Typically I primarily cover airlines and hotels, though it’s also interesting to see how the luxury cruising space has evolved, especially in partnership with the major hotel groups. In late 2022, we saw the launch of Ritz-Carlton Yacht Collection, and in the coming years, we’re going to see Four Seasons and Aman also get into cruising.
I’ve never really looked much into the financials of cruise lines, though Bloomberg has an interesting story about Ritz-Carlton Yacht Collection’s struggles, which couldn’t help but catch my eye (thanks to You Are Travel for flagging this)…
In this post:
Ritz-Carlton Yacht Collection not meeting projections
Ritz-Carlton Yacht Collection isn’t publicly traded, but instead, 55% of the company is owned by private equity firm Oaktree. Let me emphasize that the connection to Ritz-Carlton is primarily just about marketing, as it’s not like Marriott owns the cruise line, or anything.
Roughly a year ago, the company had its initial bond offering. In recent weeks, the $300 million of senior secured notes that were issued have sunk by around 16 cents on the dollar. This follows a June 13 call with bondholders, where the company indicated that it now wasn’t projecting profitability until 2027.
That wasn’t the first sign of trouble, as the company’s 2024 financial statements also raised some concerns. At the time, the company stated it would require an additional $440 million from shareholders, $312 million of which was needed before the end of June 2026. This is on top of the $63 million that has been pumped into the business so far in 2025, and around $630 million injected at the end of 2024.
Ritz-Carlton Yacht Collection cruises are pricey, so what’s causing the profitability issue? The problem seems to be occupancy. The company had estimated that it would reach 85-90% occupancy levels by 2026. With occupancy levels at around 50% during the first quarter of 2025, those levels are now unlikely to be reached before 2028 or 2029.
The company has just launched its third ship, so is growing at a fast pace, with the number of available rooms growing by 148% year over year. To go along with this, marketing spending has roughly tripled between the first quarter of 2024 and first quarter of 2025.
Are these growing pains, or is there a bigger problem?
Admittedly it can take any business time to ramp up operations and become profitable, especially with the pace at which Ritz-Carlton Yacht Collection is growing. However, it’s clear that the business isn’t performing to projections, and capacity in this segment is only going to increase more, as brands like Four Seasons and Aman also take to the seas, with competing products.
It makes me wonder if there’s a bigger issue with the market they’re going after. Cruising is of course an incredibly popular way to vacation, and my general impression is that the typical guest profile fits into one of three primary categories:
- The more “mainstream” and upscale cruise lines offer relatively affordable and easy vacations, and I can completely see the appeal
- The ultra luxury cruise lines are largely targeted at an older crowd, who enjoy the cruising lifestyle, have the money to pay for it, and are incredibly brand loyal
- Then you have the whole world of expedition cruising, for places that can’t otherwise easily be explored by land, like Antarctica, which has wide appeal across demographics (though sometimes they’re not kid friendly)
I think the question is, how big is the market of people who are willing to pay top dollar for a luxury cruise, outside of those typical demographics? In the cases of these hotel-branded ventures, it seems like they’re almost positioning themselves as cruise lines for people who wouldn’t typically cruise.
Yes, I think a lot of people might give this a try once, but will they continue to vacation this way? As I see it, there are two major issues:
- I think these cruise lines are largely targeted at affluent families, and that’s a tricky demographic if you’re aiming for 85-90% occupancy, since most people aren’t going to take their kids out of school for a cruise
- Especially on the high end, travel is more about “scene” than ever before, and no matter how well a cruise line is branded, I don’t think many people are willing to replace their annual “see and be seen” pilgrimage to Saint-Tropez, Mykonos, Ibiza, etc., with a cruise
Anyway, I’m curious to see how this sector evolves over time, especially with the amount of capacity currently being added. It’s one thing if Ritz-Carlton Yacht Collection had the market to itself, and could now spend the next few years building up demand for its products. But in reality, we’re now going to see even higher end competitors enter the market, trying to poach some of those same customers.
Bottom line
Ritz-Carlton Yacht Collection launched operations in late 2022. I can’t say I’ve put much thought into the company’s financials, though it’s interesting to note that the business doesn’t seem to be doing too well financially.
