Iran conflict threatens to squeeze oil prices into cruise ship profits

The global cruise industry is reporting record demand and renewed consumer enthusiasm, but leaders at the world’s largest cruise lines say the industry is also facing its most complex challenges in decades.

“We’re not an alternative vacation anymore. We’re a vacation.” Carnival Co., Ltd. CEO Josh Weinstein said this Tuesday in his keynote address at SeaTrade Global, a cruise industry conference.

As demand increases, passengers are becoming younger. According to the 2026 State of the Cruise Industry Report released by Cruise Lines International Association (CLIA), one-third of cruise travelers are currently under the age of 40. One-third of trips are multigenerational, with many traveling together as a family. And according to the report, nearly a third of cruisers take multiple vacations a year.

The cruise industry welcomed 37 million passengers worldwide last year and is expected to reach 42 million passengers annually by 2029, according to CLIA.

“This mainstream demand is very favorable to volatility,” Weinstein said.

At least six cruise ships remain stuck in the Strait of Hormuz in the Persian Gulf. One of them is MSC Eulivia.

About 1,500 passengers were evacuated to safety amid Dubai airport closures and missile alerts after the United States and Israel launched attacks on Iran in late February, but the ship still has several crew members on board for maintenance.

“Obviously, we are living hand-to-mouth. The situation is very fluid,” said Pierfrancesco Virgo, executive chairman of MSC Cruises, in his keynote address at Seatrade Global.

Already, the closure of maritime traffic in the strait has disrupted travel itineraries in the Middle East and southern Europe. The threat of blockades, undersea mines and on-again, off-again negotiations have kept cruise line executives guessing when they might be able to move their ships.

“Morning is one thing, lunch is another, dinner is another,” Vargo said of the numerous and often contradictory announcements from government leaders. “We need to stay calm and actually be ready to exit as soon as possibilities and opportunities return.”

Despite these challenges, cruise industry executives say the industry has never been in a better position to absorb shocks.

“We’ve adapted to every crisis we’ve faced, whether it’s financial, geopolitical or health-related,” Carnival’s Weinstein said. “There’s no reason to believe it will be different this time.”

Fluctuations in fuel prices have once again put energy strategy at the forefront of the cruise industry, especially the Carnival industry, which does not hedge fuel prices.

“No one asks about hedging when prices are low,” Weinstein said. “But our strategy remains consistent: we use less fuel.”

The cruise industry aims to achieve net-zero emissions by 2050, but CEOs agree that saving fuel alone won’t get there.

Industry leaders believe that biofuels, green methanol, and synthetic liquid natural gas (produced by combining recovered carbon and hydrogen) are the most promising solutions to meet fuel needs.

Royal Caribbean Group CEO Jason Liberty said cruise lines already invest hundreds of millions of dollars a year in technology and energy innovation, but access to alternative fuels remains a bottleneck.

“It’s not about what we want to use,” Liberty says. “The key is what is scalable and available.”

“There will also be intense competition from other sectors for these fuels, and there is no guarantee that they will be available,” added Bud Dar, president and CEO of CLIA.

Even as the industry navigates turbulent waters, cruise lines are finding their next avenues of growth.

Technological advances in artificial intelligence are being used to reduce food waste, plan routes and itineraries, and increase efficiency. Cruise line executives say the most important use is to reduce friction in the guest experience.

“A more flexible working environment is a big demand driver for us,” Liberty said. Most Royal Caribbean ships now host Starlink connectivity, which provides high-speed internet on board.

Private destinations, i.e., dedicated ports and islands owned or managed by cruise lines, remain a priority for investment. For example, Royal Caribbean currently has three private destinations on its itineraries and plans to have eight by 2028.

The company is developing a major land base in Puerto Williams, Chile, to reduce or eliminate the time passengers to Antarctica must spend transiting the harsh waters of the Drake Passage.

And although the luxury sector is a small part of the overall industry, it is growing rapidly. Customers are increasingly concerned about health, wellness and longevity, and this trend is reflected in their vacation habits.

Small ships and river cruises cater to special interests such as ecotourism, remote locations (places not yet discovered by social media influencers), and lovers of cuisine and art.

Social media-driven demand for tourism has also sparked a backlash from some destinations overwhelmed by crowds. The cruise industry is working with destinations on so-called “managed and predictable tourism.”

Vargo said MSC is working with Dubrovnik in Croatia, for example, to coordinate the flow of tourists to the medieval town, which wants tourism spending without compromising the quality of life of its residents.

“A lot of coastal communities actually appreciate that. We plan ahead and create itineraries three years in advance,” Virgo said.

“The strength of this industry is that it can evolve without losing its soul,” Liberty said. “That soul is hospitality.”

in Norwegian Cruise Line Holdingsthe challenge for new CEO John Chissey is to right the ship.

In his first earnings call, just days after taking the job in February, Chissey acknowledged that the company had made numerous mistakes.

Profit margins are under pressure. Stock prices are fluctuating wildly. Critics have questioned Norwegian’s move to expand its Caribbean cruise itineraries before the private island destination is completed.

Earlier this year, Elliott Investment Management acquired an activist stake in Norwegian, which may have triggered management changes on the board.

Chissey told CNBC that Elliott’s goals align with his own, and he intends to create a culture of responsibility and urgency where teams work together rather than in silos.

The SeaTrade conference was Chissey’s first foray into the cruise industry, a former CEO of Subway, Burger King and Avis.

When asked, “What a sandwich guy knows about cruising,” Chissy didn’t hesitate to insist that he was “not a sandwich guy, but a turnaround guy.”

“When I went to fast food, I didn’t know anything about fast food. I think having fresh eyes is what Norwegians really need,” he said. “And it all comes down to execution.”