MW 'Cruising used to feel special.' Cruise lines were struggling even before the Iran conflict hurt stocks.
By Claudia Assis
Cruise stocks are among the S&P 500's biggest decliners since the Middle East conflict, and it's not just about rising fuel prices
A Carnival cruise ship in the San Francisco Bay. Some are saying that cruising doesn't feel special anymore.
Melissa Newman, a business professor who's an avid cruiser, is starting to see some cracks in the industry she loves: Some cruise-goers, including repeat travelers, are saying cruising doesn't feel special anymore.
That sentiment comes at bad time for cruise companies, which bank on their reputation for value and glamour but have had to win over travelers amid general economic anxiety. And their stocks have been among the biggest decliners since the start of the Iran conflict, on concerns that skyrocketing crude prices will push their fuel costs higher, and that geopolitical unrest may make some travelers think twice about going on a cruise.
For Newman, an associate professor at the University of Cincinnati who shares her cruise experiences online, the glamour may be starting to fade.
Cruise lines have spent the past few years "systematically" cutting down on their own value proposition, cutting inclusions, adding fees and shrinking the onboard experiences while raising fares significantly, she said.
Royal Caribbean $(RCL)$ said in its latest earnings report that 2026 bookings have been at "record rates," while Carnival $(CCL)$ said in December that its 2026 bookings were at "historical high" prices for both North America and Europe. Carnival releases its next earnings report on March 20.
"They've been moving away from the all-inclusive model at exactly the wrong moment," Newman said. "My audience talks about this constantly. Cruising used to feel special and premium almost by default, but that perception is genuinely eroding."
Also read: Royal Caribbean CEO explains why cruises are so popular.
The conflict in the Middle East is supercharging their dilemma, as the companies are facing much higher fuel costs and may have to increase prices further just as geopolitical worries may be making a dent on bookings.
Ships are fueled by bunker fuel, usually marine gasoil, heavy fuel oil or marine diesel. Prices vary by fuel type and by port in an opaque market, but by way of example, bunker fuel at the port of Rotterdam, Europe's largest, cost $724 per metric ton on Feb. 27, the Friday before the start of the war. They have jumped nearly 50% to $1,066 per metric ton as of Friday, according to OPIS pricing data.
Fuel is a cruise company's second-largest expense after labor; Norwegian Cruise Line Holdings $(NCLH)$, which reported earnings last week, said fuel was equivalent to 9% of its revenue last year (labor and payroll expenses were equivalent to 19% of its revenue) and warned about a fuel-cost hit.
The recent weakness in cruise stocks appears to be about more than just fuel-price worries, as crude oil futures (CL.1) dropped 11% on Tuesday, but the cruise stocks were also falling.
There are also fears that geopolitical concerns will put a potential damper on the excitement of a cruise. Most cruises, with the exception of shorter, closer-to-home sails, are booked several months in advance - the more exclusive the destination, the farther back reservations generally are made.
Mexico destinations have suffered from the recent news of drug cartel-related violence, and the widening conflict with Iran is casting a shadow on Mediterranean and Middle Eastern destinations.
Dana Newbauer, who lives in the Philadelphia area, is soon sailing with this wife on a Regent Seven Seas cruise to Portugal, Spain and Morocco. Newbauer booked the trip almost a year ago, when the couple were fresh from a cruise to Alaska. Norwegian Cruise Line is the parent of the luxury Regent Seven Seas brand.
A retired engineer who traveled frequently for work, Newbauer considers himself an experienced traveler. Between packing passports and sunscreen, he has been checking the State Department travel advisory pages often, which lists Morocco as a level 2 risk - exercise caution.
"We are still going to go, but we are going to be very careful," he said. If the trip were to be any closer to the Middle East, Newbauer said they probably wouldn't be going, and friends had their cruise to Egypt and Jordan canceled by the cruise company as soon as the war started.
"We are realists, but we are not worrywarts either," he said. "We are going to be looking around, and we are staying with the group, not going on a side street, and not gather unnecessarily."
On top of that geopolitical unease, there's the broader economic anxiety that Americans are really starting to feel - market volatility, tariff uncertainty and general worry about the future, Newman, the University of Cincinnati professor, said.
"You have a consumer who is being asked to make a large, forward-looking discretionary purchase at a moment when they're feeling least confident doing so," she said. "I don't think this is purely a geopolitical story. I think the geopolitical moment is accelerating a reckoning that was already building."
For the cruise companies, fare pricing has held up, although the industry is starting to see some price softness in regions where there's excess capacity, such as the Caribbean, said Jaime Katz, an analyst with Morningstar. Prices to more exclusive destinations are holding up better, she said.
For the most part, "you have slowing price growth but the demand is still there," she said. Cruises still are value plays - passage, room and board and entertainment remain usually more expensive on land than on a cruise.
That value resonates with consumers that may be feeling a little cautious, but if economic uncertainty and geopolitical unease go on, would-be travelers could feel more nervous and pull back in their spending, including cruises and other vacations, she said. And, unlike the airline industry, which sees support from business travel, cruising is entirely a discretionary purchase.
Patrick Scholes, an analyst with Truist, said that the industry may not have been "quite as strong as many people wanted it to be" to begin with. Cruise companies, and their stocks, have benefited from stable demand and stable fuel prices for a number of years, he said.
"People got a little complacent that fuel would always be $56," and didn't have to think about fuel prices in the past few years, he said. The war with Iran is a reminder that the companies operate in very volatile environment. "All of a sudden, it's risk on," he said.
Norwegian and Royal Caribbean actively hedge their fuel costs through financial derivatives, but that strategy is not without cost or risk. Carnival does not hedge its fuel.
Rising fuel costs will certainly pressure earnings, but because travelers sometimes book trips a year or more out, some of the effects of current issues might not show until later this year.
Carnival has the most exposure to Europe, since it owns brands such as Cunard and Costa that cater to European travelers. Norwegian is the company that most Americans going to Europe use, and has seen the bigger impact from past global events, Scholes said.
Americans can become "skittish" fast, Scholes said. During the 2015 Paris attacks, for example, some pulled back on Norwegian-branded cruises, he said.
Crude futures were down 11% to around $83.45 a barrel on Tuesday, but rallied close to $120 a barrel on Monday before paring gains on hopes that developed countries could decide to release crude reserves. U.S. gasoline prices, meanwhile, have surged.
Shares of Norwegian have dropped 16.7% so far in March through recent afternoon trading on Tuesday, to make them the S&P 500 index's SPX fourth-worst performer from the start of the Iran conflict on Feb. 28, and Carnival's stock has shed 16.6% this month to be the benchmark index's fifth-biggest decliner. Royal Caribbean shares have slid 7.9% in March.
The S&P 500's top loser this month was Paramount Skydance's stock $(PSKY)$ with a 23.3% drop, as some of the financing the company lined up to acquire Warner Bros. Discovery $(WBD)$ comes from Middle Eastern sovereign-wealth funds, and AES Corp.'s stock $(AES)$ was second with a 17.6% drop after it announced plans to sell itself at a deeper-than-expected discounted price.
Charles Passy contributed.
-Claudia Assis
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 10, 2026 16:40 ET (20:40 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments