HAL strategy wrong? Go upmarket, better than going down market?

[bepsf]

I never knew that.

 

There's a list of Apollo's holdings here:

http://en.wikipedia.org/wiki/Apollo_Management#Portfolio_investments

[HappyInVan]

Of course, Bepsf is right. It is harder to fill 12 ships than 3.

 

 

Let's pull back for a better perspective. Hal's intention is to skim from the mass market line. Just as Regent skims from down-market. No doubt, HAL believed that it would have no difficulty finding its passengers from the millions of budget cruisers.

 

 

The problem was that HAL didn't build good enough ships to outshine the mass cruise ships. Perhaps, they underestimated the cost savings and WOW achieved with the big ships.

 

 

So, Hal's problems don't start at the beginning of the recession. They made a strategic mistake back in the early 2000s. They are being squeezed from the bottom, rather than skimming the cream from the mass cruise companies.

 

 

The next mistake compounds the problem. During the recession, HAL allows its prices to fall, rather than do a version of Regent's 'pay more for more'. As the price falls, they cut the quality of service and food.

 

 

The difference with the mass cruise companies evaporates. So, the Eurodam charges the same price as the Carnival Liberty in the Caribbean.

 

 

(As an aside, it is the smaller HAL ships that are able to charge a higher price because of less competition for their itinerary and uniqueness. For example, the Prinsendam)

 

 

Why is price cutting a mistake? Mark Conroy has explained that the type of customer matters. He talks about differentiation. There is something that he doesn't like to say. But, this marketing issue is crucial to the success of Regent's pay-more strategy!

 

 

What is it? What is the crucial marketing difference between a discounter and a truly premium brand?

[DRWhit]

What is it? What is the crucial marketing difference between a discounter and a truly premium brand?

From what I have seen, its usually an appeal to the "snob" in people to pay a good bit more for a product with maybe slightly better quality (not trying to sound ugly, but that's the best way to say it that I know of).

 

For example, my wife and I just went refrigerator shopping and got it narrowed down to two refrigerators. They were both about equal in size and features. One was an Electrolux, that looked to me to be marginally better made. Supposedly that brand is well known as a top of the line brand, used in very nice kitchens. The other was a Samsung, also supposedly a good brand, but more in line with all the other brands.

 

The price difference was very large with the Electrolux much more expensive. The dealer said that Electrolux would not let them discount their list price and would pull his license to sell the product if he did so. The snob in me said lets get the very best, we can afford it, and she deserves it. My lovely wife (who is somewhat of a frugal-lista) said she just could not justify such a price difference and she wanted the Samsung. So we ended up with the Samsung.

[Pettifogger]

DRWhit:

I agree with you that a wife like yours deserves the very best. I hope you fit that description.

[DRWhit]

DRWhit:

I agree with you that a wife like yours deserves the very best. I hope you fit that description.

Yes, she is great. Sadly, I am lacking in many areas, but try to make up for it others.

[Pettifogger]

DRWhit:

I should have mentioned at the same time that I said that I agreed with you, that I also agree with your wife that to pay much more for something that is only marginally better, is not wise for most of us.

For the few to whom price is not a concern, I wish them joy in purchases that make sense for them, but would not for the rest of us. (Envy is one of the few vices I have escaped.)

[cwn]

From what I have seen, its usually an appeal to the "snob" in people to pay a good bit more for a product with maybe slightly better quality (not trying to sound ugly, but that's the best way to say it that I know of).

 

For example, my wife and I just went refrigerator shopping and got it narrowed down to two refrigerators. They were both about equal in size and features. One was an Electrolux, that looked to me to be marginally better made. Supposedly that brand is well known as a top of the line brand, used in very nice kitchens. The other was a Samsung, also supposedly a good brand, but more in line with all the other brands.

 

The price difference was very large with the Electrolux much more expensive. The dealer said that Electrolux would not let them discount their list price and would pull his license to sell the product if he did so. The snob in me said lets get the very best, we can afford it, and she deserves it. My lovely wife (who is somewhat of a frugal-lista) said she just could not justify such a price difference and she wanted the Samsung. So we ended up with the Samsung.

 

 

I would agree with you on things for the house like refrigerators. All things being equal I to will go with the item that cost less if what it offers is the same. The brand name is unimportant...it is value for the $$$ that counts.

