The Cruise Experience is changing!...

[BruceMuzz]

Back to my original response to your statement that a 1,500 passenger ship could never be operated profitably at any price point: while the "yachts of Seabourn" might have been very difficult to operate profitably (but might not have been as impossible as you contend) that hardly translates to a full size 1,500 passenger ship.

 

Referring to Porter's "Competitive Advantage" a 1,500 passenger ship might not be able to compete successfully by relying on cost advantage - but it might very well be able to successfully compete on the basis of differentiation. The experience of an operator of 500 passenger and less ships does not in any way necessarily apply to vessels the size of HAL's R and S classes.

 

HAL is a very good example of small ships failing against larger ones.

HAL has 9 ships that carry fewer than 2,000 pax.

All 9 are losing money - despite the fact that they are all paid for. No bank loans to service, and still losing money. One of those ships did make a profit on one cruise about 3 years ago.

 

If they doubled their fares, they might have a chance to succeed. But then the ships would be empty. So they would fail even faster.

HAL is desperately trying to sell those 9 losers, but nobody is willing to buy small, old ships that cannot possibly turn a profit.

They were willing to give 2 of the ships to P&O. HAL got no money for them, but at least was rid of two of the biggest losers in their fleet. The other 7 will be gone soon - but not soon enough.

Edited September 8, 2014 by BruceMuzz

[dancinman66]

Must say it's interesting reading to say the least

 

 

Sent from my iPhone using Forums

[BruceMuzz]

Bruce --- Could this possibly be a similar scenario whereby Apollo is transferring a money losing entity to NCL.

 

Frank Del Rio was CEO of Renassance cruises until he was fired shortly before they went bankrupt, and left many investors credit card companies and travel agents holding the bag. He and another person from Alamo car rental bought some of the Renassance ships and formed the company that NCL recently bought. Since Apollo acquired that company and sold it to NCL, it raises some concerns about the deal.

 

A quick look at the Apollo board of directors shows some interesting info about the history of the members.

 

NCL has been bleeding money for the past decade. It took them that long to recover from CEO Colin Veitch and his henchmen.

They are now on an upward spiral. All their ships are making money again.

They can now afford to acquire Oceania and Regent.

Even though the O and R ships are not profitable on their own, they do add many collateral financial advantages to the NCL Fleet.

Adding those brands keeps more pax within the company fleet.

Increased crew numbers reduces overall transportation costs (per crew)

Increased crew numbers adds strength to the labor pool.

Buying power increases with additional ships.

Port agents are more affordable with additional ships to share the costs.

Each ship donates a certain amount of money to support the home office and the shore-based staff. Even if a ship is not profitable, it does assist in supporting the head office - making the other ships more profitable.

 

We now see a situation where NCL is mirroring HAL a bit.

Both are mass market lines. Both have money-losing premium/luxury brands as sisters.

Since nobody can afford to build small ships again, these existing small ships have great potential in future markets.

Let's see which direction(s) these 2 lines decide to pursue.

[cbr663]

HAL is a very good example of small ships failing against larger ones.

HAL has 9 ships that carry fewer than 2,000 pax.

All 9 are losing money - despite the fact that they are all paid for. No bank loans to service, and still losing money. One of those ships did make a profit on one cruise about 3 years ago.

 

 

Of course HAL is losing money. Just last night we were reviewing HAL cruises. A 7-day Canada/New England going for $399 again. That is $57 a day, per person. We have spent more having brunch. Let's not forget, many passengers will not book at this price unless they get free OBC.

[Folk Singer]

No disagreement necessary.

Yes, the passengers on both types of vessels are looking for similar products.

But the operators are looking at two completely different operations.

 

A 1,500 passenger cruise ship cannot possibly make a profit - at any price point.

A 500 passenger river boat can be very successful.

 

 

interesting.

[navybankerteacher]

HAL is a very good example of small ships failing against larger ones.

HAL has 9 ships that carry fewer than 2,000 pax.

All 9 are losing money - despite the fact that they are all paid for. No bank loans to service, and still losing money. One of those ships did make a profit on one cruise about 3 years ago.

