Beware of Inflated on Board Prices and Misrepresentations on Celebrity

[TravelerThom]

Do the "onboard" expenses include the fixed costs and overhead of the ships? Or is that just the operating expenses like fuel, food costs, product cost, and compensation? Cruise lines operate on pretty high fixed costs considering the cost of the ships themselves...

I THINK (but do not know) that the reason the onboard revenue to expense ratio is so high is that it is looking just at onboard sales (casino, spa, photos, tours [broken out separately by CCL], shops, etc) versus expenses for those areas and probably do not include fuel or any of that other stuff. I think that spa, shops, casino etc are contracted out and operated by other companies, I would guess for some combination of fixed fee and percent of profit, so possible that under this accounting system there may be NO expense booked, just the income the cruise line gets from the company that operates that department.

 

DISCLAIMER: While I know my way around numbers (I am a physicist), I am not an accountant, professional stock analyst, nor do I run a business. But I do like to attempt to understand how things work.:cool:

 

Thom

[jan-n-john]

I have always assumed that there are no bargain prices on cruise ships, or resort hotels for that matter, for anything. Where there is no competition, prices are always high. In short, I would never buy any goods on a ship. Simple rule -- don't shop on ships. Don't even look; just pass them by.

[jasm8449]

Please educate me. I have never understood why people will spend thousands of dollars on jewelry (especially diamonds and precious stones) from a shop in a port of call (other than a 'name' shop such as H.Stern, Cartier, etc). It's highly unlikely that someone who is not a jeweler could know what they are getting.

[TravelerThom]

Please educate me. I have never understood why people will spend thousands of dollars on jewelry (especially diamonds and precious stones) from a shop in a port of call (other than a 'name' shop such as H.Stern, Cartier, etc). It's highly unlikely that someone who is not a jeweler could know what they are getting.

GREED

 

Many people want something for nothing (or at least for less than it should be). It I wanted to sell a cheap imitation Rolex for an inflated price I'd try to let you think that it was stolen (and therefore genuine). Greed overcomes many people aversion to getting stolen property. Greed keeps Caribbean jewelery shops in business. A totally honest person is very difficult to con.

 

These individuals have convinced themselves that they are getting a terrific bargain, even though they know nothing about what they are buying. In many cases their greed comes back to bite them. Duty Free means that the seller has not paid duty on the item; it does NOT mean that one is free of paying duty upon bringing that item into the US. Many people are unaware of that; others knowingly intend to try to smuggle it in. Two months ago there was a CruiseCritic thread where the OP was INCENSED that Royal Caribbean had reported his onboard purchase of $10,000 plus watches to US Customs (he did not plead ignorance, but baldly stated that he had no intention of declaring the purchase). US Customs allowed him to amend his declaration form (and did not fine him or throw him in jail), but he was still pissed at everybody involved and defended his actions through multiple posts.

 

No sympathy from me in these cases.

 

Thom

 

PS Sign in Kusadasi, Turkey: "Genuine Fake Rolexes". I almost went in to check them out.

[waterbug123]

Please educate me. I have never understood why people will spend thousands of dollars on jewelry (especially diamonds and precious stones) from a shop in a port of call (other than a 'name' shop such as H.Stern, Cartier, etc). It's highly unlikely that someone who is not a jeweler could know what they are getting.

 

There are bargains to be had if one is skilled at negotiating, BUT you must know and trust your source. We recently bought a very expensive diamond piece from a shop in St. Thomas. As expected, when we returned home and had it appraised, it appraised for FAR more than we paid. But we knew what to expect... we have friends who have purchased multiple pieces from this shop over the past 20 years. They have always manage to pay FAR less than the listed price, yet have always gotten an appraisal at home for at least the listed price if not more. At this point, they know the people who run/own this shop well, and they trust them. They introduced us to the people and because of the relationship they have built with them over the years, we felt comfortable trusting them as well, and we were not disappointed. Note: This is not a 'name' shop such as Cartier, like you mentioned.

 

Of course, this is a very different situation than walking into a shop blind, and just assuming that anything and everything they tell you is true, or assuming that because the shop was listed in the cruise ship shopping guide, you are guaranteed to get a bargain or not get scammed. Had we not had our friends' prior experience with this shop as "proof," we would never have felt comfortable making such a large purchase there.