 

This carries over into the cruise lines also. We like smaller ships and have cruised for nearly thirty years mostly on Princess some in Curnard, HAL, Carnival, X, Silversea and Seabourn when the itinerary and price was to our liking. We have also sailed in inside cabins to suites on Princess and balconies to suites on the other lines.

 

Last year, to celebrate retirement, we treated ouselves to a cruise in a suite on the Ocean Princess. It was very nice. We also treated ourselves to a cruise on the Seabourn Spirit. Now that was absolute HEAVEN.

 

There is no comparison between what you get in a standard cabin (OV or balcony) on HAL or Princess and what you get in a full suite on those same lines. Then when you compare the standard suite on Seaboun to the OS Suite on Princess or Veranda Suite HAL, all thelatter two have going for them is the cabin size. The service, food, staff and the actual cabin on Seabourn are far superior plus the other passengers are very nice also. like most on HAL and Princess. The value is there on Seabourn. Those that say other wise, make me wonder if they have ever sailedl on one of the luxary lines.

 

Cabin size is not a big deal with us as long as we have a balcony, separate shower and are on a smaller ship which we really like.

 

If you like suites on HAL or Princess you will find that a standard cabin on Seaboun or Regent is many times the same price once you add in all the extras to the HAL price and compare it to the Seabourn or Regent price for the same itinerary. We did this with HAL's Circle SA and Regent's Circle SA this Jan and will be going with Regent and loving all the pamperring.

 

This is truely a case of "To Each His Own", I like HAL and will sail with them again. same with Princess. But when the price is close (as it often is for the smaller ships) for a full suite on HAL/Princess and a standard suite on Regent or Seabourn, I will go with the luxary lines as there is no camparison in what you get for your $$$'s. Filling the ship at any cost as HAL and Princess now do, effects the quality of the cruise big time. If you didn't start cruising until the late 90's maybe you don't realize what has changed. IMO

[tjcletsgo]

To those of you who insist that HAL is a mass market cruise line, there is nothing I would like better than to have a choice between cruise lines rather than being stuck with just one. If you can name one or more other lines that provide what HAL does, at no greater cost, I shall be grateful, if not eternally, at least for the rest of my relatively limited life expectancy.

 

Presently, I'm stuck with HAL for the following reasons among others; they have a school that produces a stream of excellent dining room stewards who make a visit to the MDR gracious even when it's a little slow, they're courteous to those who bring a bottle or two of wine aboard and I've never seen them harass even a whisky smuggler, they offer a choice of fixed or open dining arrangements (if one insists) for those who prefer one or the other, they offer bar setups so one can get an inexpensive start on the evening's festivities, they have a few formal nights so my wife can dress up and pretend she married a good provider instead of me, there are no drunks "sharing" dirty stories with the world while waiting for the elevators late at night (for me after 9:30 pm), and perhaps most important of all, when the recession hit, they didn't choose to sail with empty cabins to maintain their prestige as a premium-priced line, but reduced their fares so that the available cabins could stay full of people like me for our mutual benefit.

 

I do not claim to be especially well informed about the cruise business and there may be one or more other cruise lines which do all of the same things or even more at no greater cost. If you know of any, please let me and others like me know, so we can have a greater choice of ships, dates, itineraries, etc.

 

I have to say, I've only sailed HAL twice, both sailings in a Deluxe Veranda Suite. I don't expect the ship to provide me with my entertainment. I cruise for the ports, and bring my own entertainment in the form of my cruising partner or friends.:cool:

 

Whatever it takes to fill a ship is fine by me. There is a massive competition between cruiselines, and cruising is a business. Whatever your feelings are, that is the truth. Stuff changes, life changes, people change.

 

Give HAL a break. For what they provide, they're great. And, I'm someone who regularly cruise other cruise lines. Whatever, we can all still say:

 

Bon Voyage:D

[HappyInVan]

“What is it? What is the crucial marketing perspective between a discounter and a truly premium brand?”

 

 

Sorry DRWHIT. You're talking about the choices facing a customer. Which product do I buy? I'm referring to the choice facing a company. Which type of customer do I want?

 

 

Discounters are product-oriented. They provide a commodity at the best price to any customer. Come one Come all. Which customer (rich, poor, young, old) does not matter.

 

 

The premium brand knows that it's the right customer that is the key to success.

 

 

Therefore, Regent's pay-more strategy is based on marketing discrimination. Regent wants high spenders (room+food+drinks+excursions). Regent got rid of the low yield customers with the package deal.

 

 

That includes the people who bring their own drinks on board. Those who book private excursions. Those who stay on board during port visits.

 

 

As a matter of fact, HAL is doing the exact opposite of Regent. With their low prices, Hal is loading the ships with low yield passengers. Then, HAL has to work hard to extract $ from them. Smart?

 

 

That's why Regent is able to increase sales even with the same capacity. They are able to make a profit because they kept their basic prices (room/dining is the main component) high while giving away low cost freebies.

[Boatdrill]

 

Let's have your thoughts! Hopefully, HAL is listening. Are you willing to pay more for more. Or, prefer paying less for less?

 

 

More for more, definitely.

[Boatdrill]

[quote=HappyInVan;27235922

 

The premium brand knows that it's the right customer that is the key to success.

 

That's why most experienced cruisers understand that when you book a cruise, you're booking the ship, the itinerary, and your fellow passengers.

[amunhbuu]

 

If you like suites on HAL or Princess you will find that a standard cabin on Seaboun or Regent is many times the same price once you add in all the extras to the HAL price and compare it to the Seabourn or Regent price for the same itinerary. We did this with HAL's Circle SA and Regent's Circle SA this Jan and will be going with Regent and loving all the pamperring.

 

 

CC has an article on the front page discussing the very same thing. Once you throw in airfare, hotels, tips, drinks, excursions, etc. they come out to similar prices.

 

However, this tends to be true for suites only. We are not to the point where we are booking suites. If we get to that point, I would imagine that we will take a long hard look at the luxury lines.

[cwn]

CC has an article on the front page discussing the very same thing. Once you throw in airfare, hotels, tips, drinks, excursions, etc. they come out to similar prices.

 

However, this tends to be true for suites only. We are not to the point where we are booking suites. If we get to that point, I would imagine that we will take a long hard look at the luxury lines.

 

Unfortunately you are right...though every now and then Silversea and Seabourn's cruise prices will be close to the balcony price on other lines, but not often. That was how we wound up on a Silversea TransAtlantic cruise a few years ago. We also did the Seabourn cruise last year in place of a simular itinerary on Oceania because we couldn't get a suite on Oceania and the price wasn't that different.

 

We were up graded to suites a few times in the past years and loved them, of course. We finally booked one out right for our retirememt celebration....now I know we will never go back...we will just look for deals and cruise less.

[HappyInVan]

 

So do I, but I also like all the service and the demographics of the high end lines and I assure you I am "no overpaid Hedge fund 20 something" just a retired high school teacher and I feel very comfortable with the other passengers on Seabourn as they look like a small part of any Princess or HAL ship I have ever sailed on!

 

 

I have to agree with cwn. There are plenty of 'ordinary' people (like me) on the short cruises of the premium cruises. Are the cruises really that expensive?

 

 

In Manhattan, just a decent hotel room plus meals and theater comes to $500 per day per couple

 

 

I am looking at a Silver Cloud cruise. They are offering a good deal for the Cloud (Ryndam's contemporary) in the Caribbean. Terry (TLCOhio) was good enough to provide a bunch of pictures. Looks very laid back to me.

 

 

http://boards.cruisecritic.com/showthread.php?t=1322424

 

 

I like the Cloud because of its cabin distribution. It has only 13 superior suites + 36 Vista OV. 70% of the cabins are standard veranda suites (295 sf). Very egalitarian, and good for the guests AND STAFF.

 

 

So, you have to assess each company and each ship/cruise on its own merits. Don't be prejudiced. Perhaps, the tycoons/bigshots/CEO/heavy hitters are on the Crystal or Regent where there is a concentration of expensive suites. IMO, they like to network when they travel!

[MightyQuinn]

I am looking at a Silver Cloud cruise. They are offering a good deal for the Cloud (Ryndam's contemporary) in the Caribbean. Terry (TLCOhio) was good enough to provide a bunch of pictures. Looks very laid back to me.

You should check out the following blog, written by a frequent HAL cruiser (Atomica) while on his first luxury cruise on Silversea Silver Spirit. Exceptionally well written with great interior & exterior ship photos. He also offers sage advice about the comparative value of luxury & mainstream cruise choices. Definitely worth a peek.

 

http://fromthedeckchair.blogspot.com/

[HappyInVan]

You should check out the following blog, written by a frequent HAL cruiser (Atomica) while on his first luxury cruise on Silversea Silver Spirit. Exceptionally well written with great interior & exterior ship photos. He also offers sage advice about the comparative value of luxury & mainstream cruise choices. Definitely worth a peek.