 

If they doubled their fares, they might have a chance to succeed. But then the ships would be empty. So they would fail even faster.

HAL is desperately trying to sell those 9 losers, but nobody is willing to buy small, old ships that cannot possibly turn a profit.

They were willing to give 2 of the ships to P&O. HAL got no money for them, but at least was rid of two of the biggest losers in their fleet. The other 7 will be gone soon - but not soon enough.

 

While your figures appear to be compelling, there seems to be something missing. When it comes to ships carrying fewer than 2,000 passengers: in addition to HAL and Princess, there are small ships operated by Azamare, Swan Hellenic,, Crystal, Princess, P&O, Cruise & Maritime, Ponant, Paul Gauguin, Fred Olsen, Sea Dream, Silver Sea, Louis, Star Clippers, Croisiers de France, Aida, and most likely some others which do not come to mind - sailing more than 50 small ships (not river cruises, which you seem to except).

 

Are they all missing something? Or is there possibly something that they do differently?

[dancinman66]

While your figures appear to be compelling, there seems to be something missing. When it comes to ships carrying fewer than 2,000 passengers: in addition to HAL and Princess, there are small ships operated by Azamare, Swan Hellenic,, Crystal, Princess, P&O, Cruise & Maritime, Ponant, Paul Gauguin, Fred Olsen, Sea Dream, Silver Sea, Louis, Star Clippers, Croisiers de France, Aida, and most likely some others which do not come to mind - sailing more than 50 small ships (not river cruises, which you seem to except).

 

 

 

Are they all missing something? Or is there possibly something that they do differently?

 

 

I'm thinking that they do something differently

You can't run businesses for a loss for long without folding and figured also can be made say whatever they want

I do feel a lot struggle. In making dollars though

 

 

Sent from my iPhone using Forums

[buggins0402]

Please look at it this way.

I managed ships for Seabourn for many years.

At the time we were charging a base fare of US$1200 per person per day.

We were also bleeding money.

At those prices we could not fill the ships.

 

But if we had been able to fill the ships at $1200 per person per day, we still would be operating at a loss.

 

So our Sales and Marketing people decided to start discounting in order to attract more passengers. On selected itineraries, you could book passage on Seabourn for around US$800 per day.

Occupancy picked up a bit, but so did our operating losses.

 

We did some internal studies that showed the possibility of making a profit if we charged a base fare over $3,500 per person per day - with a full ship.

We all know that is an impossible situation. Or to use your term - absurd. Something like that is not going to happen in any environment - competitive or otherwise.

 

So which price point is going to generate a profit for Seabourn?

 

$800 per day which helps to fill the ship but increases operating losses?

$1200 per day which leaves the ship half empty and increases operating losses?

$2000 per day which leaves the ship completely empty, further increasing losses?

 

If you can name a price point that will generate higher revenues than costs for Seabourn, you are going to have a very rosy and lucrative future with them.

 

What was included in the operating costs? Any assigned corporate overhead costs that would not be reduced if Seabourn ceased operations? What was/is the cash flow situation?

[sail7seas]

Of course HAL is losing money. Just last night we were reviewing HAL cruises. A 7-day Canada/New England going for $399 again. That is $57 a day, per person. We have spent more having brunch. Let's not forget, many passengers will not book at this price unless they get free OBC.

 

 

You didn't mention the $3,500 + pp fare for Neptune Suites....... same ship, same itinerary. How many cabins are actually available for the $399 you mention? A handful per week?

 

[navybankerteacher]

I'm thinking that they do something differently

You can't run businesses for a loss for long without folding and figured also can be made say whatever they want

I do feel a lot struggle. In making dollars though

 

 

Sent from my iPhone using Forums

 

Of course they are doing something differently. First, it is possible that accounting approach can make an operation look either profitable or losing.

 

It is certainly obvious that there are real savings which come with size - exactly the same staffing levels in deck and engineering departments can run a 5,000 passenger ship as a 1,500 one - and there are comparable (though not as dramatic) staffing efficiencies - which, combined with newer more efficient ships, make the larger ones much less expensive to operate on a per passenger basis. But cost is only part of the equation - differentiation of product can result in significantly higher per passenger revenue on a well run ship. Personally, I am willing to pay a premium to sail on a smaller ship - and a significant one if there is higher quality of product delivered.