[Bfson]

For emeralds we only use Mr. Emerald in Cartagena.

[cle-guy]

As to the $50 amex credit OP received, often these are temporary as Amex contacts the merchant for clarification. At that point, merchant will supply signed sales slip and provide copies of their return and sales policy, and if price matching is there.

 

At that point Amex will review the details, and may possibly reverse the $50 credit. Unless Amex ddi it as just a way to appease their customer and eat the $50 themselves, which they will sometimes do.

 

I have a small business, actually operate like cruise retailers, coming in as 3rd party selling in the museum, paying museum a commission of our gross sales. We had a customer buy an expensive necklace in our museum gift shop. She wore it to the special event that night (I was there and saw it) then tried to return to the next day. Our policy is clearly ALL SALES FINAL- NO RETURNS, even printed on the credit card slip in bold letters as well as signed at each POS register.

 

We would not take the item back, she filed claim with amex, they reversed the charge. 2 months later they put it back on after reviewing my documents as our sales policies were very clear, and even acknowledged by the customer with their vey own signature. Amex DID call me and asked me to make an exception, but I would not budge and they left the sale stand as-is.

[jan-n-john]

I can't lay my hands on RCCL 2012 figures, but looking at Carnival Corporation 2012 Annual Report their net income for the year US$1298 Million (ie Approx $1.3 Billion). Looking further into the figures and you see Onboard Revenue of $3513 Million versus Onboard Expense of $558 Million (that's revenue 6.3 times expenses!). Tour revenue and expenses are listed separately; add these in and you find revenue over expenses (ie profit) for Onboard plus Tours of $3012 Million. Subtracting that profit from the total Corporate net income of $1298 Million, I see a LOSS of $1714 Million in other areas. I am NOT an accountant, but looks to me like CCL took a loss of $1.7 BILLION:eek: to get you onboard and sell you stuff (casino, spa, photos, tours, shops, etc).

 

Thom

 

Good work. You now are a long way toward understanding the cruise industry business model.

 

Over time, based on average pax behavior, the way it has evolved is that onboard selling is (1) highly profitable, because it is (2) insulated from downward price pressure. Given competition among the lines to get pax aboard to sell them stuff on-board and make big bucks, the prices of the other parts of the total cruise package have dropped below cost. Given these facts, one may surmise that the smart strategy is to take advantage of the underpriced parts (the cruise itself) and do one's shopping elsewhere where competition does exist for the desired merchandise and prices are lower. Also of course keep drink-buying, spa-going, and the rest to a minimum. Let the other guy provide the cash for the cruise lines' bottom lines. Of course if everybody did this the business model wouldn't work, but many have not figured it out, or just don't care, or just can't live without all those on-board purchases, which is the fundamental premise of the first sentence.

[boogs]

AAt that point Amex will review the details, and may possibly reverse the $50 credit. Unless Amex ddi it as just a way to appease their customer and eat the $50 themselves, which they will sometimes do.

 

They don't "eat" the charges - other customers of Amex will end up paying for the OP's foolishness in the interest rates or annual membership charges they pay. The OP got a $50 refund - the rest of Amex's customers get to pay for the refund.

[cle-guy]

They don't "eat" the charges - other customers of Amex will end up paying for the OP's foolishness in the interest rates or annual membership charges they pay. The OP got a $50 refund - the rest of Amex's customers get to pay for the refund.

 

Very true indeed. Partly why cc interest rates can be as high as 29%!

 

My point was they may choose to not pass that charge back to the merchant as they do on most chargeback claims.

[Kellie Poodle]

I may be dating myself here as I've been cruising for over 25 years but there was a time when one could get a good price on jewelry and optics in the Caribbean as well as on the ship.

 

Perhaps people may still be working on that premise. They might have heard from people like myself about the good price we got on a piece of gold jewelry DH still wears 23 years ago in St. Thomas and believe that the bargains are still there.

 

Likewise he has a watch purchased around the same time on a ship (that didn't have balconies) for a really good price.

