Profits.......What Do You Think?

[sail7seas]

Something a friend said to me yesterday got me thinking.....

Do you think the cruiselines (HAL in particular) make a higher profit margin on a ten day or a seven day Caribbean cruise? (Can we please not consider 34 day or World or European etc cruises.....Just seven vs. ten day Caribbean cruises.)

Why do you choose the one you think earns the higher profit?

 

[meglet]

My opinion would be the seven day Caribbean. I don't think the ships are as full for the 10 nt. sailings since many people can only take a week's vacation at a time. The 7nt sailings, especially during the summer and school vacations see even 3rd and 4th berths occupied. Also just anecdotal suggestions of this, the 10 and 11 night cruisers are more experienced and don't book as many of the shore excursions, whether it's because they've been to the islands before or are looking for a more relaxing cruise experience than heading on and off buses.I'm looking forward to the day when I can get on some of those 10 nighters. Only 20 years to retirement!

[Krazy Kruizers]

HAL has to be making more of a profit on 7 day cruises. They are diffently gearing their ships and sales to the younger people who don't have as much vacation time or have limited resourses to spend. Seven days is cheaper than 10 as far as cabin prices go. We have seen a lot different crowd the last couple of years on the 7 day cruises from when we originally started cruising. The younger crowd tend to book the cheaper cabins but once on the ship they spend more on alcohol - spa - cabanas - shops - pictures - etc. If these same people were to spend more for a cabin for 10 days, then they would spend less on the ship.

 

JMO

[Stevesan]

Do you think the cruiselines (HAL in particular) make a higher profit margin on a ten day or a seven day Caribbean cruise?

Why do you choose the one you think earns the higher profit?

 

 

Follow the money.

(1) The shorter cruise results in a higher pax turnover p/annum.

(2) It's certainly not a scientific analysis, but my experience researching cruise prices finds the shorter cruises have @ the same price p/person p/day.

(3) Consequently, shorter cruises will return higher annual revenue.

(4) Assuming the same, or only marginally greater, operating costs the shorter cruise realizes more profit.

[jhannah]

The 7-day argument makes sense. However, consider the portside expenses. It costs a cruise line a fixed amount to have the steveadores and material handlers on the dock. They are there for the same number of hours regardless of the length of the cruise. On a 10-day itinerary, the ship can amortize that cost over 10 days as opposed to 7, so it's better for them to stay out longer.

 

From previous posts, the more experienced cruisers who take longer journeys run up some fairly significant shipboard accounts. So I don't think it's necessarily true that the more one spends for a cabin the less they'll spend on board.

 

I'm leaning more toward a 10-day being more profitable for the cruise line.

[Stevesan]

Follow the money.

(1) The shorter cruise results in a higher pax turnover p/annum.

(2) It's certainly not a scientific analysis, but my experience researching cruise prices finds the shorter cruises have @ the same price p/person p/day.

(3) Consequently, shorter cruises will return higher annual revenue.

(4) Assuming the same, or only marginally greater, operating costs the shorter cruise realizes more profit.

 

Well, Duh! I had another senior moment (they're getting more frequent:rolleyes: ). Whether the cruises are 7, 10, 37 or umpteen days long, if the daily rate is unchanged, then so too is the revenue.

 

However, (watch him crawl out of this hole) I'd propose that pax turnover is stil relevant because it impacts onboard spending patterns. I know that we spend less, on average, per day during longer cruises. There is a tendency to spend more during early days until the novelty of the cruise wears off, then our spending tapers off. (How's that for a recovery?:) )

[Krazy Kruizers]

Hope we hear more from others on this topic.