The company now doesn’t expect to be profitable until 2027 (and that in and of itself might be a fanciful projection), as occupancy levels earlier this year hovered around 50%, while the company is aiming for 85-90% occupancy levels.
This market will only get more competitive, with Four Seasons and Aman branded competitors soon taking to the seas as well.
What do you make of this sector of the cruising industry, and how do you think it will evolve?
They hold their pricing no matter what, and since they really don't offer anything more than Silversea or Explora Journeys, who do offer price reductions, they can't compete.
I’ve just done my first cruise with RC, also our first cruise ever, and we thought it was an incredible experience. I’d say that feedback from others on board that we talked too was similar. Our ship had 200 guests, which was 75% capacity and the most regular comment was ‘you’ll never want to cruise any other way’ as the service on board and overall experience was very good. Yes it’s expensive but we thought...
I’ve just done my first cruise with RC, also our first cruise ever, and we thought it was an incredible experience. I’d say that feedback from others on board that we talked too was similar. Our ship had 200 guests, which was 75% capacity and the most regular comment was ‘you’ll never want to cruise any other way’ as the service on board and overall experience was very good. Yes it’s expensive but we thought they were good value and we’re planning to cruise with them again
I don't think the issue is with the luxury market, but with the fact that Ritz Carlton's product has nothing to distinguish it from competing brands. Further I think tying a cruise line's marketing with that of a hotel group is actually a negative: prospective guests are not looking for a bland hotel experience. As to Four Seasons, I find their business plan to be a prescription for failure. (I never could understand why Ben...
I don't think the issue is with the luxury market, but with the fact that Ritz Carlton's product has nothing to distinguish it from competing brands. Further I think tying a cruise line's marketing with that of a hotel group is actually a negative: prospective guests are not looking for a bland hotel experience. As to Four Seasons, I find their business plan to be a prescription for failure. (I never could understand why Ben and Ford had planned to book one of Four Seasons inaugural sailings, unless Ford had a exceptionally low travel agent fare, though assume with a new infant that plan has been scrapped). The strong brands in the luxury category, including Seabourn, Regent and Silversea) have loyal followings and with an aging population, including many in the upper income brackets, thei futures look good. (Personal note: I would never recommend Crystal and don't have trust in their ownership).
We took a cruise with them this past January on their newest ship. We have cruised on Windstar about 10-15 times. They are about 3x expensive as Windstar. On the plus side, the food, rooms, and onboard experience was incredible. It was like staying at the Ritz in Beaver Creek, or NYC. Where they need a lot of work is with their excursions. The excursion choices were pretty weak, and they try to supplement that...
We took a cruise with them this past January on their newest ship. We have cruised on Windstar about 10-15 times. They are about 3x expensive as Windstar. On the plus side, the food, rooms, and onboard experience was incredible. It was like staying at the Ritz in Beaver Creek, or NYC. Where they need a lot of work is with their excursions. The excursion choices were pretty weak, and they try to supplement that with "get a private car". They should look to Windstar (or Disney) for how to offer a complete range of quality excursions.
They don’t work well with agents, pricing is hard to get, they are expensive for what they offer. Not a surprise.
Orient Express is also joining the Yacht trend and the pictures they have shared, it looks beautiful
I'm going to guess that the market for this price point of cruise is brand loyal. Be it Seabourne, Silversea, Ponant.
I'm just kind of surprised some private equity firm thought this would be a good idea for an investment. The initial investment is massive, the operating costs massive. It must be years before you see a return. versus good ole fashion real estate. Not that it's easy, but the horizon is much shorter.
I have an unrelated question: for those commenting and saying things like "I'm affluent," how much does it take to make such an assertion? I think of myself as, fortunately, well off compared to others- but i don't think I ever did or would describe myself as affluent. Very curious...
Interestingly, Four Seasons is well on their way to launch into this exact same space - the supposed loyal luxury hotel guest whom will transition over to also adding in hotel group branded yacht voyages.
Given the challenges faced by RCYC, and the lacklustre guest count to berth ratio, I find it even more eye raising that Four Seasons expects to enter this market with even higher per day pricing than RCYC - while not...
Interestingly, Four Seasons is well on their way to launch into this exact same space - the supposed loyal luxury hotel guest whom will transition over to also adding in hotel group branded yacht voyages.