 

Of course most of us know these bargains no longer exist in the islands where each jewelry store has its special scheme to make themselves money while making us suckers.

 

Also, be very careful when buying precious stones, like diamonds. The lighting in those stores is designed to enhance the appearance of the stones quite a bit. If you are on land, ask to see the piece in the daylight outside. You might be very surprised at the difference in quality.

 

No bargains on shipboard shops. How much of a discount can one expect when the store is paying a fee to just be on the ship and then a commission on what they sell?

 

As far as the shops "recommended" by the cruise line, you will likely pay the most there as these merchants pay the cruise line to tout them. A cruise director once told me that if one of the recommended shops rip you off, the cruise line will make good, but I think he was misinformed.

 

If you see something you like on a cruise or an excursion and you can afford it, buy it, but don't expect any bargains.

 

The best way to purchase fine jewelry is to establish a relationship with a local jeweler or like one poster, an independent jeweler they trust on an island.

 

I still buy the $10 evening bags on the ship. :D

[buggins0402]

Do the "onboard" expenses include the fixed costs and overhead of the ships? Or is that just the operating expenses like fuel, food costs, product cost, and compensation? Cruise lines operate on pretty high fixed costs considering the cost of the ships themselves.

 

Of course it goes without saying that their gross profits from onboard spending must be very high since they push so hard for it. I've never seen anything cheap on a ship unless the price matched the cheap quality such as the "closeout/sale" merchandise they come up with like $10 watches and $10 T-shirts.

 

Yep, after the S-class builds, depreciation is probably a pretty big line item of general overhead.

 

I'd have to look at the financials, but if the income attributable from onboard was compared to total EBITDA (earnings before interest, taxes, depreciation and amortization) is might be a relevant analysis.

[DirtyDawg]

While CCL's "problems" have certainly had an impact on their bottom line, I don't think that is the explanation. I have looked at RCCL numbers for 2010 and 2011, and while I don't have the specific numbers in front of me I can say that RCCL had onboard revenue profit per annum of roughly $1.2 Billion, and their total net profit was about $450 Million, so excluding onboard RCCL had a loss of about $750 Million. Considering that RCCL is roughly half the size of CCL those numbers track pretty closely. The biggest difference I noticed was that RCCL onboard revenue to expense ratio was in the 4.5 to 5 range versus CCL's 6.3.

 

I wish that I could invest in just the "onboard" without having to eat the loss these companies sustain to get you to sail:D. Looking at it another way, if you spend little onboard you are getting a subsidized vacation. So I want everyone (else) to spend lots on board, so that I get a cheap vacation:).

 

Thom

 

You're so right. The "onboard" business' have very nice margins!! So fellow cruisers please, please drink, gamble, go to the specialty restaurants, buy the 'fine'art and overpriced watches, jewelry, and yes binoculars. :D

 

And don't forget about the spa!

[robtulipe]

There used to be for liquor prices if one brought back a printed price list.

Still do as this was offered on our recent Century cruise.

In the past I've also used a picture of the price sticker or card to get a price adjustment. That why some shops in duty free ports like Sint Maarten and St. Thomas have signs prohibiting photos inisde them. ;)

[wwcruisers]

Janet (Kellie Poodle) -- great advice (as always). And, I agree that some bargains could definitely be had, "back in the good old days". I still have a pair of small earrings that DH bought me at the Colombian Emeralds in Freeport, back on our first "real" cruise (in the '80's). To this day, I don't know if we got as much of a bargain as the saleslady told us we did -- but, I like them! :p

Edited December 25, 2013 by wwcruisers

[KiwiFunCruiser]

Yes "Sales", IMHO and experience there is no such thing as a "Free Lunch". Today our Boxing Day sales start, and apart from the small number of super low priced items to lure you into the stores which the retailers still make $$$ on, most other "Sale" items are really pitched at there original retail price anyway. Having said that, I will still go looking for that real "Bargain" LOL:)

[Kellie Poodle]

Janet (Kellie Poodle) -- great advice (as always). And, I agree that some bargains could definitely be had, "back in the good old days". I still have a pair of small earrings that DH bought me at the Colombian Emeralds in Freeport, back on our first "real" cruise (in the '80's). To this day, I don't know if we got as much of a bargain as the saleslady told us we did -- but, I like them! :p

 

I have a bracelet with the best quality "rainbow topaz" or as it was called in Alaska, where I bought it, "northern lights" topaz I've ever seen. Each stone is framed in 14K gold and, because the bracelet was way too big, I have a pair of earrings and a pendant made from the three extra stones. I got it in 2005. I don't know if it was a bargain or not, but the piece was unique and I fell in love with the quality of the stones. I did not buy it as an investment.

