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

[RevNeal]

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.

 

Fuel expense on a 10-day cruise would be greater than on a 7-day cruise, true. So is food expense and salary expense. However, that doesn't make the cost of operating 10-day cruises as opposed to 7-day cruises any more expensive when averaged out over an entire year. Those 3 extra days that the Tendam spends on a single cruise are actually being cruised by the Sevendam too ... just on the next 7-day cruise.

 

If this seems confusing to you, think of it this way. Both the Sevendam and the Tendam spend 336 days a year burning fuel in sea or port operations. (More than this, actually, because the generators are ALWAYS on, producing electricity ... even during dry-dock. But, we're figuring this just on days spent working.) The Tendam spends those days in 34 10-day groupings, while the Sevendam spend those days in 49 7-day groupings. But, no matter HOW you figure it, it's still 336 days for BOTH ships. Hence ... the fuel costs are roughly the same for the whole year. But the costs for shore staff, turn around operations expenses, home port fees, etc., are all MORE for the Sevendam because the Sevendam returns to homeport more frequently (15 times more frequently each year) than the Tendam.

 

Does this make sense?

This one factor alone -- the increased number of visits to "homeport" for passenger turnaround, consumables replenishment, and such -- really does increase the cost of 7-day operations by a significant amount (as I said in my prior post ... it increases the costs by 30%).

[sail7seas]

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.

 

 

I agree with you, Lipoppop.

 

Even considering the higher shore ops expenses of the seven day cruiser, the turn around day expenses, I think it is more than set off with higher casino spending, more spa/salon spending, more shore excursions, higher liquor tabs. I think the per diem prices paid for the cabins are comparable but the amount spent per pax per day is higher on the shorter cruises.

 

Maybe it's the 'have to have as much fun as we can as fast as we can' philosophy. Or maybe, because there are large numbers of younger working folks on the seven day cruises they are parting with their disposable cash a little more easily than some of the retired folks.....the ones who have already gambled for years and are tired of it; have as many t-shirts as anyone could want or need; have bought as many photos as their albums/frames and display areas can accomodate. They may not be drinking as much either. Perhaps they have more medical conditions that prevent drinking or take meds that 'don't mix well' with liquor?? These same folks have done about as many shore excursions in the past that they have already been there and done it and bought the t-shirt.

I definitely think the seven day cruises produce a lot more income from spa services/massages/salon appointments/manicures/pedicures. I think the younger women/men are more apt to spend more money on their once or twice a year short vacation than the folks who have more time to take more/longer vacations.

 

The kids that travel with the young families are pouring money into the video arcades, their parents are often paying for alot of shore excurions, lots of souvenirs from the gift shops and photos to be sure to memoralize this and all the wonderful vacations the family enjoys.

 

I think the seven dayer (in the Caribbean particularly) produces higher profit.

[HeatherInFlorida]

Hmmm .... well, I'm not sure but my gut tells me they probably work it out to gain about the same profit for both 7 and 10 day cruises. From my own experience I've always been surprised to find the 10 day cruises a bit more expensive on a daily basis than the 7-day.

 

We also need to consider that the longer cruises have more days at sea so there is a better chance that passengers will spend more money in the casinos and the shops. There are many 7-day cruises that have only 1 or 2 days at sea in the entire week. I'm on a 14 day cruise on Celebrity this Fall with 7 days at sea.

On the other hand, they make a lot of money on their shore excursions.

So I think HAL's number crunchers have worked this out to gain the greatest profit from all length cruises.

[RevNeal]

So I think HAL's number crunchers have worked this out to gain the greatest profit from all length cruises.

 

Without a doubt ... absolutely without a doubt!

[BruceMuzz]

The answer to your question is very simple - but not for the reasons you might think.

The 7-day cruise is more profitable in nearly every case, because as market research shows us, 95% of the cruising public wants to take a 7 day cruise. A Mass Market cruise ship can only turn a profit when it has 100% occupancy (or more) on an annual basis. Since most cruisers (not all) will not - or cannot - take a longer cruise, it is rather difficult to fill a ship on a 10 day or longer itinerary.

These days the majority (not all) of cruisers on a 10 day or longer itinerary are retired and on fixed incomes. Per diem revenues on most (not all) longer cruises are lower due to the frugal nature of those guests.

 

A note of reference for those of us who still view the cruise lines as cash cows:

 

If you took all the revenues and all the profits from all the major cruise lines in the entire world for 2004, and added them all together, the totals would be lower than the revenue and profits of the Federal Express Company in 2004.

 

The big difference of course is that while Federal Express invested in leasing airplanes, buying delivery trucks and building warehouses, the cruise lines borrowed Trillions (not Billions) to invest in building new ships.

[HeatherInFlorida]

I complete understand Bruce's point and it also supports why I find 10 and 14-day cruises more expensive than double a 7-day. They have to charge more to gain the profit. On our last Oosterdam cruise, we had a Verandah cabin for $1600 for the 2 of us. But I could not come close to $3200 in a Verandah on the 14-day I was looking at. I was getting rates of +$4000 for the same cabin. So.............there you go!:)

[RevNeal]

Interesting observation, Bruce.

