Royal Caribbean bets its future on one big idea

Royal Caribbean knows how to make people happy. It has mastered building the cruise ships people want that take them to destinations they're happy to be in.

And while the cruise line has said it plans to eventually build some smaller ships to replace its aging hardware in that area, that's not the company's core business. Royal Caribbean builds mega-ships where the ship is the destination.

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Nobody spends the money to board its newest ships Icon of the Seas and Utopia of the Seas because they stop in Nassau. They're paying a premium for those ships because they offer more to do onboard them you can fit into a week on Icon, let alone 3-4 days on Utopia.

It's a bigger is better model that pairs massive destination ships with Perfect Day at CocoCay, the cruise line's private island. CocoCay essentially serves as an extension of the ship giving passengers a beach experience along with more pools, food, drinks, and entertainment.

Perfect Day at CocoCay has consistently been Royal Caribbean's most popular destination. That's a clear deviation from the old cruise model where seeing different places was the draw.

For Royal Caribbean, destination-based has become a niche business for its older ships and "classic" customer base. In many ways, Icon and Oasis-class ships where the ship and CocoCay, as an extension of the ship, are the attraction.

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Royal Caribbean sees private destinations as its future

Cruising to different countries where you explore and learn a little bit about a different culture used to be Royal Caribbean's core business model. That's still how sister brand Celebrity Cruises primarily operates, and Royal Caribbean's smaller ships do destination-based cruising.

Destination-based sailings are pretty active. You may be in a country where you don't speak the language and you sometimes have to navigate unfamiliar transportation systems. It's not a type of vacation that's all about taking it easy.

Sailing an Icon or Oasis-class ship that stops at CocoCay is an entirely different type of vacation. It's not hard work to pick whether to hang out by the beach or the pool. The same applies to food choices, bars, and entertainment.

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When you board these large ships, the expectation is relaxation — a vacation that might include high levels of activity — but won't have to do a lot of thinking or planning.

Royal Caribbean is betting that its passengers want bigger ships (one more Oasis class and three more Icon-class ships are on order) paired with high-end beach days.

The cruise line has massive plans in that area too.

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Royal Caribbean bets on destination cruise ships and private destinations

Royal Caribbean believes that its passengers — at least the ones on its largest ships — want a vacation, not a travel experience. That's why the cruise line has massive plans for new Coco-Cay-like experiences.

"We also continue to lead the vacation industry with exciting new experiences on our ships and our portfolio of private destinations. Perfect Day at CocoCay continues to perform exceptionally well, and we are reaching important milestones on Royal Beach Club Paradise Island opening in 2025 and Royal Beach Club in Cozumel, Mexico opening in 2026," CEO Jason Liberty said during its second-quarter earnings call.

The Beach Clubs will be added-fee half-day experiences. Basically, the cruise line is taking two fairly routine ports, Nassau and Cozumel, and turning them into affordable beach, pool, and bar days for passengers.

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Royal Caribbean also plans to build another take on Perfect Day, Perfect Day in Mexico, which will open in 2027.

"Along with Royal Beach Club Cozumel, the recently announced beach experience in Cozumel, Mexico, that opens in 2026, Perfect Day Mexico will be a hallmark of Royal Caribbean vacations that introduces new adventures in the western Caribbean. Vacationers have in store an unparalleled lineup of experiences and locally inspired twists across the design, flavors, and spirit," the cruise line shared on its website.

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