Time To For A Reality Check For Mr. Fain

[WhenIsLobsterNight]

You can do your own research on earning reports and onboard spending from 2006-forward.

 

 

I was not the one shooting my mouth in this thread on how lower prices equals lower spending on board and how according to Coach T this is a VERIFIABLE FACT. So I gave you the chance to prove your assertions and of course your could not. Please allow me to destroy your 100% incorrect nonsense with one simple article.

 

http://www.buzzfeed.com/peterlauria/royal-caribbeans-newest-ship-represents-a-critical-test-for#.sfnZ9ZBq0

 

Please note the passage that says that says:

 

"Goldstein, the president of Royal Caribbean, elaborated a bit more in an interview, saying that 2014 will mark the fifth consecutive year that revenue per guest per night will increase.".

 

Sorry coach, you were just wrong.

 

For the rest of you, this is a lengthy and interesting article. RCCL has had a long streak of success in recent years keeping cruise prices low and passengers responded by spending lavishly on board. The stock has had an amazing run up from under $6 a share in 2008 to over $73 a share today as profitability has been strong many years in a row now. So what did RCCL do to try and keep this mojo going? Well they have dramatically raised the prices of the cruise ticket and also dramatically raised the prices of on board expenses like alcohol. They are guessing that they might not sell quite as many tickets as before, but those they do sell will be at a price that covers those empty rooms. In addition, they are betting that passengers will still happily shell out $12 for a drink since they are vacation. I personally think they are crazy and have completely pushed the supply and demand curve out of reality, but I guess we will find out shortly. Yesterday RCCL lowered full years earnings estimates and the stock was slaughtered. It appears they already are being squeezed somewhere in their estimated revenue projections to lower guidance. RCCL is down 10.3% year to date in stock price. It is interesting to note that competitors like Carnival (up 2.3% year to date) who have not been as aggressive in pricing are fairing better this year in stock price.

Edited April 21, 2015 by WhenIsLobsterNight

[north29]

but are up 1.25 right now.

http://www.zacks.com/stock/news/171475/royal-caribbean-cruises-rcl-in-focus-stock-tumbles-8

[davy jones]

Dropping prices brought about cheap cruisers who did not spend once on the ship. They CAN afford to sail with empty staterooms. When the discounting started and the cheap cruisers came, onboard revenue went down as much as 75%.

 

He is a smart man and I for one am glad prices are going up and the discounting will come to an end!

 

You are so wrong! It is the new cruisers that the cruise line wants.

 

New cruisers actually spend more onboard than seasoned cruisers. New cruisers spend much more on high markup things like ship photographers, bingo, onboard shops, and art auctions. Most experienced cruisers see some, if not all, of them to be expensive, low value items.

 

On top of that, high level C&A members get discounts on top of the already discounted fares, mulitiple onboard discounts and freebees, free drinks daily, and other perks. These perks are not free to the cruise line. According to recent threads, each free drink represents $10 in lost revenue, and so on. Yet, the company offers these perks because they believe that they still make money on these passengers.

 

Do the math. If a each new passenger purchases 1 extra drink per day over the repeat cruiser at $10 and three pictures from the shipboard photographer @ $20 each, that alone amounts to an extra $130 revenue per passenger for a 7 day cruise, exclusive of everything else. The newbie also doesn't have previous cruises to compare to (like me), so they won't complain about a diminishing product.

 

It seems to me that attracting new passengers is key for cruise lines to please the investor community.

[CoachT]

It seems to me that attracting new passengers is key for cruise lines to please the investor community.

And they are going to do that by charging them a premium and this makes me so happy! Richard Fain has repeatedly said prices are artificially low and now they are approaching the levels they need to be. Yay for new cruisers at higher prices!

[spookwife]

Said this one person, ever.

 

make that 2. there is something to be said for keeping prices slightly higher to control demographics. its not just about on board spending, but also the class of people on board.

 

the ones who do not understand that a vacation costs more than just the price of the berth.

[dfishner]

I agree with what the OP wrote. RCL is our cruise line of choice but we are by no means loyal to any cruise line. I believe what Richard Fain said is just posturing and that is it, I have seen this before over the years with RCL but if in fact they do what he wrote then some people will probably look at different options.

 

We are not looking for a bargain we are looking for value for price paid for and when we no longer see a value in that then it is time to look at different options and I believe some people will do just that.

 

I do find it hard to believe that RCL will let ships sail less than full. Losing cabin rate in addition to incremental revenue that just does not make sense but we will see. What I have learned with RCL is they what they say and what they do are two different things.

[whitecap]

make that 2. there is something to be said for keeping prices slightly higher to control demographics. its not just about on board spending, but also the class of people on board.

 

the ones who do not understand that a vacation costs more than just the price of the berth.

 

So that I understand you correctly, are you saying that it is ok for a cruise line to purposely inflate the price of a cruise in order to keep the lower class demographic out?

[davy jones]

Yay for new cruisers at higher prices!