Given the challenges faced by RCYC, and the lacklustre guest count to berth ratio, I find it even more eye raising that Four Seasons expects to enter this market with even higher per day pricing than RCYC - while not actually including any meals (other than perhaps breakfast for some guests) or any cocktails, wine or alcoholic beverages! The proposal seems crazy to me, but Four Seasons Yacht will add yet more capacity in this already stretched market I feel.
Given that additional relative newcomer in the luxury voyage space Explora Journeys - a passion project of the very wealthy Aponte family with deep ties to the MSC Shipping empire - is also aggressively growing in the luxury ocean space and also targeting "hotel and resort/non-cruise type travellers" - Explora is also having to work hard to build the necessary minimum guest count average per voyage, despite massive marketing, sales engagement and the huge backing from the various MSC cruise and cargo shipping components of the organization.
This market segment is under pressure and capacity growth is (currently at least) outpacing demand.
I’ve taken numerous 6 star cruises and have considered RC a handful of times but their itineraries are completely uninspiring and their prices are literally double similar itineraries on competitor lines (such as Seabourn and Silversea). They should invite cruisers who haven’t been on RC to show proof of a competitor’s cruise taken within the past 24 months and give them a chance to try RC for half off or something. The top cruisers (like...
I’ve taken numerous 6 star cruises and have considered RC a handful of times but their itineraries are completely uninspiring and their prices are literally double similar itineraries on competitor lines (such as Seabourn and Silversea). They should invite cruisers who haven’t been on RC to show proof of a competitor’s cruise taken within the past 24 months and give them a chance to try RC for half off or something. The top cruisers (like flyers) can be fiercely loyal and may not bother to try unless there is a big reason to do so.
they’re not doing well bc the service is abysmal. also you can’t compare to other cruise lines since it’s a yacht and is affordable for those who want to go on a yacht but can afford their own.
Then start calling at yacht ports not right next to Royal Caribbean.
They may call it a yacht, but the vessel capacity is around the same as the other luxury/ultra luxury cruise lines. I'm guessing it's just a branding thing.
It seems to me that they are mass marketing a niche product to a small group that will never be willing to support it at the volumes needed for survival.
As for cruising itself, I’ve been on more than a dozen of the lower end labels, although thankfully NEVER on a Carnival, and I could never go back. The necessary BS needed to get to the ship, get on board, deal with the “others” and...
It seems to me that they are mass marketing a niche product to a small group that will never be willing to support it at the volumes needed for survival.
As for cruising itself, I’ve been on more than a dozen of the lower end labels, although thankfully NEVER on a Carnival, and I could never go back. The necessary BS needed to get to the ship, get on board, deal with the “others” and then the reverse at the end of the scripted week which will be punctuated by a return flight and the unpleasantness of airports is enough for me to say, “No Thank You”.
It seems like it's directed at the affluent, but unimaginative. RC (like Explora) just goes to the same cruise destinations as other cruises. So sure, I'm on a nicer ship, and the food is better, but I'm surrounded by bunch of people wandering around like a dummy on Antigua for an afternoon, then the next day I'm surrounded by a bunch of people wandering around Grand Cayman like a dummy for an afternoon.
For most...
It seems like it's directed at the affluent, but unimaginative. RC (like Explora) just goes to the same cruise destinations as other cruises. So sure, I'm on a nicer ship, and the food is better, but I'm surrounded by bunch of people wandering around like a dummy on Antigua for an afternoon, then the next day I'm surrounded by a bunch of people wandering around Grand Cayman like a dummy for an afternoon.
For most people paying for this, there's nothing stopping them from going to Antigua or GCM, and probably flying there up front. Being on a floating all-inclusive resort is what isn't appealing. The same thing could be said about the Med. If you want to visit the Med, then just go visit the Med... And you can even have a glass of wine ashore after 7:00 PM if you want to!
Absolutely agree. We thought about a six months cruise, but when we realised what you have said here, we opted not to. We'd go crazy.
Did anyone else go to the site? https://www.ritzcarltonyachtcollection.com/
It says "Request Pricing" for every adventure.
Even though my husband and I are affluent and childfree, "Request Pricing" is off putting to me. I wouldn't investigate further. I wonder if this kills more sales than they know. Otherwise I would be interested in this style of cruising.