 

I cannot be the only one.

[BruceMuzz]

Of course they are doing something differently. First, it is possible that accounting approach can make an operation look either profitable or losing.

 

It is certainly obvious that there are real savings which come with size - exactly the same staffing levels in deck and engineering departments can run a 5,000 passenger ship as a 1,500 one - and there are comparable (though not as dramatic) staffing efficiencies - which, combined with newer more efficient ships, make the larger ones much less expensive to operate on a per passenger basis. But cost is only part of the equation - differentiation of product can result in significantly higher per passenger revenue on a well run ship. Personally, I am willing to pay a premium to sail on a smaller ship - and a significant one if there is higher quality of product delivered.

 

I cannot be the only one.

 

You are not the only one, but there just aren't enough people like you to fill a fleet - or several fleets - of small ships week after week, year after year.

If there were more people like you, Seabourn, Crystal, and Silver Sea would have waiting lists, and they would be building many more small ships as fast as they can.

But there are no waiting lists and they are not building more small ships.

 

Seabourn ships rarely sail with more than 50% occupancy.

Silver Sea never hits 50%.

Silver Sea had to tie up a brand new ship for two years and let it sit empty. They couldn't find enough passengers to make it worthwhile to sail it.

 

Far too many cruisers tell me that they are more than happy to pay "a little bit extra" for a premium product.

Firstly, it requires far more than "a little bit extra" if you want a quality experience.

Quality costs plenty more - plain and simple.

Secondly, when it comes time to get out the wallet and pay, those big spenders who offered to pay more for quality usually go for the cheapest inside cabin on the cheapest possible cruise.

[ducklite]

You are not the only one, but there just aren't enough people like you to fill a fleet - or several fleets - of small ships week after week, year after year.

If there were more people like you, Seabourn, Crystal, and Silver Sea would have waiting lists, and they would be building many more small ships as fast as they can.

But there are no waiting lists and they are not building more small ships.

 

Seabourn ships rarely sail with more than 50% occupancy.

Silver Sea never hits 50%.

Silver Sea had to tie up a brand new ship for two years and let it sit empty. They couldn't find enough passengers to make it worthwhile to sail it.

 

Far too many cruisers tell me that they are more than happy to pay "a little bit extra" for a premium product.

Firstly, it requires far more than "a little bit extra" if you want a quality experience.

Quality costs plenty more - plain and simple.

Secondly, when it comes time to get out the wallet and pay, those big spenders who offered to pay more for quality usually go for the cheapest inside cabin on the cheapest possible cruise.

 

Actually since the triplets were sold, Seabourn is sailing full.

 

You are also forgetting other small ships--Windstar (typically sail at 80%+) and Paul Gauguin (typically sail at 90%).

 

I think you were selective with your examples. :rolleyes:

 

Also keep in mind that people tend to spend a lot more money on board luxury cruises, because face it, they are a demographic that has disposable income.

 

Obviously there is a market for luxury and small ship cruises or they would all be going bankrupt, so I'm not sure what your point is.

Edited September 9, 2014 by ducklite

[Folk Singer]

You didn't mention the $3,500 + pp fare for Neptune Suites....... same ship, same itinerary. How many cabins are actually available for the $399 you mention? A handful per week?

 

 

:confused:

[momofmeg]

The food has gotten terrible. I don't know if I'm ready to compare it to Carnival, but it is headed in that direction

 

I think RCI still caters more to families, especially families with teens, whereas Carnival caters to singles who like to party. As far as food, yes RCI food is just okay, but Carnival did have great food, I am not sure if that is true anymore though; as it has been over 10 years since I cruised Carnival, I got too old for them lol!

[Beachdude]

I think RCI still caters more to families, especially families with teens, whereas Carnival caters to singles who like to party. As far as food, yes RCI food is just okay, but Carnival did have great food, I am not sure if that is true anymore though; as it has been over 10 years since I cruised Carnival, I got too old for them lol!

