After rebounding from the COVID-19 pandemic with "revenge travel" driving strong growth, the cruise industry is facing new headwinds from the broader macro-environment and geopolitical pressures.
Financial analysts point to a return to more traditional growth rates while the luxury and expedition segments of the industry are taking on new importance to drive future growth.
The basic elements of cruising, a largely all-inclusive vacation that's hassle-free and offers an excellent value, remain in place and continue to gain traction with travelers. Analyst Meredith Prichard Jensen at HSBC says, "The pillars of growth remain intact, led by durable experience-led demand, a boost from private destination roll-out, and a strong value equation for the budget conscious.”
She writes in a recent report that the industry “navigated through intermittent cross currents in 2025” and ended the year outperforming the S&P 500 and the broader travel segment.
STRONG START
Further, the industry has started 2026 with a bang. Analyst Robin Farley of UBS notes that one large U.S. seller told her "wave season” is off to a strong start, in line with expectations. Farley thinks the robust booking environment of late 2025 is carrying into 2026
It's a sentiment echoed by Steve Griswold, owner of travel agency Pixie Vacations, who says cruise bookings at his agency increased in 2025 and 2026 has already exceeded 2025. The major cruise companies have stated that they're well booked through 2026 and are now releasing itineraries for 2027.
“The outdated caricature of a cruise passenger as a retired shuffleboard player is rapidly fading thanks to savvy social media and influencer campaigns,” observes HSBC's Jensen. She notes that as much as a third of the bookings are from the “new to cruise” segment. The industry has adjusted its product to compete with land-based resorts and theme parks, adding more short cruises in the broad, mass-market segment known as contemporary cruising as well as in the premium segment. However, it will have to work harder to achieve growth.
Analyst Chris Woronka of Deutsche Bank says, “There might be a bit of fatigue setting in among cruisers who have been dealing with steadily rising prices on tickets, onboard extras, and shore excursions.” He sees growth continuing at moderate levels and looks for yield growth to be “much more 'normal' in 2026.”
Driving down costs and continuing to lower financial leverage remain key goals for cruise companies. They're using advanced revenue management capabilities and enhancing/refining loyalty programs, learning from the hotel sector. There's a greater emphasis on the pre-boarding spend and high-margin activities onboard.
OVERCAPACITY
One of the big concerns emerging among analysts is the potential for overcapacity, especially in the Caribbean in the near term.
Several major new ships came online in 2025, including the MSC World America (216,638 gross tons with 6,764 passenger capacity) at its Miami homeport and Royal Caribbean's Star of the Seas (248,663 gross tons with capacity around 7,600 passengers) in Port Canaveral, Florida. Star of the Seas and her sister ship, Icon of the Seas, share the title of the world's largest cruise ship.
Norwegian Cruise Line added Norwegian Aqua (156,300 gross tons with capacity for 3,571 passengers), and Celebrity Cruises added CelebrityXcel (141,420 gross tons with accommodations for up to 3,950 passengers). Only Carnival Cruise Line was more disciplined, not introducing a newbuild last year.
Homeports benefited with Port Canaveral becoming the world's largest cruise port, handling 8.6 million passenger movements in FY 2025 and eclipsing PortMiami, the longtime leader, which handled just under that number. Newer cruise ports, including Galveston, Texas (approximately four million passenger movements), also continued their rapid growth.
Supply in the contemporary segment (mass market) continues to be slightly higher than demand, says C. Patrick Scholes of Truist Securities. In his latest report, Scholes calls it a “slight though not extreme imbalance” but believes it's leading to higher levels of promotional activity, which could erode some pricing power and impact financial results, especially net yields, in the first half of 2026.
To offset some of the softness and keep more revenue in-house, companies are stepping up their investments in private destinations. Carnival Cruise Line opened Celebration Key on Freeport in the Bahamas and is enhancing existing facilities in Honduras, while Norwegian added a pier, pool, and other amenities to its Bahamas out island, Great Stirrup Cay. Royal Caribbean International is launching private beach clubs, including its first in the Bahamas.