 

[RevNeal]

I'm not sure there's really going to be that much of a difference between the profit margin on a 7-day as opposed to a 10-day cruise on a cruse-by-cruise basis. The per-day expenses are going to run roughly the same, ports will charge different prices for a cruise ship to dock but those will average out across the Caribbean (with the exception of Panama, which is more expensive). So ... there is really only one critical factor that will push operational expenses higher between the two schedules: the number of times a ship visits "home port" and has to access terminal facilities, shore services, resupply services, special cleaning services, etc. etc. Here's my thinking:

 

2 Hypothetical Dam ships:

 

Sevendam makes 7-day cruises in the Caribbean year around,

Tendam makes 10-day cruises in the Caribbean year around.

 

The Sevendam will turn-around at Ft. Lauderdale about 49 times in a year. The Tendam will turn-around at Ft. Lauderdale 34 times during that same period. Cost for the turn-around should be the same for each ship per-turn-around. However, the Sevendam turns around 15 more times (30% more frequently) in a year than the Tendam does ... hence, the Sevendam's shoreside operations will cost 30% MORE than the Tendam's.

 

Let's put some hypothetical dollars on the line. Let us say that it costs the Cruise Line $10,000 to turn-around a cruise ship -- disembark passengers, embark new ones, prepare the ship, etc. I have no idea what it costs, but $10,000 will be easy for math-purposes. The Sevendam will cost $490,000 a year for its turn-around expenses. The Tendam, however, will only $340,000 for that same period.

[cruzermon]

My suspicion is that 7 day cruises are more profitable, only because these are more likely to have higher occupancy factors. The incremental costs for a 3rd or 4th person in a cabin would seem to be food costs, and for CCL as a whole they run around $12.50 pp/day (I was surprised too). Actually, it's the summer cruises that are more profitable, and, I'm guessing here, there's more 7 day cruises in summertime and lots of kids sharing cabins with parents so occupancy rates go up. I could check this out on the SEC's Edgar site, and sift through all the 10Qs, but I'm just too lazy at the moment.

[Tricia724]

I think the shorter cruises are more profitable or the cruiselines wouldn't be doing so many of them. Look at Carnival...they have a zillion ships doing 4, 5, and 7-day cruises almost exclusively. HAL used to have more 10-day cruises than they do now; and it's even tougher finding a 14 day or longer cruise. Instead they alternate itineraries on the 7 dayers, I suppose so people can do b2b cruises if they want more time onboard. I would love to see one of the Vista class ships doing 10, 12 or 14 days in the Southern Caribbean during the long cold winter.

 

I agree that it's probably easier to fill the ships up for one week...lower pp cost and less time commitment. Younger cruisers who are still working often have to take their vacations in one-week increments. Also, I think the onboard spending would be much higher on the 7-dayers as people try to make the most of their limited vacation time. Longer cruises attract people who have cruised more often and are less likely to buy "stuff" onboard or take cruiseline shore excursions. How many pictures or special drink glasses can you buy?

 

Anyway, I think there are many other factors that contribute to profitability than simply per diem income and fixed costs.

[Tatka]

Celebrity is planning to spend $55 mil renovations on Century and put her on 4- and 5- itineraries out of Miami... I guess short cruises are more profitable.

 

Previous posters listed many points I agree with..

 

I want to add: More profit from ship stores.

[kryos]

Do you think the cruiselines (HAL in particular) make a higher profit margin on a ten day or a seven day Caribbean cruise? (Can we please not consider 34 day or World or European etc cruises.....Just seven vs. ten day Caribbean cruises.

I've really never given this much thought ... but off the top of my head I would imagine how profitable a sailing was would depend more on the time of year than on specifically how many days the cruise was. For example, a seven-day cruise during peak summer season would bring out more families. That's more people per cabin, more money spent for shore excursions, more money spent onboard, etc., etc. Contrast this with the same seven-day cruise ... off-peak season (i.e., kids back in school), max of two people in most cabins, many of the passengers perhaps older and not as interested in lots of shore excursions, many passengers experienced travelers who have been there/done that ... don't need another tee-shirt to commemorate the experience ... equals less money spent onboard.

