Unable to beat back surging cruise demand, many U.S. hoteliers are looking to join their travel frenemies.
Many lodging companies are cutting deals with cruise operators so that both customers and cruise staff needing a place to stay on the bookends of their trips will be marketed to certain hotels.
Meanwhile, hotels in the largest United States cruise markets appear to have outpaced the overall U.S. industry when it comes to increased demand.
Additionally, companies like Hilton are tapping into potential cruise guests looking to a place to hang out for the day either before or after their cruise by making day-passes available to cruise guests who don’t need overnight accommodations.
“When you look at the waves of post-COVID recovery, there was initially hesitancy in that space, but they’ve seen a great uptick,” said Pete Sams, chief operating officer with Denver-based Peregrine Hospitality, which manages 92 resorts, including the Sheraton San Diego. “We’re seeing increased demand for that hotel from cruise travelers pre and post.”
For companies like Aimbridge Hospitality, which manages more than 1,000 hotels, wholesale agreements with cruise companies have helped business.
“We have partners with the major cruise lines for pre- and post- stays. Some may be through a wholesale provider, some may be direct with the cruise lines,” said Donnelly Maysey, Aimbridge's divisional vice president of sales for full service. “We’ve been able to expand in this area and use each other’s resources to gain more business in those areas.”
Hoteliers have been tasked with addressing a U.S. travel market where cruise demand has surged while lodging demand has flattened. North American cruise-passenger volume jumped 18% last year to 18.1 million, while more than a quarter of passengers between 2021 and 2023 were first-time cruisers, according to the Cruise Lines International Association.
Carnival Corp. & plc’s revenue for the year ended Nov. 30, 2024, jumped 16% from a year earlier to a record $25 billion, the cruise operator reported in December. Meanwhile, Royal Caribbean Group in November boosted its full-year earnings projections because of higher-than-expected demand.
“This has been an incredibly strong finish to a record year,” said Carnival CEO Josh Weinstein in a Dec. 20 statement. “Revenues hit an all-time high driven by a strong demand environment that we elevated throughout the year."
Meanwhile, the increase in revenue per available room at U.S. hotels last year flattened to 1.8%, as average daily rate rose 1.7% and occupancy was unchanged at 63%, CoStar reported. That RevPAR growth marked the slowest since the pandemic year of 2020.
“A lot of consumers are just really not happy with the price increase on the hotel side, and food and beverage is getting more expensive,” said Jan Freitag, CoStar’s national director of hospitality analytics. “People are looking for deals, so the all-inclusive nature of a cruise is attractive.”
Still, business with lodging nearest to the largest U.S. cruise ports appeared to outperform the U.S. market overall in 2024. Last year’s RevPAR at hotels within five miles of the Port of New York and New Jersey rose 9.7% from a year earlier, while hotels near the Ports of New Orleans and Tampa Bay had RevPAR gains of 5.6% and 5.2%, respectively, according to CoStar.
And while hotels within five miles of the Ports of Galveston and Miami had relatively modest RevPAR increases of 2.5% and 2.3%, respectively, those hotels still outperformed the overall U.S. market.
On the day-pass front, Hilton started its partnership with ResortPass last May. Under that platform, day travelers can access pools, cabanas, kids’ clubs and other amenities without committing to an overnight stay by booking day passes at hotels such as Florida’s Diplomat Beach Resort, Conrad Los Angeles or the Roosevelt New Orleans.
Sams, whose company’s cruise-port-adjacent properties also include the Clearwater Beach AC Hotel near Tampa, says the draw of on-site amenities pitched through the ResortPass program makes sense, given the larger contingent of cruise passengers that have gotten used to the type higher-quality on-site amenities on an upscale cruise ship.
“The elevated food and beverage, and the all-inclusive nature creates pressure on our industry to meet the bar,” said Sams. “So much of the resort game goes well beyond just room revenue.”
Moving forward, hoteliers will be either battling or cooperating with growing cruise capacity. Global cruise capacity is forecast to grow at least 10% between 2024 and 2028 as 56 ships totaling more than 127,000 lower berths are slated for completion, according to CLIA. Globally, the cruise-passenger count is forecast to increase 9.5% this year to 34.7 million and grow to almost 40 million by 2027. Among global destinations, the West Coast of the U.S. and Mexico grew by 24% in passenger volume between 2019 and 2013.
All of which bodes well for the hoteliers who cooperate with such a growing industry.
“We’ve seen not only more agreements, but requests for more inventory,” said Aimbridge’s Maysey. “They’re looking to find additional hotels to house those customers.”
(Updated on Feb. 28 to modify Aimbridge's portfolio of managed hotels in the sixth paragraph.)