$70 BILLION ORDERBOOK
Reflecting the longer-term positive outlook and the mass market potential, companies continue to order ultra-large cruise ships.
Both Carnival and Norwegian confirmed orders for their first 200,000-plus gross ton ships to be built at Fincantieri in Italy. MSC expanded its order for World Class vessels to eight at Chantiers de l'Atlantique in France while Royal Caribbean has the third, fourth and fifth ships of its Icon Class under construction at Meyer Turku in Finland.
While the majority of the new ships on order will be delivered by 2030, the orderbook extends to 2036 to lock in building slots.
A total of 75 cruise ships are on order, representing more than $70 billion in investment. Almost half the orderbook, 34 cruise ships, are for the mass market and will have nearly 165,000 berths. Despite the large investments, HSBC's Jensen notes the 2026 orderbook is running less than half that of 2019.
Analysts like Jensen see a measured pace for new ship deliveries and strategic decisions to rationalize capacity. Woronka points out that across all segments of the industry the new ships are larger, improving the operating economics, while predicting, "There will eventually be a fresh round of non-core ship retirements within the next three to five years.”
BRIGHT SPOTS
One bright spot for the industry is the continued growth in the ultra-luxury segment as well as expedition cruises to exotic destinations. Norwegian Cruise Line Holdings is at the forefront, ordering the first new class of ships in 10 years for ultra-luxury Regent Seven Seas Cruises – four 77,000 gross ton ships due by 2036 – while luxury brand Oceania Cruises has ordered five 86,000 gross ton ships due between 2027 and 2037.
There's a total of 32 luxury cruise shíps on order, but Scholes points out that while the high-end luxury segment is growing, demand remains at or slightly above supply.
“Expedition and yacht-style cruising is one of the fastest-growing segments we're seeing,” adds Henry Gilroy, Executive Vice President at Internova Travel Group. “Travelers are willing to pay more for exclusivity, access, and once-in-a-lifetime experiences.”
Internova, which calls itself one of the world's largest travel service companies, recently completed an analysis of millions of travel bookings and surveyed 4,000 North American travelers. The Internova Index revealed a significant broadening of traveler interest in high-end cruises.
“One-third of travelers surveyed expressed interest in luxury yacht cruises and expedition-style voyages, with demand particularly strong among affluent and adventure-seekers,” the group reports.
Michele D'Agostino, Co-Founder of Secret Atlas, expedition micro-cruise specialists, says consumers are trading up. He sees a “durable shift toward experiences that feel scarce, real, and story-worthy” and says in 2026 “authenticity” is a differentiator “because many travelers have become allergic to anything that feels staged.”
THE "LUXURY HALO"
"The growth in ultra-luxury and destinations extends to some river cruise itineraries as well. It's also not gone unnoticed by luxury hotel brands including Ritz-Carlton, Four Seasons, Orient Express, and Aman, all of which partnered to launch branded cruise ships.
HSBC's Jensen points to the “embracing of the luxury halo" as one of the core factors driving industry growth. She expects that the entrance of the luxury hotel brands could be an “outsized catalyst for sector expansion and evolution” and help to set new "aspirational pricing” for the luxury segment.
The hotel brands have strong loyalty programs to leverage with Jensen pointing out that approximately 70 percent of Ritz-Carlton Yacht Collection's first-year bookings were "new to cruise.” Four Seasons starts cruising in March, and Orient Express Corinthian enters service in June.
Despite emerging challenges, the outlook remains very strong for the cruise industry. Analysts highlight that the “propensity to cruise” remains high as well as the recognition of the value aspects of a cruise vacation. For all its growth, however, cruising is just a small portion of the large, leisure-time travel sector, giving it extensive opportunities for continued expansion. – MarEx
Allan Jordan is the magazine's Associate Editor.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.