 

Like I said ... I'm just guessing, but I would assume you couldn't get a definitive answer to this question. It would depend upon the season.

 

Blue skies ...

 

--rita

[kryos]

Celebrity is planning to spend $55 mil renovations on Century and put her on 4- and 5- itineraries out of Miami... I guess short cruises are more profitable.

I wonder, though, what they will do with the remaining 2 or 3 days. Sail back-to-back? If so, then I would imagine the weekday sailing would be a lot cheaper since most people looking for this type of cruise will want one than spans the weekend (less time off from work).

 

I think these shorter cruises target an entirely different market than the 7, 10 or longer number of days cruise. There is a large segment of the population who simply cannot get away as a family for seven or more days. These are people who are regular "working stiffs," who get maybe two weeks of vacation a year max. They also have several kids who cause them to eat through that vacation time pretty quickly (school vacations, sickness, etc.). By the time all is said and done, oftentimes these parents will only have a couple of days where they could afford to vacation together. They will have each used up the rest of their vacation time separately by taking days off as family needs dictate during the year.

 

I would imagine if the cruiselines are setting aside a ship for shorter itineraries, it is because this segment of the market has been deemed as a significant one that has been largely untapped. If shorter cruises weren't offered, these folks would simply not cruise.

 

I realize that I am very fortunate to have a job where I get a substantial amount of vacation time each year ... close to six weeks. I am also fortunate (in some respects) that I am not raising children. Therefore, the longer cruises are the only ones I am interested in. But, for many of my friends ... there is no way they could comfortably manage even a seven-day cruise. They simply wouldn't have enough available vacation time between the two of them. In fact, one friend of mine does a week down the shore with her kids each summer. Her husband takes them down on Sunday and stays with them until mid-week. Then she goes down maybe Tuesday or Wednesday night, and stays with them for the rest of the week, while husband drives home to go back to work. Can't do that sort of thing on a cruise.

 

Another benefit I'm sure the cruiselines have thought of with the shorter cruises is that they can serve as an "introduction to cruising" for the person reluctant to try a cruise. I have often heard people say that they would go nuts if they were stuck on a boat for seven days. While that statement makes me laugh, I can readily understand someone feeling that a cruise would be too confining ... especially if they were used to very active land vacations. The four or five-day cruise is perfect for this sort of person as it will let them try crusing on for size, while having the comfort of knowing that even if they hate it, at least it's only for a couple of days ... not a whole week.

 

So, while some cruiselines are getting into the shorter cruises, I think they are doing so not so much for profit, but because they've discovered a substantial market out there that has been going largely untapped. This sort of cruise will satisfy that market's needs and bring more customers into the cruiseline's database.

 

Blue skies ...

 

--rita

[Tatka]

I wonder, though, what they will do with the remaining 2 or 3 days. Sail back-to-back? If so, then I would imagine the weekday sailing would be a lot cheaper since most people looking for this type of cruise will want one than spans the weekend (less time off from work).

 

I think these shorter cruises target an entirely different market than the 7, 10 or longer number of days cruise. There is a large segment of the population who simply cannot get away as a family for seven or more days. These are people who are regular "working stiffs," who get maybe two weeks of vacation a year max. They also have several kids who cause them to eat through that vacation time pretty quickly (school vacations, sickness, etc.). By the time all is said and done, oftentimes these parents will only have a couple of days where they could afford to vacation together. They will have each used up the rest of their vacation time separately by taking days off as family needs dictate during the year.

 

I am sure Century will sail back-to-back (like other ships that do 3-4-5 day cruises)

 

I am that "working stiff" ;) who only has 2 weeks of vacations a year (in 2 years it'll be 7 years working for the same company and I'll have 3 weeks :) )

 

I only take 1 week at a time and think 5 day cruise (while short, we prefer 7 days) can be a nice alternative for us as we can drive to Miami , instead of spending $$ for 3 of us to fly. ( if I take 7 day cruises there is no time to drive). I was reluctant to take 4 or 5 dayers on Carnival or RCI older ships (Sovereign or Majesty) as they are mostly "booth" cruises..but I hope Celebrity short cruise experience will be much better.

