian Gulf by the impasse at the Strait of Hormuz. One of them is the MSC Euribia.
Though roughly 1,500 passengers were safely evacuated amid Dubai airport shutdowns and missile warnings after the U.S. and Israel launched an attack on Iran in late February, there are still some crew on board to maintain the vessel.
“Obviously, we live day by day. The situation is very fluid,” said MSC Cruises Executive Chairman Pierfrancesco Vago during the Seatrade Global keynote.
Already the shutdown of marine traffic in the Strait has disrupted itineraries in the Middle East and southern Europe. Threats of blockades, mines on the sea floor and on-and-off-again negotiations are keeping cruise executives guessing about when they can move their ships.
“Morning is one thing, lunchtime is another, dinner is another again,” Vago said of the numerous and often conflicting announcements from government leaders. “We need to stay cool and actually be ready to move out as soon as the possibility and opportunity comes back.”
Despite these challenges, cruise executives argue the industry has never been better positioned to absorb shocks.
“Every crisis we’ve faced — financial, geopolitical or health-related — we adapted,” Carnival’s Weinstein said. “There’s no reason to believe it will be different this time.”
Fuel costs, sustainability and the push to use less
Fuel price volatility has once again put energy strategy front and center for the cruise industry, particularly for Carnival, which does not hedge fuel prices.
“Nobody asks us about hedging when prices are low,” Weinstein said. “But our strategy has been consistent: use less fuel.”
The cruise industry aims to have net zero emissions by 2050, but CEOs agree that they can’t achieve that goal solely by conserving fuel.
Industry leaders see biofuels, green methanol and synthetic liquid natural gas (produced by combining captured carbon with hydrogen) as the most promising solutions to meet their fuel needs.
Royal Caribbean Group CEO Jason Liberty said cruise lines are already investing hundreds of millions of dollars annually in technology and energy innovation, but availability of alternative fuels remains the bottleneck.
“It’s not about what we want to use,” Liberty said. “It’s about what’s scalable and available.”
“We’re going to have heavy competition with other sectors for those fuels as well. There’s no guarantee we get them,” added Bud Darr, president and CEO of Cruise Lines International Association.
Tailwinds for growth
Even as the industry navigates choppy seas, cruise companies are looking for their next avenues for growth.
Technological advances in artificial intelligence are being used to reduce food waste, plot routes and itineraries and increase efficiency. Cruise line executives say the most important application is to reduce friction in the guest experience.
“A more flexible work environment has been a big demand driver for us,” Liberty said. Most Royal Caribbean ships now host a Starlink connection for fast internet aboard.
Private destinations, the exclusive ports or islands owned or controlled by a cruise line, continue to be a priority for investment. Royal Caribbean, for instance, currently has three private destinations on its itineraries but will have eight by 2028.
It’s developing a major land-based hub in Puerto Williams, Chile, to reduce or eliminate the amount of time passengers to Antarctica have to spend transiting the punishing seas of the Drake Passage.
And the luxury segment, though a small percentage of the overall industry, is growing rapidly. Customers are increasingly interested in exploring health, wellness and longevity — and those trends are showing up in their vacation habits, too.
Smaller ships and river cruising accommodate specialized interests in eco-tourism, off-the-beaten path (not yet discovered by social media influencers) locales and culinary or artistic aficionados.
Social-media driven demand in tourism has also sparked backlash from some destinations, overwhelmed by the crowds. The cruise industry is working with destinations on what it calls managed, predictable tourism.
Vago said MSC worked with Dubrovnik, Croatia, for example, to coordinate the flow of visitors to the medieval town, which wants the tourism spending but without destruction of quality of life for residents.
“Many of these coastal communities actually appreciate that. We plan in advance. We create itineraries three years in advance,” Vago said.
“The strength of this industry is its ability to evolve without losing its soul,” Liberty said. “That soul is hospitality.”
Leadership change and fresh perspective
At Norwegian Cruise Line Holdings, the challenge for new CEO John Chidsey is righting the ship.
In his first earnings call, just days after taking the helm, Chidsey acknowledged the company had committed numerous missteps.
Margins are under pressure. Shares have been volatile. Critics have questioned a push to expand cruise itineraries in the Caribbean before Norwegian’s private island was fully completed.
Earlier this year, Elliott Investment Management took an activist stake in Norwegian, which may have provided impetus for the board to make a leadership change.
Chidsey told CNBC Elliott’s goals align with his own and that he intends to create a culture of accountability and urgency where teams are working together rather than separated into silos.
The Seatrade conference was a cruise industry debut for Chidsey, formerly the CEO of Subway, Burger King and Avis.
When asked what a “sandwich guy knows about cruising,” Chidsey didn’t miss a beat, insisting he’s a “turnaround guy not a sandwich guy.”
“I knew nothing about fast food when I went there. I think having a fresh set of eyes is really what Norwegian needs. And it’s all about execution,” he said.
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