Cruise Companies Are Investing Billions in New Ships Piling Up Fresh Debt

Cruise companies are still continuing with their new vessel orders despite choppy waters in an uncertain consumer spending environment — and face the risks of piling on more debt.

Take Norwegian Cruise Lines, which is planning to invest $2.4 billion in ship construction-related capital expenditures for 2023, and anticipates the figure to be $500 million and $1.8 billion for 2024 and 2025, respectively. Royal Caribbean Group also sees approximately $4.1 billion in ship construction costs in 2023 and an aggregate total of $9.8 billion for all existing ship orders. Carnival Corporation expects contracted new-builds to be $1.8 billion for 2023, and is reshaping its investment spending outlook to scale back on capital expenditures.

The three major cruise lines, with $74 billion of debt combined, according to Bloomberg, face incoming competition from billionaires and hotels hoping to start their own fleets. Betting on the luxury tier and existing customer loyalty bases, these new entrants will be vying for a chunk of the premium market.

After scrambling to renegotiate credit terms and grabbing lifelines from governments and banks to stay afloat during the pandemic, cruise companies are now in a balancing act between paying off debt and rebuilding profit streams.

The industry was exposed for its wasteful practices and detrimental environmental impact