 

When someone asks me if it's "real" I tell them: "of quartz":D

[cl.klink]

Was on Celebrity Constellation Sept 15. One night photo department had some binoculars for sale. I saw a pair for $124.95 I liked and asked how that compared to what I could expect to pay off the ship.

 

Was told their price was 30% to 40% less.

 

Checked price on Amazon, Best Buy, Nexttag when I got home. They sell for $79.99. List price is $119.00.

 

Complaint to Celebrity just answered. They are sorry but they use a third party vendor and have nothing to do with price.

 

The third party does not price match and Celebrity refuses to make this right in any way.

 

Anyone think I am being unreasonable in saying this is wrong and fraudulent?

 

I'm shocked. Shocked, I say.

[maxsales]

Was on Celebrity Constellation Sept 15. One night photo department had some binoculars for sale. I saw a pair for $124.95 I liked and asked how that compared to what I could expect to pay off the ship.

 

Was told their price was 30% to 40% less.

 

Checked price on Amazon, Best Buy, Nexttag when I got home. They sell for $79.99. List price is $119.00.

 

Complaint to Celebrity just answered. They are sorry but they use a third party vendor and have nothing to do with price.

 

The third party does not price match and Celebrity refuses to make this right in any way.

 

Anyone think I am being unreasonable in saying this is wrong and fraudulent?

 

I really find this mentality disturbing. It seems most people want to protected from themselves.

 

You were told the price and made a decision to buy then after the fact you do research and complain that you were overcharged. Really?

[mickeysgal]

Captive audience and therefore captive prices. Like airport pricing or Disney pricing. That roll of Tums or a bottle of water is overpriced - why? Because they can. Only you can decide whether it's worth buying or not.

[robtulipe]

Captive audience and therefore captive prices. Like airport pricing or Disney pricing. That roll of Tums or a bottle of water is overpriced - why? Because they can. Only you can decide whether it's worth buying or not.

Exactly, just by going into the shop onboard and noting the price on common articles like toothpaste, dental floss and aspirin one should realize this fact.

[waterbug123]

$15

 

Worth it then, I guess. I've never had anything but diamonds appraised, but apparently a certified appraisal on less expensive stones is much cheaper.

[Kellie Poodle]

Worth it then, I guess. I've never had anything but diamonds appraised, but apparently a certified appraisal on less expensive stones is much cheaper.

 

I live in an area that has been named the lowest cost of living city in the US for two years running. Everything is cheaper here.

[Nova24]

I find it appalling that Celebrity put a gun to the OP head and made him buy over priced binoculars! For shame Celebrity.

[Denny01]

Please educate me. I have never understood why people will spend thousands of dollars on jewelry (especially diamonds and precious stones) from a shop in a port of call (other than a 'name' shop such as H.Stern, Cartier, etc). It's highly unlikely that someone who is not a jeweler could know what they are getting.

Because we are idiots!

 

I use a local jeweler who we love. But in a port on a cruise, I spotted a very inexpensive string of Pearls and jumped on them. Very proud of myself!

 

Then the string broke and the pearls ran all over the floor. Ooops.

 

So I sheepishly took my loose pearls to my jeweler. He properly restrung them so they wouldn't be all loose, and then mentioned how nice the 'pearls' are. I told him I thought they were real because I rubbed them against my teeth and they felt rough - I'd heard to do that to check for 'real pearls'. He just grinned and told me the way to check if the pearls are real is to ask the Reputable Jeweler selling them......I got very quiet.

 

Den

 

wow... tough crowd

.

 

Nope, just disagreeing with the OP. I'm personally always amazed of what reasons posters list why they won't cruise with some Line ever again.

 

Den