 

Apparently the nirvana strategy isn't attracting enough new cruisers. Empty cabins = zero revenue and the inability to cover fixed costs.

[American Bear]

Hi Whitecap in my experience RCCL cruisers are nothing like this person.

 

And he is probably a poser anyway-if you have real jack you are on Crystal or Regent, right?

 

The rich arrogant people I deal with I am ok with because they have legit bank. The deluded arrogant "upper middle class guy" in a mountain of debt annoys me to extremes.

 

He will put down a fellow who works as a tow truck driver who saves for eons to do something special never being smart enough to realize his entire financial well-being is dependent on a three digit score arbitrarily calculated by people he will never meet. He needs to be cool to that tow truck driver because they are closer in need and class than he realizes, but the ego simply won't allow it.

 

Enjoy your cruise and welcome to the RCCL cruiser family.

 

 

Let us add,,,

Arrogant snobs are everywhere, they aren't limited to cruising, or RCL..

Why some people are arrogant, snobs, or put on a show, who cares, its their delusion!:D

[Big_G]

So that I understand you correctly, are you saying that it is ok for a cruise line to purposely inflate the price of a cruise in order to keep the lower class demographic out?

 

OK for who? OK for the company? OK for the consumer that wants it? OK for the consumer that doesn't? It's all a matter of perspective isn't it? There's really no law that says they can't. ;)

[whitecap]

OK for who? OK for the company? OK for the consumer that wants it? OK for the consumer that doesn't? It's all a matter of perspective isn't it? There's really no law that says they can't. ;)

 

A very un-educated comment. Apparently you know nothing of the laws against discrimination.

[spookwife]

So that I understand you correctly, are you saying that it is ok for a cruise line to purposely inflate the price of a cruise in order to keep the lower class demographic out?

 

My very first cruise was a rock bottom price on Carnival. when we got on board we were SO outclassed it wasn't funny.. and while on board we didn't spend an extra penny..I was AFRAID to as I was deathly afraid that my bill at the end of the week was going to equal my husband's military paycheck for the month. we simply could not afford that.

 

we were very much lower middle class, maybe even upper end of the working poor. we had no business being on a cruise ship where the temptation to buy a one of kind picture with the fancy sunset background, and the fancy drink of the day and that amazing ten dollar watch would have meant we could not afford next month's rent. we had no concept of savings, no understanding of the death trap that happens when you keep your credit card maxed out and only pay the interest monthly.

 

How many of those 'big spenders' on their first cruise came home and realized that they just dug their hole deeper for the excitement of that past week?

 

instead of charging Motel 6 prices, and then suckering people into buying stuff they cannot afford, charge Hilton Marriott price up front and lock in a smaller profit margin but a more steady one because now Joe Cruiser, who may not have spent any extra money on board this time because he couldn't afford to knows he has to save up a little extra for NEXT TIME. which will be in 2 or 3 years

 

while his pal Jack Cruiser who spent less on his cabin but three times as much on board is now so far behind in his credit card payments his accounts been canceled; thus ensuring hat it will be ten years before he can cruise again.

 

I have a budget that I will spend for the berth and I stick to it. then I have separate budget for on board discretionary spending. and yes some cruises that on board spending budget is very low. but while they may not get a thousand dollar bar tab from me, they ARE guaranteed the revenue generated by my cabin being full.

[Big_G]

A very un-educated comment. Apparently you know nothing of the laws against discrimination.

 

Find me the law then.

[poncho1973]

GUESS YOU SHOWED THEM!! Maybe we should just believe everything you say as being the Gospel. Sure your name isn't Hillary?

 

Whether you agree or not, there is no place for politics here. Check that at the door, please.

[davy jones]

So that I understand you correctly, are you saying that it is ok for a cruise line to purposely inflate the price of a cruise in order to keep the lower class demographic out?

 

 

 

I will not debate the ethics, but I will state that there are people everywhere who are willing to pay to do exactly that on land and sea. If there are enough people willing to do that, someone in the marketplace will gladly fill that demand. In the cruise industry, it could be a more "upscale" line, or "exclusive" access to certain areas of a ship, or some other perk.

 

Please note that the definiton of "lower class demographic" varies from individual to individual. A Royal loyalist who considers Carnival to be "low class" shoud remember that a passenger on Amazara could feel the same way about him/her.

[Funky Chicken]

A very un-educated comment. Apparently you know nothing of the laws against discrimination.

 

Raising fares is not specifically discriminating against anyone.

 

It's easy to say that Quantum is 80% booked for summer. it SHOULD be.

Newest ship in the water

Smaller than Oasis/Allure

High Season for families

Sailing from a port that is drivable for many affluent Americans and provides easy international flight access for others

Only here for a limited time before she leaves for the Far East

I think 80% is a weak showing myself.

 

How do you keep people coming back? Service, not price. Anybody in sales would rather deal with a repeat customer. you don't see nearly as many people complaining about overpaying as people complaining about the decline in food/service/amenities.

