3 Reasons Cruise Lines Are In A Race To Open More Private Island Resorts

Popular cruise lines are racing to grow their private island and port portfolio.

Brittany Chang/Business Insider

• Cruise lines are spending millions on private islands and ports exclusive to their guests.
• These private Caribbean properties are money trees for companies like Carnival and Royal Caribbean.
• In-house destinations are becoming increasingly necessary amid rising fuel costs and port restrictions.

About 140 miles east of Miami, Royal Caribbean's private Bahamas island, Perfect Day at CocoCay, receives thousands of eager families virtually every day of the year.

The cruise line and its competitors don't just own ships — they also have land-based portfolios. Across the Caribbean and in countries like Honduras and Belize, almost every major cruise company has snatched up and developed beachfront properties exclusively for their guests.

To travelers, these secluded ports of call are convenient, safe, and cherished: "The vast majority of people love the islands," Patrick Scholes, a lodging and leisure research analyst at Truist Securities, told Business Insider in March.

To cruise lines, they're cash cows. And now, maybe more than ever before, a necessity as operators seek out profits amid rising operating costs and ever-restrictive ports.

The industry is cruising into a private island renaissance

Disney Cruise Line said its new private destination, Lighthouse Point, seen in a rendering, will launch on the Bahamas island of Eleuthera this summer. The cruise line already has a private island, Castaway Cay.

Disney Cruise Line

Cruise lines like Princess, Holland America, and MSC collectively own 17 ports and private destinations in the Caribbean (including properties still under development).

Michael Bayley, president and CEO of Royal Caribbean International, told analysts in 2023 that the CocoCay had seen robust demand, including from repeat travelers. As such, the financial returns on the $350 million investment have been "exceptionally high and significantly above its target," Naftali Holtz, CFO of Royal Caribbean Group, said a few months prior.

Renderings of the "Royal Beach Club at Paradise Island" show a sprawling beachfront property lined with cabanas, lounge chairs, and pools.

Royal Caribbean International

Given travelers' appetite, the cruise giant has continued to grow its splashy Bahamas getaway.

The most recent extension opened in January, adding the adult-only Hideaway Beach to CocoCay's 14-slide waterpark, upscale beach club, massive pool, and umbrella-lined beaches. Perfect Day Mexico is set to open in 2027.

Carnival says Celebration Key, shown in a rendering, will flex resort-like amenities like oceanside cabanas and a grown-ups-only infinity pool.

Carnival Cruise Line

Carnival is also growing its real estate portfolio — next with Celebration Key, a $600 million resort on Grand Bahama Island scheduled to open in 2025, and expansions to its private Half Moon Cay a year later.

Private ports have become a cruise line goldmine for three major reasons.

1. Fuel is expensive

Food is Royal Caribbean's second-highest expense after fuel, Linken D'Souza, the cruise line's senior vice president of food and beverage, told reporters in late January.

Brittany Chang/Business Insider

Fuel is a major expense for the cruise industry. Fortunately, most Caribbean private destinations are only a night's sailing from Florida's major ports.

Amid rising fuel costs, it's easy to see why cruise lines are increasingly focusing their itineraries on these nearby stops.

In September 2023, Josh Weinstein — president, CEO, and chief climate officer of Carnival Corp — called the forthcoming Celebration Key a "win-win-win for the environment, our guests, and the people of the Bahamas," citing the property's proximity to its Florida homeports and the subsequent reduced fuel expenditure.

It could certainly be a "win" for travelers: In the same call, he told analysts that a guest-fronted fuel surcharge is "certainly not off the table."

2. Private destinations keep profits in-house

About two-thirds of Royal Caribbean's Caribbean-bound guests could go to CocoCay this year, Jason Liberty, Royal Caribbean Group's president and CEO, told analysts in December 2023.

Brittany Chang/Business Insider

These private ports offer plenty of opportunities for guests to spend big. And with no need for third-party excursion operators, cruise lines can keep more profits in-house.

Before its debut, pre-cruise bookings for CocoCay's new Hideaway Beach surpassed the company's expectations, Jason Liberty, president and CEO of Royal Caribbean Group, told analysts in October 2023.

Admission can cost up to $89 per person during peak season. Nearby, entry to the more exclusive beach club could be shy of triple that cost.

Royal Caribbean says Thrill Waterpark's Daredevils Peak is the tallest slide in North America.

Brittany Chang/Business Insider

Even the otherwise complimentary parts of the island have splurge-enticing options like rentable cabanas and snorkeling gear.

Travelers content with a basic beach chair and the lunch buffet don't have to ball out on these up-charged luxuries. But they sure are hard to resist, especially as cruisers have become eager to spend more on their vacations.

For families, skipping CocoCay's waterpark could be as sacrilegious as skipping Disney World during an Orlando vacation, Scholes said. A day pass to Thrill Waterpark can exceed $100 per person — that's more than $400 down the drain for a family of four in one afternoon.

3. Some popular ports are saying 'no' to giant cruise ships

Ships weighing more than 96,000 tons are banned from entering Venice, Italy's Giudecca Canal.

Simone Padovani/Awakening/Getty Images

The world's largest cruise ship, Royal Caribbean's Icon of the Seas, can carry 7,600 guests and 2,350 crew.

This sudden influx of travelers could overwhelm smaller destinations and their locals, like the more than 25,000 residents of Santorini, Greece, and 25,600 of Key West, Florida.

With concerns like pollution and over-tourism, it's no surprise the popular Greek island limits daily cruise visitors, while its Florida counterpart has faced a fraught battle to restrict cruise tourism.

Ports in states like California, Alaska, Maine, and Florida have restricted cruise tourism.

CHANDAN KHANNA/AFP via Getty Images

They're not alone. Cities across the US and Europe have increasingly limited travelers coming by sea — either through size restrictions, daily visitor limits, or complete bans. This includes desirable ports like Juneau, Alaska, French Polynesia, and Venice, Italy.

Ironically, at the same time, mass-market cruise lines have continued to grow the size of their vessels — so much so that several of these new mega-ships are now simply too big to fit into some ports.

So, if you can't beat the ports, why not join them? Especially if you can outfit your private properties with dozens of profit-growing amenities.