As the return of cruises has expanded trip options for travelers, hotels located in the big cruise ship markets domestically and abroad have more competition for travel demand.
To stand out, hotels and resorts, that had their run of these markets when ships were stuck in port, must have competitive pricing as well as programming.
An analysis of several properties in the Florida Keys in 2021 shows that average daily rates were increasing at levels well above inflation and rate increases in other parts of the country, said David Sangree, president of Hotel & Leisure Advisors.
"Part of the reason for the very strong increases was that there was very little cruise demand," he said. "As cruises are ramping up again in 2022 and offering very attractive packages for customers, I expect that room rates will temper in Florida and other Gulf Coast areas as leisure travelers will appreciate the value in taking a cruise versus staying at a resort property."
Room rates in resort destinations have reached record highs during the recovery from the COVID-19 pandemic, and this competitive pressure to drop rates "actually will signal another 'return to normal' post-pandemic," Sangree said.
The cruise industry was forced to shut down at the height of the pandemic amid health and safety concerns and travel and social distancing restrictions. Cruise demand also suffered due to horror stories of infected passengers forced to quarrantine on board for extended periods. But the cruise industry is now poised for a strong rebound, said Fernando Garcia-Chacon, managing director of CBRE Hotels.
"Memories of COVID-struck cruise ships unable to dock in foreign countries and drifting at sea will very likely dissipate over time. As such, the industry should return to pre-pandemic levels over the next two years," he said.
Garcia-Chacon said there has not been a notable decline in resort performance in cruise port markets as more ships reopen their routes.
"From Florida’s hotel industry standpoint, there is no doubt the state government’s more lenient COVID protocols led to a surge in visitation," he said. "Households with record savings that were experiencing lockdowns were attracted to Florida’s warm weather and miles of coastline and beaches — as the state became a natural escape destination — leading to record performance in many of its resorts."
There has been somewhat of a shift in guest profiles. Commercial demand virtually disappeared, and leisure visitors become the dominant segment. The pandemic might have attracted to these resort properties guests who had never visited before, and moving forward, some of these hotels might have a larger base of repeat customers.
Following the hardest-hit days of the pandemic, cruises and all-inclusive resorts alike are attracting younger, non-traditional customers, said Rob Smith, Aimbridge Hospitality's divisional president of full-service hotels.
"This hasn’t put too much of a dent in current demand, but I believe it will slow rate growth as pent-up demand weans," Smith said. "Right now, we are approaching the return of cruising travel as something we will need to react to in our marketing and offerings as demand and seasonality stabilizes."
In terms of guest demographics in cruise-heavy markets, there has been a shift to younger, adventure-seeking resort guests who are looking for a special experience, Smith added.
Overseas, the return of cruises is important for the entire Mexican Caribbean, said Dario Flota Ocampo, director general of the Quintana Roo Tourism Board in Playa del Carmen, Mexico.
The guest demographics of a cruise market such as Cozumel, Mexico, have shifted somewhat in that more groups and family reunions are traveling after the unpredictability of the past few years.
"We have also seen an increase in luxury travelers, reflecting new luxury travel patterns," he said. "After a few years at home, travelers are more open to splurging on exclusive experiences."