[sail7seas]

I am sure Century will sail back-to-back (like other ships that do 3-4-5 day cruises)

 

I am that "working stiff" ;) who only has 2 weeks of vacations a year (in 2 years it'll be 7 years working for the same company and I'll have 3 weeks :) )

 

I only take 1 week at a time and think 5 day cruise (while short, we prefer 7 days) can be a nice alternative for us as we can drive to Miami , instead of spending $$ for 3 of us to fly. ( if I take 7 day cruises there is no time to drive). I was reluctant to take 4 or 5 dayers on Carnival or RCI older ships (Sovereign or Majesty) as they are mostly "booth" cruises..but I hope Celebrity short cruise experience will be much better.

 

Tatka....

 

This is off the subject of the thread, but want to mention to you that yesterday when I was pricing air to FLL for our upcoming cruises, I checked Jet Blue. Per person, round trip Boston to FLL priced at $165.40. I know that times three people it adds up but it might be an option worth thinking about on order to avoid the minimum four full days of driving it must be to go round trip MA to Miami. What with the price of gas, food on the road, wear and tear on your auto (and on you) etc....

[sail7seas]

Tatka....

 

Sorry, forgot to ask you in my preceding post....

What is a 'booth' cruise that you mentioned?

[jhannah]

I have often heard people say that they would go nuts if they were stuck on a boat for seven days.

I've heard this, too. It's almost humorous. I've read on land tour bulletin boards how terrible it would be to be "imprisoned" on a cruise ship for a week. They simply are uninformed. I personally have concerns about being "imprisoned" on a tour bus day in and day out. At least on a cruise ship I can move about, join in games or other activities, or go out and watch the sea. Not a whole lot you can do on a tour bus.

[Krazy Kruizers]

Tatka

I am also curious about "booth" cruises.

Please explain.

[Krazy Kruizers]

jhannah

Like you - we have never felt "imprisoned" on a ship. Buses - yes. I used to hate when DH wanted to take bus tours all over Europe.

On a ship you can sit by the pool, read whenever or whereever, take part in activities, play trivia, attend port and shopping lectures, some curises have regular lecturers on them, go to wine tasting, attend cooking presentations, etc. - oh the list goes on and on.

[Sailure]

I'm not sure there's really going to be that much of a difference between the profit margin on a 7-day as opposed to a 10-day cruise on a cruse-by-cruise basis. The per-day expenses are going to run roughly the same, ports will charge different prices for a cruise ship to dock but those will average out across the Caribbean (with the exception of Panama, which is more expensive). So ... there is really only one critical factor that will push operational expenses higher between the two schedules: the number of times a ship visits "home port" and has to access terminal facilities, shore services, resupply services, special cleaning services, etc. etc. Here's my thinking:

 

2 Hypothetical Dam ships:

 

Sevendam makes 7-day cruises in the Caribbean year around,

Tendam makes 10-day cruises in the Caribbean year around.

 

The Sevendam will turn-around at Ft. Lauderdale about 49 times in a year. The Tendam will turn-around at Ft. Lauderdale 34 times during that same period. Cost for the turn-around should be the same for each ship per-turn-around. However, the Sevendam turns around 15 more times (30% more frequently) in a year than the Tendam does ... hence, the Sevendam's shoreside operations will cost 30% MORE than the Tendam's.

 

Let's put some hypothetical dollars on the line. Let us say that it costs the Cruise Line $10,000 to turn-around a cruise ship -- disembark passengers, embark new ones, prepare the ship, etc. I have no idea what it costs, but $10,000 will be easy for math-purposes. The Sevendam will cost $490,000 a year for its turn-around expenses. The Tendam, however, will only $340,000 for that same period.