However ... HAL tends to sell out its 10 and 14 day cruises just as quickly, if not more quickly, than its 7-day cruises. While it is definitely true that the passenger census on a 10 or 14-day cruises will tend toward the higher end of the scale (I've observed this myself), it is also true that the economic means of many (not all) of these people is sometimes (not always) far above a younger couple with kids in college or at home. Not all of these retired people are on "fixed" incomes ... and, among those who are, their "fixed incomes" are (many times) quite a bit higher (by several orders of magnitude) than my working salary.

 

Also, Heather, consider that price is also driven by demand. In terms of number, HAL has fewer 10 and 14-day cruises in the Caribbean as opposed to its numerous 7-day cruises. Supply-and-demand. HAL doesn't have any trouble selling out those longer-itineraries, so the price goes up (not down). Witness the Veedamer's cruise ... I couldn't get on it in the cabin-category Christopher wanted, so we didn't go.

[kryos]

This one factor alone -- the increased number of visits to "homeport" for passenger turnaround, consumables replenishment, and such -- really does increase the cost of 7-day operations by a significant amount (as I said in my prior post ... it increases the costs by 30%).

I would imagine too that it is not cheap to have that berth in Fort Lauderdale (or wherever the ship is turning around) each and every week. I'd love to see the rent bill! As you point out, turnaround expenses ... personnel, etc. ... are probably quite high and therefore could actually make the seven-day cruise more expensive to run for the cruiseline.

 

But, I would imagine berth space in Fort Lauderdale is probably a lot cheaper than say in New York, because it seems that whenever I price it out ... a cruise leaving from New York (or one of the home ports) is always considerably more expensive than the same amount of days leaving from Florida. In fact, it's actually cheaper to factor in the airfare and go from Florida than take the train and leave from New York.

 

Blue skies ...

 

--rita

[kryos]

The 7-day cruise is more profitable in nearly every case, because as market research shows us, 95% of the cruising public wants to take a 7 day cruise. A Mass Market cruise ship can only turn a profit when it has 100% occupancy (or more) on an annual basis. Since most cruisers (not all) will not - or cannot - take a longer cruise, it is rather difficult to fill a ship on a 10 day or longer itinerary.

Just a note here, though. My past two cruises were on Princess ... ten and 15-day respectively. Both cruises were booked 100% capacity. Entirely sold out.

 

I think there are a lot of people that will take longer cruises ... at least enough to fill the ship. In fact, that's probably why the cruiselines don't run as many longer cruises than they do seven-day ones. But with a lesser amount of cruises, I think they do, in many cases, manage to fill the ship.

 

Blue skies ...

 

--rita

[bepsf]

I simply can't imagine that longer cruises aren't as profitable if not more so than 7 day cruises - Otherwise, why would the lines bother to put so many on the schedule?

Bear in mind that the 7-day cruises are in some seasons practically a commodity item requiring a certain level of discounting to sail full, whereas when was the last time you saw 40-50% discounts on a 15-day Hawaii or 21-day South America cruise?

[RevNeal]

.... when was the last time you saw 40-50% discounts on a 15-day Hawaii or 21-day South America cruise?

 

Rarely. The Hawaii and South American cruises are usually expensive, and they usually book solid several months before the final payment due date. That doesn't sound to me like the longer cruises are sailing only half-full Quite the contrary ... my experience has been the opposite.

[BruceMuzz]

In 2004, approximately 11 million people went on a cruise.

The average cruise for those 11 million people was 6.8 days long.

[sail7seas]

In 2004, approximately 11 million people went on a cruise.

The average cruise for those 11 million people was 6.8 days long.

 

Do you have the statistic which compares how many seven day cruises are offered by all the combined mass market cruiselines vs. how many ten day cruises? I think that statistic is very pertinent. People can only book that which is offered. It does not mean that more people would not like a ten day cruise but once the considerably smaller number offered are sold out, those trying to book are left with a seven dayer or nothing. (Again....I remind this discussion is merely about 7/10 day cruises and not longer or shorter ones.) Thanks if you have those numbers.

[HeatherInFlorida]

I agree, Sail, that statistic would be important. Without that, the average number could be deceptive. Obviously more 7-days are offerred so the average would come down.

The problem with the 10-days are they often actually take up 2 work weeks which is a problem for working people. The ideal would be a cruise leaving on a Friday and returning on a Monday ... making it one full workweek and 2 days. But many leave on a Tuesday and return on a Friday using 2 full weeks. Obviously the cruiseline has to do it that way. But I think you'd see a ton of 7-day people choosing the 10 day if it could take place in that ideal timeline.

Having written all that, I realize it has nothing to do with anything other than to suggest that just because the average is 6.8 days doesn't mean the 7-day cruises are necessarily more profitable.

[kryos]

The problem with the 10-days are they often actually take up 2 work weeks which is a problem for working people. The ideal would be a cruise leaving on a Friday and returning on a Monday ... making it one full workweek and 2 days. But many leave on a Tuesday and return on a Friday using 2 full weeks. Obviously the cruiseline has to do it that way. But I think you'd see a ton of 7-day people choosing the 10 day if it could take place in that ideal timeline.

God I love having my "weekends" in the middle of the week ... not to mention working third shift! I only used ten workdays to take a 15-day cruise. What a life! :)

 

Of course, I do play it on the "dangerous" side. I generally fly to the point of embarkation the morning of the cruise.

 

Blue skies ...

 

--rita