At the end of the day there are 23 ships to fill every week. They are going to get filled one way or another. People can't spend onboard if they are not onboard.

[aurelius180]

How do you keep people coming back? Service, not price.

 

That's what has prevented us from booking our next vacation on a cruise ship. All of our Royal cruises have been terrific and have stood out because of the overall exceptional service. Except for our most recent on the Vision. Originally I attributed it to the ship and some noted problems during the timeframe but am beginning to think it is systemic to the cruise line.

 

I don't have as much of a problem with increasing prices as I do with declining service.

Edited April 21, 2015 by aurelius180

[marci22]

make that 2. there is something to be said for keeping prices slightly higher to control demographics. its not just about on board spending, but also the class of people on board.

 

the ones who do not understand that a vacation costs more than just the price of the berth.

 

Your 'class of people' comment is just silly.

[whitecap]

Raising fares is not specifically discriminating against anyone.

 

It's easy to say that Quantum is 80% booked for summer. it SHOULD be.

Newest ship in the water

Smaller than Oasis/Allure

High Season for families

Sailing from a port that is drivable for many affluent Americans and provides easy international flight access for others

Only here for a limited time before she leaves for the Far East

I think 80% is a weak showing myself.

 

How do you keep people coming back? Service, not price. Anybody in sales would rather deal with a repeat customer. you don't see nearly as many people complaining about overpaying as people complaining about the decline in food/service/amenities.

At the end of the day there are 23 ships to fill every week. They are going to get filled one way or another. People can't spend onboard if they are not onboard.

 

Generally very true however, raising prices, for the purpose of excluding a certain group of people is discrimination.

[whitecap]

Whether you agree or not, there is no place for politics here. Check that at the door, please.

 

Thanks for the advice, but who mentioned politics?

[LMaxwell]

Eating popcorn before noon never felt right to me. :(

[CoachT]

Generally very true however, raising prices, for the purpose of excluding a certain group of people is discrimination.

And there is not a thing illegal about that in the slightest. Show me the law that says different.

 

I will be on QOTS soon so I am not a Crystal or Regent cruiser. I just know the evidence as demonstrated the moment prices were lowered. Yes the ships were filled, but specialty restaurant spending went down. A certain class of people who could now afford a Royal Cruise were not spending more money onboard and as such onboard revenue went down.

 

If you look at increased revenue (and not profit from that revenue) you will also note that onboard pricing did go up. I know Richard Fain would rather sell with empty staterooms with people paying a premium because they will more than make up that spending onboard. Cheap people looking for a cheap deal will cruise as cheaply as possible period.

[A&L_Ont]

Eating popcorn before noon never felt right to me. :(

 

Butter popcorn doesn't really go well with coffee.

[knittinggirl]

From the news article . . .

The discounts, which are usually offered anywhere from a week to a month ahead of a sailing, are designed to fill ships that aren't yet full. . . . Fain said.

Hmmmm, they used to discount a week to a month out.

"As a result in March we adopted a new policy that we would not do any last minute discounts on bookings in North America. Depending on the type of cruise, that last minute may be 10, 20 or 30 days out, but from that point on we will hold our price at the prior level."

Now he's saying they'll discount depending on type of cruise 10 to 30 days out. A week or 10 days, sounds the same to me.

 

BTW, I just priced an Alaska Sawyer cruise on Royal Caribbean and Holland America for the same time period. Why does the Royal Caribbean cost more if Holland America is supposed to be a step up?

[WrittenOnYourHeart]

And there is not a thing illegal about that in the slightest. Show me the law that says different.

 

I will be on QOTS soon so I am not a Crystal or Regent cruiser. I just know the evidence as demonstrated the moment prices were lowered. Yes the ships were filled, but specialty restaurant spending went down. A certain class of people who could now afford a Royal Cruise were not spending more money onboard and as such onboard revenue went down.

 

If you look at increased revenue (and not profit from that revenue) you will also note that onboard pricing did go up. I know Richard Fain would rather sell with empty staterooms with people paying a premium because they will more than make up that spending onboard. Cheap people looking for a cheap deal will cruise as cheaply as possible period.

 

One thing that I always try to remember - even for myself when budgeting for trips - is that cruising is NOT an unalienable right given to anyone (myself included) just for existing. It's a privilege and a choice people can make - some people will save years to be able to go on just one cruise.

 

Please note I'm not defending any cruiseline here - I haven't even sailed on RCCL yet but will in August, and I make the choice to cruise on Disney most of the time when I cruise. But I realize that it is my choice to spend my money in that manner and not a right given to me. There are vacations that do price me out - I changed my 2016 Disney cruise to our late April break rather than our Presidents' Week break because the Feb cruise was double the price for the same itinerary - but I don't whine and demand that they change the price just so I can go. I make the best decision for me based on my situation. When I can't go every year, yes it will suck, but I'll deal because I know that's just how it is.