 

http://fromthedeckchair.blogspot.com/

 

 

Thanks once again to MightyQuinn for Atomica's blog. It is very enthusiastic. Yes, the Silversea ships are more like a country club than a hotel.

 

 

“It’s something I’ve notice onboard too: Silversea passengers are very outgoing and friendly. I’ve met more people here in the past day and struck up more conversations with total strangers than on any ship I’ve ever sailed. Everyone here clearly considers travel to be a necessity; many have sailed multiple times with the line and seem thrilled to be returning, and many are trying the Silver Spirit for the first time. They also know exactly what they want, and will spend accordingly to get it. But there’s not a hint of pretentiousness; only interesting passengers from all over the world. In fact, as Kim said today, “I feel at home here.”

 

 

Yes, the Silver Spirit is the latest and greatest. We do need to remember that atomica was upgraded to a Silver Suite 742sf from a veranda suite 376sf. The Silver Suite is larger than a Deluxe Veranda Suite on the New Amsterdam.

 

 

Word of caution about the Silver Cloud. It is a contemporary of the Ryndam. It is not in the same league as the Spirit which is a work of art. The Cloud's Silver Suite is 200sf smaller!

[scamper]

Nobody has ever lost any money under-estimating the taste of the American Public.

 

The most wildly successful company in American History is Wal-Mart.

They make all their money by going for the lowest common denominator.

 

The most wildly successful Cruise Line in history is Carnival.

Once again, lowest common denominator.

 

What happened to those great elegant cruise lines like Royal Viking, Sea Goddess, and Royal Cruise Line?

Their owners claimed that they would NEVER lower their standards - even if it killed them.

Rest in Peace................

 

Why is it that really great cruise lines like Seabourn, Sea Dream, Silver Sea, and Crystal have NEVER made a penny of profit in their entire histories?

Because the cruising public is more interested in Quantity over Quality.

Everybody claims that they want the quality, but when it comes time to ante up, lowest price always wins.

 

Thank goodness that the owners of the truly great cruise lines have such large egos and large pocketbooks they can continue to operate at a loss.

 

Bravo(a)! I could not have said it better myself. So, so true!

[HappyInVan]

Bravo(a)! I could not have said it better myself. So, so true!

 

Sigh! The big lie again.

 

In the meantime, Celebrity forges ahead.

 

http://www.cruisecritic.com/reviews/cruiseline.cfm?CruiseLineID=9

 

"Celebrity Cruises is entering a new era of larger ships and higher capacity -- competing even with the likes of Carnival Cruise Lines -- but don't mourn just yet for the little cruise line that offers personalized service. After all, no one believed that Celebrity could maintain its standards with its birth of Millennium-class ships. But it managed quite nicely, adding a series of enhancements that pleased even the most stalwart fans of smaller ships...

 

 

With these 2,850-passenger ships, Celebrity aims to rock the notion that a cruise line that positions itself in the "premium" market must keep its ships small and cozy. So far, the plan has worked. The interior architecture of Celebrity Solstice, for example, is the best we've seen in some time, and even on a full sailing, the ship feels half empty. Passenger flow is excellent with no lines and no crowding, and onboard evolutions -- from a glass-blowing show to a top-of-ship Lawn Club featuring real grass -- have been welcomed and successful. The Solstice-class features have become so popular that Celebrity is adding some of the restaurant, lounge and decor concepts to its Millennium-class ships (see our slideshow of Constellation's refurb).

 

 

Aside from these "new ship" developments, Celebrity Cruises has spent the past few years -- pretty much since the launch of its last Millennium-class ship, Constellation, in 2002 -- upgrading onboard services and amenities. The goal in turning its attention inward was to introduce enhancements that would position the cruise line as a competitor to luxury line Crystal Cruises, albeit with a younger passenger demographic.”

Edited December 24, 2010 by HappyInVan

[peaches from georgia]

Thanks once again to MightyQuinn for Atomica's blog. It is very enthusiastic. Yes, the Silversea ships are more like a country club than a hotel.

 

 

“It’s something I’ve notice onboard too: Silversea passengers are very outgoing and friendly. I’ve met more people here in the past day and struck up more conversations with total strangers than on any ship I’ve ever sailed. Everyone here clearly considers travel to be a necessity; many have sailed multiple times with the line and seem thrilled to be returning, and many are trying the Silver Spirit for the first time. They also know exactly what they want, and will spend accordingly to get it. But there’s not a hint of pretentiousness; only interesting passengers from all over the world. In fact, as Kim said today, “I feel at home here.”