Couldn't agree more. And when you inquire, they hammer you with marketing
You probably work for Crystal?
Trying to discredit competitors?
It says "Get a Quote" right after it says "Fares from $xxxxx".
Never quote unquote "Request Pricing" anywhere.
Some gay influencers on free Ritz cruise now. Its meh. Nothing looks that special and ship does look little empty.
I suspect RC is having trouble competing with luxury offerings from mainline cruises. You bring up affluent families - which is a perfect example. A ship that size cannot have the entertainment options for kids to compete with several mainline companies. Those companies then provide exclusive areas and private services to attract affluent travelers - oftentimes still at a lower price point than what RC is asking.
To me, I imagine RC as a next...
I suspect RC is having trouble competing with luxury offerings from mainline cruises. You bring up affluent families - which is a perfect example. A ship that size cannot have the entertainment options for kids to compete with several mainline companies. Those companies then provide exclusive areas and private services to attract affluent travelers - oftentimes still at a lower price point than what RC is asking.
To me, I imagine RC as a next gen Odyssey or Viking and, frankly, skewing very old for its demographics (beyond the diehard Bonvoy loyalists)
Fully agree with this. In a parallel to airlines, this is equivalent to business class, and, instead of having a plane with only business class (a model that has been tried and largely failed), it's much cheaper to have one large jet with both economy and business.
Similarly, mainline cruises nowadays have pretty nice luxury offerings, upto and including private pools, restaurants, sun decks, and other amenities, while still having access to the rest of...
Fully agree with this. In a parallel to airlines, this is equivalent to business class, and, instead of having a plane with only business class (a model that has been tried and largely failed), it's much cheaper to have one large jet with both economy and business.
Similarly, mainline cruises nowadays have pretty nice luxury offerings, upto and including private pools, restaurants, sun decks, and other amenities, while still having access to the rest of the ship. For many -- especially families -- that's a better option (not to mention cheaper), than a smaller boat that's all luxury where the kids will get bored very quickly.
IMHO, this luxury line (and likely ones like Four Seasons and Aman) fall into an uncomfortable middle: you can get better value for your buck by getting a luxury cabin on a mainline ship, or, if you're willing to pay RC prices, you might as well spend just a little more and charter a yacht.
They’re just way too expensive for the little improvement they offer over existing luxury lines. Also, poor itineraries for having such an able/small ship.
Funny how this ties into your recent airline startup post. Most of the major lines have gone all-in on the “ship within a ship” concept. Gets both segments of the market and promotes buy-up opportunities that are sticky. Once you go “Yacht Club” or “Haven” it’s hard to go back,...
They’re just way too expensive for the little improvement they offer over existing luxury lines. Also, poor itineraries for having such an able/small ship.
Funny how this ties into your recent airline startup post. Most of the major lines have gone all-in on the “ship within a ship” concept. Gets both segments of the market and promotes buy-up opportunities that are sticky. Once you go “Yacht Club” or “Haven” it’s hard to go back, but you still have the large ship choice of entertainment/activities that a RC size ship simply cannot provide
Very good summary. MSC brought their Yacht Club concept to a whole new line which is not much different than RCYC at a fraction of the price, building loyalty in the process and aligning it firmly in a certain segment with thoughtful partnerships (ie. Monaco Grand Prix).
Four Seasons has a brand loyalty and experience via their current yacht products and plane experience. RCYC to me piggy back on an aspirational brand which diluted...
Very good summary. MSC brought their Yacht Club concept to a whole new line which is not much different than RCYC at a fraction of the price, building loyalty in the process and aligning it firmly in a certain segment with thoughtful partnerships (ie. Monaco Grand Prix).
Four Seasons has a brand loyalty and experience via their current yacht products and plane experience. RCYC to me piggy back on an aspirational brand which diluted its value over the years. At the same price point in the hotel world for a "real" luxury experience, I go for FS, Rosewood and the likes and leave behind points hotel which have become "luxury factories" with limited incremental value.
Cruising is no different. they'll have some paying customer, but my take is that FS will be able to build what RCYC can't seem to be able to on the back of a "real" luxury value prop and brand equity, with other cash paying customer will be loyal to existing luxury cruise brands and their affiliates.