 

Our experience is different. We haven't cruise Carnival in that last two years, so maybe they changed. But our family found Carnival 2nd only to Disney as family friendly. I do agree Carnivals five day party cruises are not family friendly, but that isn't their typical cruise. Food quality is changing on all the main lines, so who knows anymore. Food service is horrible as well. They were the first places that were cut.

 

Burt

[momofmeg]

By and large, cruising has evolved from the concept of "sea voyages" to that of "floating amusement parks." RCCL ships are good examples of this change.

 

I used to gripe about that but then I realized there is a customer base for that product. I am not among that customer base but I also know if a cruise line was based upon my likes/dislikes it would be hard to fill even one ship for one cruise,lol!

 

I say people should instead of complaining about RCI not fitting them any more perhaps they should check out other lines and find a better fit for their likes.

 

It is okay that one person does not like what other person does. I am sure there is something out there all cruise lovers will like, just find it.

 

Bruce has a good point too. Too many people want something for nothing. They fail to realize cruising has not gone up much in price over the last 20 years (except for taxes that is) so of course we do not have as good of food and less things are included in the base price. However, there is a flip side to that, if you love good food, you can pay for it by meal if that is what you want. If you are not a foodie, you spend your money on other things. Now we can tailor where we put our $$$s to what we actually like. I like that; as why should my cruise fare go (for example) to bedroom chocolates that I never eat or wine included at dinner when I do not drink wine, or an outrageous midnight buffet that I do not even eat, etc.

 

Besides, some things it is good they are gone; most people did not eat the midnight buffet, it was more to gawk at-that was a major waste of food in my opinion. I have not noticed any cruise line offering a midnight buffet that you could go to for an extra cost. I am sure they realize it would be a more a waste instead of a money maker.

Edited September 9, 2014 by momofmeg

[momofmeg]

Our experience is different. We haven't cruise Carnival in that last two years, so maybe they changed. But our family found Carnival 2nd only to Disney as family friendly. I do agree Carnivals five day party cruises are not family friendly, but that isn't their typical cruise. Food quality is changing on all the main lines, so who knows anymore. Food service is horrible as well. They were the first places that were cut.

 

Burt

 

Burt I am 60. when I was in my 40's I loved Carnival,then I got too old for them and their night time atmosphere. Yes, they offer family stuff to attract families, but they can't compete with RCI's wave runner, miniature golf,rock climbing, and zip lining which I feel is to attract families with teens and young couples.

 

Hey I am too old for those RCI ships that offer that stuff too lol! I only like the older RCI radiance class ships.

[Warm Breezes]

I think RCI still caters more to families, especially families with teens, whereas Carnival caters to singles who like to party. As far as food, yes RCI food is just okay, but Carnival did have great food, I am not sure if that is true anymore though; as it has been over 10 years since I cruised Carnival, I got too old for them lol!

 

I have to disagree. All of our Carnival Cruises have been family cruises and there were definately plenty of families on the cruises we have been on. The 3-4 day cruises may cater to singles, but 5+ definately cater to families.

[momofmeg]

I have to disagree. All of our Carnival Cruises have been family cruises and there were definately plenty of families on the cruises we have been on. The 3-4 day cruises may cater to singles, but 5+ definately cater to families.

 

I have been on both with Carnival, yes the shorter cruises were more "party/hardy" for sure, (I found that true even on a short celebrity cruise I took) but it is still not the subdued experience I find on Celebrity, Princess, and even RCI; especially RCI's radiance class ships. On Carnival, there is more of a Vegas type atmosphere in the evenings even on 7 day cruises. that "lets party party party" feel every night.

 

but as I already said,there is a product for everyone. I am not "knocking" Carnival. heck,I would still cruise them for the right itinerary. They are just not my first choice as they are not a good fit for me. I just like things more calmer.

[ducklite]

I say people should instead of complaining about RCI not fitting them any more perhaps they should check out other lines and find a better fit for their likes.