 

Does the price of fuel figure in?

[sail7seas]

Whether the ship is sailing on a ten day itinerary vs a seven dayer, it would be using the same about of fuel while in port or while at sea, wouldn't it?

[kryos]

I am that "working stiff" ;) who only has 2 weeks of vacations a year (in 2 years it'll be 7 years working for the same company and I'll have 3 weeks :) )

I've been with my employer for 27 years now ... that's why I get so much vacation time.

 

Sadly, though ... I don't think my tenure there will last more than another year ... cutbacks, buyouts, etc. Our union contracts expire next October and I think many of us will no longer be there after that time. Unfortunately, though, since I'm too young to retire yet, I'll have to hunt down another job, and it'll be back to the two weeks vacation again for me too. :( When that time comes, it'll be strictly cruises out of Philly or New York for me because it's not worth the airfare (nor the stress of flying) for me to head down to Florida for anything less than a ten-day cruise ... and, unfortunately, ten-day cruises won't be doable any longer.

 

That's why I went ahead and booked my 30-day South Pacific for next January. Might be the last year for a long time that I can do a cruise of that long. :(

 

Blue skies ... fellow working stiff! :)

 

--rita

[kryos]

Whether the ship is sailing on a ten day itinerary vs a seven dayer, it would be using the same about of fuel while in port or while at sea, wouldn't it?

Presumably, though, it would travel farther on a ten-day than on a seven-day. More ports, some farther out than would be doable on a seven-day. So, I would imagine fuel costs would be a bit higher on a ten-day.

 

Also, a ten-day has more sea days. Even if the next port is relatively close, the captain doesn't just dock there when he arrives. If he has loads of time to kill, he cruises around. Gotta give people some sea for those sea days. That eats up fuel too. With a seven-dayer, you're likely to have a tighter timetable to get from one port to another, less cruising around, less burning of fuel.

 

Just my two cents worth ...

 

Blue skies ...

 

--rita

[kryos]

I've heard this, too. It's almost humorous. I've read on land tour bulletin boards how terrible it would be to be "imprisoned" on a cruise ship for a week. They simply are uninformed. I personally have concerns about being "imprisoned" on a tour bus day in and day out. At least on a cruise ship I can move about, join in games or other activities, or go out and watch the sea. Not a whole lot you can do on a tour bus.

I can't laugh at these people because ... I was one of them! I always falsely believed that a cruise would be a very boring vacation ... the kind of vacation only "old fogeys" took. I would laugh when I heard about people at work who were going on a cruise.

 

Then a writer's foundation I am involved with did a writers conference at sea on the Rotterdam in March 2004. I had attended their annual land-based writer's conference and retreat in Maui back in 2001 and loved it. But I knew Maui would be a hardship again due to the length of the flight (it almost killed me the one time I did it). Since Fort Lauderdale looked a lot more attractive in terms of travel time than Maui, I went ahead and booked the cruise. I honestly figured it would be my one and only cruise experience. I was going for the conference, not for the joy of being on a "boat."

 

Two days on that ship and I was hooked. Since then I've been on a total of five cruises, with two more booked for next year. Seems I can't get enough.

 

Lord, this cruising thing is probably more addictive than cocaine ... and equally as expensive too! :)

 

So, I guess I have to be tolerant of people who make false assumptions about cruising being for the "geritol" set. All I can say to those people is to give it a try ... perhaps on an itinerary of a shorter duration. Then maybe they'll get addicted too, and I'll have some new cruising buddies. :)

 

Blue skies ...

 

--rita

[lipoppop]

Many good points have been made but let me add:

 

I have noticed that there is more gambling on the 7 day cruises then the longer ones- more income to HAL from the concession.

People tend to try the spa once on a cruise. Therefore the more cruises per year the more spa visits- again money to HAL from the concession.

 

So I think the seven day crjuise is a better deal for HAL.