Valuation of the Cruise Ship: A Discounted Cash Flow Analysis

Abstract

The global cruise industry has rebounded sharply from pandemic-era disruptions. It recorded a market size of USD 25.93 billion in 2024, and it is projected to grow at a compound annual growth rate (CAGR) of 6.7% through 2032. Against this backdrop, this paper presents a comprehensive financial valuation of the Cruise Ship, the world's largest cruise ship by gross tonnage, owned and operated by Cruise Liner International. The vessel was launched in January 2024. It carries up to 7,600 passengers across 20 decks, and its building cost was approximately USD 2 billion. The valuation follows the RICS Valuation Global Standards 2024 (Red Book) and applies the Income Approach using the Discounted Cash Flow (DCF) methodology. Revenue projections assume a 100% occupancy rate, an Average Daily Rate (ADR) of USD 456.30, and a 5% annual escalation. Operating costs, covering fuel, crew salaries, port fees, food and beverage, maintenance, onboard services, and marketing, are modelled as percentages of gross revenue. The Weighted Average Cost of Capital (WACC) is derived at 6.76%, and a risk-adjusted discount rate of 9% is applied to reflect the capital-intensive and cyclically vulnerable nature of the cruise industry. The resulting Net Present Value (NPV) of the asset, as of 15 September 2025, is estimated at USD 5.50 billion. This paper bridges a gap in literature by applying formal real estate valuation frameworks to the emerging asset class of mega cruise ships. It demonstrates that income-based methodologies can effectively capture the financial complexity of floating hospitality assets, and it offers a replicable, practice-oriented valuation framework that analysts can apply to comparable vessels.

monstrating that income-based methodologies can effectively capture the financial complexity of floating hospitality assets.