 

I am forever amused by the people that moan and complain about cuts and poor service, but refuse to try another line. Some say it is because of their loyalty perks--the reality is that those perks add up to almost nothing in the big picture. Let's see, I can spend $2000 on a cruise where I'm not happy or spend $50 extra with someone else (who might even include some of those items in the base fare) to make up for those items.

 

The phrase "throwing good money at bad" comes to mind for the people that continue to sail on lines they aren't happy with. There's a big world and a lot of cruise lines out there--try something new. Either you will be glad you found what you've been missing, or you'll be back with new found appreciation for what you had.

 

Besides, some things it is good they are gone; most people did not eat the midnight buffet, it was more to gawk at-that was a major waste of food in my opinion. I have not noticed any cruise line offering a midnight buffet that you could go to for an extra cost. I am sure they realize it would be a more a waste instead of a money maker.

 

Agree 100%! Add to that the average person has already swined and dined four times the number of calories that they burned while laying in a chaise lounge all day and practicing the Olympic sport of elbow bending with a bucket of cold long necks, and the last thing most people need is more food. ;)

[dancinman66]

I just keep looking at value for money compared with what I used to pay and smile

I have it good

 

 

Sent from my iPhone using Forums

[momofmeg]

I just keep looking at value for money compared with what I used to pay and smile

I have it good

 

 

Sent from my iPhone using Forums

 

I know. I prefer booking a balcony for for about the same money per night that we paid for an inside back in 98. Yep, the food may not be as good, but I can always swing for a specialty a night or 2. So even with that factored in I guess we are paying maybe $200 more in cost than we did in 98? Maybe another $150 a person in taxes on a week cruise? Something like that.

 

But my grocery bill at home has almost doubled since then. So has gas and electricity. Our water has not doubled but it is a good third higher. So yes, mainstream line cruising is a good value. It is just not luxury, but that's okay. I feel if you/I /us want more we should step it up a notch and book Oceania or Azamara. If you add in inflation and how much other things costs, well those cruises would be equal in cost to what we were paying in 98.

Edited September 9, 2014 by momofmeg

[BruceMuzz]

Actually since the triplets were sold, Seabourn is sailing full.

 

You are also forgetting other small ships--Windstar (typically sail at 80%+) and Paul Gauguin (typically sail at 90%).

 

I think you were selective with your examples. :rolleyes:

 

Also keep in mind that people tend to spend a lot more money on board luxury cruises, because face it, they are a demographic that has disposable income.

 

Obviously there is a market for luxury and small ship cruises or they would all be going bankrupt, so I'm not sure what your point is.

 

I receive the daily occupancy figures for the three Seabourn ships every day of the week. Not sure where you are getting your numbers, but they do not match the ones Seabourn sends to me.

I also receive the daily onboard spending figures for the Seabourn ships. Your assumption that people on luxury cruises spend far more onboard is not correct. The high upfront fares cover most of the onboard amenities that are included in the fares.

 

There is indeed a very small market for small luxury ships.

But they will not go bankrupt so long as their owners do not mind losing money on them.

They will also never really flourish as there are just not enough people willing to spend the money to sail them, and they can never make any appreciable profit with the cost and revenue structure they use.

That is my point.

[buggins0402]

I receive the daily occupancy figures for the three Seabourn ships every day of the week. Not sure where you are getting your numbers, but they do not match the ones Seabourn sends to me.

I also receive the daily onboard spending figures for the Seabourn ships. Your assumption that people on luxury cruises spend far more onboard is not correct. The high upfront fares cover most of the onboard amenities that are included in the fares.

 

There is indeed a very small market for small luxury ships.

But they will not go bankrupt so long as their owners do not mind losing money on them.

They will also never really flourish as there are just not enough people willing to spend the money to sail them, and they can never make any appreciable profit with the cost and revenue structure they use.

That is my point.

 

You receive daily update numbers .... and the " powers to be" don't mind you posting on CC???

Edited September 10, 2014 by buggins0402

[BruceMuzz]

You receive daily update numbers .... and the " powers to be" don't mind you posting on CC???

 

They would mind if I posted the actual numbers.

The general numbers are already well known throughout the cruise industry.