At some point have to wonder if they will be in business for future bookings. Cruisers often book a year or more in advance. The ships do seem well designed, and the vloggers make it look good. It would be nice to see them succeed, and have little doubt it's a upscale way to vacation and accessible cruise compared to the lines that appeal to an older crowd. It can be a fun way to vacation, especially with young kids.
If you compare RCYC destinations to other luxury operators' destinations, they are super-boring; Bergen, Reykjavik, Alesund, Lisbon etc. Seabourne, Scenic and others have much better destinations.
I don't know all the right category names but there's near luxury, luxury, and super high-end. A lot of choice. You can also do some of the massive suites on Celebrity, which have private outdoor space and pools/hot tubs, and you can have all the specialty dining in the cabin. Iconic Suite prices for some of the itineraries are $60K+, and while I know RC is a class above, at some point people with that...
I don't know all the right category names but there's near luxury, luxury, and super high-end. A lot of choice. You can also do some of the massive suites on Celebrity, which have private outdoor space and pools/hot tubs, and you can have all the specialty dining in the cabin. Iconic Suite prices for some of the itineraries are $60K+, and while I know RC is a class above, at some point people with that much money don't want to see other people when they go on vacation.
Seems like an unrealistic occupancy expectation. How's that occupancy and pricing compare to say, Silversea, Seabourn, or Ponant? Because I'd think that would be their target market they're trying to break into. Ponant is closest in terms of ship size I think, but at the end of the day you're still trying to attract the top end of the cruise market, not people with their own yachts.
"Pricey" doesn't equal profitability. A lot of debt was likely incurred to build these vessels. And competition in the luxury market is fierce, with lines such as Seabourn, Regent and Silversea having strong financial backing by parent companies, many years in the market, and strong passenger loyalty. The RC "Yachts" are unlikely to succeed long term and the ships will probably be acquired by an established line.
And, then, there are some of us who would choose a Disney cruise.
I completed my first RC cruise last month. Yes it is expensive but it was worth the price. Great service all around.
I'm definitely in the demographic they are targeting, and I have taken cruises on similar lines. However, Cruise Critic, where I do some of my research, has an average review rating of 3.4 out of 5 stars for the Envira. If I am spending top dollar, I want my experience to reflect the price. Until they are able to deliver a product commensurate with the price, I think they will continue to struggle.
Stock prices for mainline cruise companies are way up... so appears more an issue for ultra luxury segment
we took a Silversea cruise last year, which is supposed to be a top line. we werent wowed.
Virgin Voyages was struggling for awhile (and maybe still is)
They're not. Their ships are pretty full now.
Brand lotalty is a huge problem for them. I am a diamond elite with Seabourn, why would I try Ritz, without a status match for the same benefits I recieve now?
Ritz Carlton should host a season of The White Lotus on its ship. One little murder mixed with some unlikable, quirky personalities and they'll have full ships in no time! It worked for the Four Seasons!
The White Lotus made the upper middle want to stay at Four Seasons more but made the affluent go elsewhere because of these middle class people.
It’s an interesting segment for sure. As someone who has done several mainstream cruises over the past decade, I won’t be getting on one anytime soon. They are charging more and more while continuing to deliver less and less
I think MSC has an interesting option with their Explora Journeys line. It sits kind of in the middle of mainline and ultra luxury and I think can offer a better value as they are...
It’s an interesting segment for sure. As someone who has done several mainstream cruises over the past decade, I won’t be getting on one anytime soon. They are charging more and more while continuing to deliver less and less
I think MSC has an interesting option with their Explora Journeys line. It sits kind of in the middle of mainline and ultra luxury and I think can offer a better value as they are all inclusive.
Four Seasons I think is going to have an interesting go of it as it’s a big gamble with the prices they are asking for their itineraries.
"which couldn’t help but catch my eye (thanks to You Are Travel for flagging this)…"
Did it catch your eye, or not :)
Ricky Martin just posted after his cruise on a RC yacht in Europe with what seems like a small group of other people. Though not sure he contributed to revenue or just cost...
We took our first mainline cruise in 10 years Last year and it was meh. We have been intrigued by the ritz cruises but I just can’t stomach spending that kind of money to still be on a boat with a lot of people, albeit a smaller ship.