Passive Income With a Cruise Ship

Haven’t you always wanted to go on a cruise? Open waters, the warm sun on your shoulders, and the endless activities on board – these are all great reasons to enjoy a vacation on a cruise ship. While many of us dream of going on a cruise, I’d say that a very minute percent of us have actually considered owning a cruise-line of our own. Sure, the initial start-up cost is most likely in the millions, but imagine how great it would be to earn a passive income from your very own cruise ship?!

Cruise Ship Currently For Sale

The Upfront Costs of a Cruiseliner

Many cruiseliners can run you $300 million or more, but these are the brand-new, high-end ships for the big dogs. I would start out with a ship similar to the one above. It was originally built in 1967, but has had some recent updates. Instead of a $300 million price tag, this beastly boat will run you about $10 million.

This ship has 288 cabins, a couple of restaurants, a few casinos, a movie theatre, a beauty salon, a swimming pool on the deck, and even has it’s own hospital! The maximum capacity is 680 passengers.

Maintainence

With a ship of this magnitude, it’s obviously going to cost some money to maintain.

  • Fuel – the average cruise ship gets 30 feet to the gallon (at $5/gallon)
  • 25 Employees and the captain = $800,000/year
  • Ship wear and tear repair = $100,000/year

The employee and the ship’s repair costs are constant, but the fuel costs are going to be variable, depending on the distance of the cruise. You’ll see how I work this in the overall calculation for potential earnings.

Set Your Sights On a Cruise to the Bahamas

Let’s say our port is in Ft. Lauderdale, Florida and our regular cruise route is to the Grand Bahama and back – a round-trip distance of 130 miles. Typical cruises cost about $200 per person for a 3 day, 2 night trip to the Bahamas, but since our ship isn’t exactly the Royal Caribbean, we’ll charge only $170 per person. Assuming that we book 80% of our full-capacity, let’s calculate how much our earnings will be per trip.

Income

  • 544 passengers at $170 per person = $92,480
  • Food, Alcohol, and Retail Profits ($100 per person) = $54,400

Expenses

  • Employees = $16,000
  • Wear and Tear = $2,000
  • Fuel = $114,400

Profits Per Outing

  • Income = $146,880
  • Expenses = $132,400
  • Profit = $14,480 per trip

Proties For the Year

If we make this trip 50 times per year (which is actually a pretty full schedule), our estimated earnings would be $724,000. Those are pretty slim margins considering the initial cost of the ship was over $10 million!

I honestly thought that this passive income idea would have generated a much higher revenue, but it appears that the fuel expenses are just too much these days – they are eating up all of the profits!

Sure, it would be fun to own a cruise-liner, but it would take about 15 years to recoup your initial investment. By that time, you’re going to have to buy a new boat!

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13 thoughts on “Passive Income With a Cruise Ship

  1. There are also a lot of other costs that will eat into your slim profit margins that aren’t even considered in your scenario. I know that you were keeping things simple to show the example, but you will also have selling costs, insurance, and a host of other costs that will continue to errode your projected earnings.

    1. Yep – there are plenty of other costs, and actually, I had to work hard just to come up with a positive profit! Who would have thought? I was banking on this being a money-making machine!

  2. Cruise lines drop the prices until they sail darn near 100% full.

    I think you’re revenue estimation is low. But it is hard for just one ship to make a profit as it is one hospital. Cruise lines are able to profit from economies of scale.

  3. I had to chuckle just a bit because when I think of passive income…cruise ship is really not the first thing that pops to mid. But an interesting option, for sure!

  4. As cool as it sounds, I think that this wouldn’t be the greatest investment, unless you are starting a franchise to try and go big. There are so many costs and variables in this, not to mention what happens if you were to have an accident, and there were two just such accidents recently.

    1. There are a ton of variables! The uncertainty would probably freak me out too much to even give it a shot. Plus, these numbers didn’t come out so great.

  5. Hi Derek,
    This stuff is timing for the one who are able to planned to spent their great vacation at “Cruise ship”.. Thanks for this one…

    1. When I did my research, I was amazed at how much fuel a big cruiseliner used per trip! It’s incredible. But, you’re right, even if they use less, it’s still going to take a while to recoup your initial investment. Maybe they make a ton of money with the casino, alcohol, and food? It’s possible.

  6. Well there costs in here are a bit low to say the least. You are looking at 770 million to 1.3 billion these days to purchase a cruise ship that would produce any public interest in taking that ship over any other. The extravagant nature of these vessels requires massive finishing work that pushes costs way over budget. Then you have the problem of finding a niche you can actually compete in against those that do it so well by practically slave labor and purchasing agreements with large oil businesses and large food service companies that would make the costs more in line with profitability. The problem with this of course is that if you dont have 20 to 100 ships in your company portfolio, you really have no clout to compete to get the best discounts based on massive use. This means the smart guy would need to go with Eco or green Tech to save on fuel costs and you are just screwed when it comes to that food bill unless you can find a way to Franchise with NCL or Regency. You may win a contract for frnachise with a smaller competitor against RCL and Carnival. The advantage here is that you gain thier training facilities and services as well as staff support for any staff they may currently have on backup as well as thier purchasing power to get discounts on food and oil purchasing. You may also see better discounts on offerings from island services such as port fees or and excursion discounts that help with your profit margin. The downside of that is that you become the next salve based sweatshop ship. If you go it alone, you are looking at 4 months of paid training and finding trainers, managers, and choreographers etc. that can trian your crew. At 200 to 800 staff depending on your ship size and passenger capacity, That ends up being 10’s of millions in training and prep work before you even start cruising. Then coordingating the ship delivery and sea trials etc. and making sure the builder STX or Fincatiere, etc. is commited to an on schedule delivery. During any building process you have these goals. When a goal is reached during each building stage, you are relieved of millions more in money that you pay to move to the next building stage. During this time you get the fun of trying to work out entertainment throughout the cruise and getting a site up and running with sailing dates etc. as early as possible to start trying to sellout your cruise. Then there is advertising and working with travel agencies to promote you which they may not be so willing to do as an untested new company. See you have no reputation in the business. They would risk thier reps themselves if you went bankrupt and would require assurances that your are stacked with the cash to make it happen. Unless you are a Billionaire, you would not make it. And for thos ethat say start small, Charter companies dont make money at all. Most Charters are rich people who own the yachts and are just trying to find some work for thier boat through the year when no tin use to offset the 1 to 7 million in Mega Yacht upkeep each year. If someone say wont the Powerball for 600 million and took a 300 million cash out. That would still not get you anywhere. These days it would be impossible to make money on an old ship even providing discount cruising. The old ships eat the most fuel and you would make no money. You best bet would be to invest the money in the cruis eindustry and try to buy yourself into a position with that company by buying up stock attempting to get a controlling stake. I took 1 billion investment for Apollo Investments to get a controlling stake in Regent Seven seas formerly Radisson Seven Seas. So in any case you are up against a very high funding requirement and no bank is going to give a startup 2 billion in capital needed to get one cruise ship operational if that owner has no industry experience.

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