🛳️⚓ Get ready to set sail on an economic adventure where we explore the bustling world of cruise ships and uncover the intricate economic principles that drive this multi-billion dollar industry. From pricing strategies and demand dynamics to the impact of global events on cruise tourism, we look at a lot of fascinating concepts behind multiple aspects of the cruising experience. The next time you consider embarking on a floating vacation, you’ll see the experience in a whole new light
In this episode, we discuss:
Competition across cruise ship lines Across Cruise Ship Lines
Affordability of cruises versus other vacation options
Price discrimination tactics in the cruise industry
Tax implications for American companies operating in the Caribbean
And a whole lot more!
Catch up on some old episodes:
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Some show notes:
Jadrian’s on a mission to clear some space in his beverage-packed fridge, and for this episode, he's reached into the back for a Peak IPA from Peak Organic Brewing Company in Portland, Maine. Meanwhile, Matt's staying true to his Damp January commitment well into February, opting for a non-alcoholic option whenever he plans to indulge in more than one drink. He's back with another Run Wild IPA by Athletic Brewing Company. Before kicking off the show, Matt also shares a summary of a fascinating WSJ article on the booming growth of non-alcoholic beers. Check it out here:
Our journey into the world of cruising was sparked by Jadrian's recent booking for the Bahamas Bowl cruise adventure, though last year's plans were derailed when the game relocated to Charlotte, NC. Jadrian set sail anyway, a testament to his love for cruising—a sentiment shared by Matt! Perhaps it's the abundance of fascinating economic examples on board that keeps them coming back for more.
As Matt gears up for an upcoming Spring Break cruise, he's eager to share some insider tips on scoring great deals. A blackjack aficionado, Matt's love of the game has earned him special perks, including $50 cruises for interior cabins on 7-night cruises! And that was enough to lead us to our first concept of product differentiation in the cruise industry—a crucial factor for both passengers and cruise lines alike. With each cruise line offering unique destinations and onboard experiences, they're all essentially selling the same product—a cruise—but with their own distinct flair.
Another fascinating concept onboard happens behind the scenes: specialization. Every crew member, from the chefs in the galley to the cabin attendants, is hyper-focused on their specific tasks. From preparing exquisite meals to delivering top-notch performances, each individual plays a vital role in ensuring the smooth sailing of the ship and the satisfaction of its passengers. Here’s a great video from Business Insider highlighting the specialization that occurs while you’re enjoying the pool and bar:
Matt and Jadrian also discussed the complex labor dynamics surrounding international workers aboard cruise ships. While some view the disparity in wages as exploitation, an economic perspective sheds light on a different angle. Many of these workers hail from countries where job opportunities and wages are significantly lower than those offered on cruise ships. Despite wages that may fall below U.S. standards, these opportunities often provide a lifeline to workers seeking better economic prospects for themselves and their families.
Another complex issue involves cruise ship registration and the debate surrounding regulatory compliance. While many cruise lines are listed in the U.S., most ships are registered in countries with lighter regulations. This practice has sparked criticism from some policymakers who view it as an unfair evasion of U.S. regulations. However, cruise ship companies argue that their vessels spend the majority of their time outside U.S. waters, making registration in other countries a more practical choice.
If you want to take another look at the economics behind cruises, Jadrian has published an article on
about Royal Caribbean’s newest mega-ship: Icon of Seas. It coves some of the same topics as we did here, but provides a slightly different perspective:
This week’s pop culture references:
Jadrian highlighted a clip from Brooklyn 99 where one of the characters (Charles) is going on a singles cruise and isn’t sure when to arrive at the airport. His friends tell him to show up 8 hours early just to be safe. There are some economic arguments against showing up early to a flight, and some even argue that if you haven’t missed some flights then you’re wasting time at the airport.
Matt’s pop culture isn’t connected to cruises but instead shared some scenes from Curb Your Enthusiasm. You can check out one example from Matt’s recent
newsletter:
The Economics of Cruises