 

 

Couldn't agree more with these thoughts and Atomica's blog. Just got off a 10 day Seabourn and it was the greatest cruise we have ever been on. All the pro's of being on a smaller all-inclusive luxury line are true. And the pax and atmosphere couldn't be friendlier or less pretentious. It was a cruising experience of a lifetime and we will do it again for sure. There are deals out there and thanks to the all-inclusive feature it is comparable price-wise to a suite on HAL.

[iancal]

We just got off an 11 day Millennium cruise this morning. To our tastes, Celebrity is moving in the right direction. HAl does not appear to be moving towards any market...they just keep building the same old ships and attracting the same demographic. I have never really heard DW ask for a specific ship or cruise line before. Now she wants the Equinox or one of the other solstice class ships. It used to be that any one of HAL, Princess, or Celebrity would be just fine.

Edited December 24, 2010 by iancal

[HappyInVan]

Thanks very much for the polite discussion. After 200 posts in this thread, everyone has had a chance to have their say.

 

 

All points of view have been explored. There are those happy to pay less for less because of the opportunities offered by price cuts. Others are willing to pay more for more. I think that I have made a strong case for why HAL should stay upmarket.

 

 

Premium/luxury brands have more room to maneuver during bad times. They are less likely to get sucked down by the mega ship vortex.

 

 

Moreover, upmarket cruise lines have the ability to innovate and provide additional value. Celebrity shows that it can be done when you redesign from the ground up.

 

 

HAL is trying to add more value by adding features e.g. flexible dining and play areas. It is trying to be everything to everyone. That is the SALES DEPARTMENT approach.

 

 

But, Regent actually chooses its customers. It wants high yield passengers willing to pay the all-inclusive price. Goodbye to everyone else. That's MARKETING STRATEGY.

 

 

Finally, let's look at the competitive dynamics if Hal goes upmarket. Hal would be a large player taking on small competitors (2 to 4 ships). How long would the shareholders support Regent or Oceania if there's red ink?

 

 

Should it have been Hal (instead of Apollo Investments) that bought out Regent and Oceania? Instead of adding the Vista and Signature ships.

 

 

HAL could have seized the entire market segment between HAL/Celebrity and Crystal/Seabourn!

 

 

In the other direction, Hal is committing suicide if goes toe to toe with the mass cruise companies. Hal is a small fish compared to the established giants. Make sense?

[Philip217]

To paraphrase Groucho Marx:

 

"It's too bad that the people who really know how to run a cruise line are so busy driving taxicabs, cutting hair, - and posting on Cruisecritic."

[ironin]

To paraphrase Groucho Marx:

 

"It's too bad that the people who really know how to run a cruise line are so busy driving taxicabs, cutting hair, - and posting on Cruisecritic."

 

LOL! I have found myself idly wondering what some of the experts posting here do IRL.

[MightyQuinn]

Thanks very much for the polite discussion. After 200 posts in this thread, everyone has had a chance to have their say.

------------------------------------------------------------------------------------

All points of view have been explored. There are those happy to pay less for less because of the opportunities offered by price cuts. Others are willing to pay more for more. I think that I have made a strong case for why HAL should stay upmarket.

Well done Happy! You started a discussion that attracted close to 225 responses & nearly 10,000 views without getting personally critical, inflammatory or otherwise causing a thread lock. I've enjoyed the discussion.

 

As I posted earlier in the thread, I think the time has passed for HAL to go upmarket, despite your compelling arguments. No doubt HAL execs know the cost/benefit of going upmarket & have decided not to go there. I think it's much easier to accept where HAL has landed in the marketplace than to lament what could have been if they had made different choices. If there's a nagging mismatch between your expectations & what HAL delivers, it may be time to move on.

 

As has been ably demonstrated in this discussion, there are many cruise options at many price points. It's all about personal values, budgets & expectations. Sometimes HAL will be best, sometimes another cruise line will be preferred. Choice is great. I wish you happy sailings as you explore Regent & Silversea. :):)

[bepsf]

LOL! I have found myself idly wondering what some of the experts posting here do IRL.

 

I don't know if this was directed towards me...

...but I work in the Securities/Brokerage industry - so I read alot of research & analysis on publicly-traded companies.