Cruise Ship Billionaires
You don't have to own a cruise ship to be able to enjoy all the benefits.
Royal Caribbean recently launched the Icon of the Seas. The new cruise ship accommodates 8,000 passengers, weights 250,800 tons, and features eight “neighborhoods,” six water slides, seven swimming pools and more than 40 dining, drinking and entertainment venues on 20 decks. Royal Caribbean was founded in 1968 by Arne Wilhelmsen and two partners. Their first cruise ship was the 8,000-ton Song of Norway launched in 1970 that could carry 724 passengers. Wilhelmsen saw the potential for cruising and economies of scale. “My initial challenge was to convince my partners and management in Miami to build bigger and more efficient ships in order to grow the company.”
The Icon of the Seas cost Royal Caribbean $2 billion to design and construct. They are building two more of the mega-ships at the Meyer Turku shipyard in Finland. If you shop around you can find a seven-night cruise on this astonishing creation starting around $1,500—or $215 per night—including food and entrainment. Today blue-collar workers are earning around $37.15 an hour in compensation (wages and benefits). This would put the time price of a weeklong cruise at 40.4 hours. Work a week and then enjoy a week of cruising. I can buy a day enjoying a $2 billion masterpiece of design and engineering with food and entertainment for only 5.8 hours of work. Is this not a great deal?
Carnival Cruise Lines entrepreneur Ted Arison launched his first ship, the Mardi Gras, 53 years ago on March 11, 1972. It cost $5 million and accommodated 1,248 passengers on 10 decks.
You could book a 7-day cruise from Miami to the Caribbean for $240 to $595. Blue-collar workers at the time were earning around $4.59 an hour in wages and benefits. At $240, a cruise would cost them 52.3 hours. For the time it took workers in 1972 to earn the money to enjoy a cruise on the first Mardi Gras, they can get 1.3 cruises on the Icon of the Sea today.
Adjusted for inflation, the Icon of the Seas cost 55 times more to build than the Mardi Gras but passengers pay 23 percent less to enjoy. How is this possible? Two words: people and knowledge. More people create larger markets. With a larger market projects that require a high development or fixed cost become feasible because you can now spread these costs over lots more customers.
Innovation can be defined as the discovery and sharing of valuable new knowledge.
Each cruise generates new insights that savvy entrepreneurs, like those at Royal Caribbean and Carnival, transform into value for their customers. These companies compete 24/7/365 to improve the passenger experience, creating a virtuous cycle of innovation and satisfaction.
This dynamic highlights why cruise ships thrive in free societies but remain absent in places like North Korea, Cuba, and Venezuela. Without the freedom to innovate, societies stagnate, leaving their citizens trapped in economic decay. Havana could be another Maui if the Castro family and their fellow Marxist oppressors were not so opposed to private property rights, free markets, and entrepreneurial creation.
The cruise ship industry has made billionaires out of many of its owners, but is has also made virtual billionaires out of the rest of us as well. Capitalism encourages people like Arne Wilhelmsen and Ted Arison and Elon Musk to become billionaires by investing their billions to make billions of billionaires.
My first cruise was a three-day Royal Caribbean excursion to Catalina Island and Ensenada, Mexico. It was a great value. Now I look forward to booking my next cruise on the Icon of the Seas. Hope to see you there.
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Gale Pooley is a Senior Fellow at the Discovery Institute, an Adjunct Scholar at the Cato Institute, and a board member at Human Progress.
I have never taken a cruise but perhaps will one day just for the experience. Your short history of cruises is fascinating. I had not thought about when cruises started. It's a little surprising that it was within my lifetime!
What I find really interesting is how this model could apply to resorts in Earth orbit (and eventually further away). With the continuing SpaceX-driven plummet in launch costs -- how about a piece on that, Gale? -- and efforts by Blue Origin and others, space hotels and then resorts are coming. As a huge space fan who watched all the Apollo launches as a child, I hope to live long enough to be a customer.