Time To For A Reality Check For Mr. Fain

[RocketMan275]

Three comments and then I'm done. First, I just finished going through the complete MarketLine report on the cruise line industry and Mr. Fain is on solid ground. Second, Based on what I read, I expect all of the other lines to follow suit. Third, I expect the other lines not to shoot themselves in the foot by announcing their intentions to the world.

 

Actually, "announcing their intentions to the world" may prove to be a useful strategy since such 'announcements' can a signalling to the other lines that RCI is willing to stop the price wars if the other lines stop deep discounting as well.

 

If all the cruise lines agree that deep price cuts are not in their collective best interest, then these practices will cease. The lines have to be careful to avoid entanglement with laws against price fixing, but generalized statements like this shouldn't be a problem.

[RocketMan275]

I can't help but read this and think......wow. Who in their right mind gets that exited about price increases and discontinued discounts?

 

People who are tired of cuts in service, lower quality food, reduced entertainment, reductions in staffing,....

[whitecap]

Those two terms were Coach T. I think they combined responses to two different comments.

 

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Check out his other post. He was the one who used those terms to describe cruisers.

[whitecap]

Please explain how exactly it is discriminatory at law to price something so that not everyone can afford it?

 

Edited to add: I see that you've clarified your comments and I get that, I get why you would find it upsetting that people are making reference to class, but it doesn't help anyone to start claiming that RCI is breaking discrimination laws. Or to state that other people don't understand those laws when your own comment is factually incorrect.

 

You missed it completely. I never said that it was the cruise line making those comments or planning on any discrimination. It was CoachT's comments that I and others were referring to as he was the one that was talking about the lesser class of people.

[idamae3218]

Check out his other post. He was the one who used those terms to describe cruisers.

 

Yes. That's what I meant. The person I responded to had responded to a post that referred to Mr Fain & then quoted CoachT. They thought the poster was saying Mr. Fain used those terms.

 

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[DarthGrady]

Without getting into the economics debate, which is certainly not my field of expertise, I will say that cruise vacations are far more "affordable" now than they were thirty years ago. I'm looking at my 1982 Carnival catalog, and the prices don't seem much different than they are today. And don't forget that a "suite" on the old Tropicale would be about the same size as a standard balcony cabin nowadays.

 

Hopefully this is legible:

 

[whitecap]

Yes. That's what I meant. The person I responded to had responded to a post that referred to Mr Fain & then quoted CoachT. They thought the poster was saying Mr. Fain used those terms.

 

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Understand thanks.

[Big_G]

Richard Fain's comments relating to this discussion:

 

 

The objective is to fill our ships earlier and reduce the number of state rooms we have to fill closer in. With fewer staterooms to fill at the last minute there is less need to offer the kind of drastic last-minute discounts that are so disruptive. That approach has been working and is amply demonstrated by our higher book load factors and our higher APDs.

 

 

But more recently we have adopted policies designed specifically to deal with the last-minute discounts that are so disruptive to the system. I am referring specifically to the special discounts offered in the last days before sailing, often at significant discount.

 

 

Now these may represent only a small percentage of our business, but their influence is more significant. They upset many of our most loyal customers by creating an uncertainty about the prices that they pay. They cause headaches for our travel agency partners who don't know what price they should rely on and they undermine our brand image.

 

 

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.

 

 

Obviously this may cost us some bookings in the short-term and our guidance reflects that. But we believe that the long-term advantage for our brands is worth the small short-term cost. Over time we think this will lead to happier guests, happier agents and better branding. The only exception to this rule is for very short-term cruises, i.e. 2 to 4 nights where last-minute bookings is more a reflection of the decision process.

Edited April 22, 2015 by Big_G

[splash_in_the_water]

Gregg, could you imagine what would happen if a developer began building homes and purposely raised the prices by $100,000 to exclude certain "discount seekers" and "cheap home buyers".

 

Comparing housing may not be the best metric, but sure, why not? ;). I'm in construction, and we work in a lot of neighborhoods where the developer buys up all or most of the properties, and they consistently build 200k-250k (or more) homes. They don't build "budget" homes that someone 1 or 2 pay grades lower would generally be able to afford (not to say they can't buy one) but generally, no. Some if they did, they also probably don't want to attract the "riff-raff" , as it would be a bad look for the neighborhood, and lower the surrounding property values. But thenm unless you're paying cash, banks will only lend you so much anyway for any particular property.

 

I don't know...I can see some of it both ways. I don't think they're trying to necessarily price people out of a cruise. They have a responsibility to the shareholders to make money, but then offering "budget" prices is a good way to fill up the rooms.

 

We've been on 4 carnival cruises now, and our first RCI in 3 weeks. I've never really felt outclassed, just "less funded". And we're poor by most people's standards.

Edited April 22, 2015 by splash_in_the_water

[orville99]

Actually, "announcing their intentions to the world" may prove to be a useful strategy since such 'announcements' can a signalling to the other lines that RCI is willing to stop the price wars if the other lines stop deep discounting as well.

 

 

 

If all the cruise lines agree that deep price cuts are not in their collective best interest, then these practices will cease. The lines have to be careful to avoid entanglement with laws against price fixing, but generalized statements like this shouldn't be a problem.

 

 

Admittedly, Fain's statements make it significantly easier for other lines to follow suit with relative impunity. I'm not at all sure that it makes good business sense to be the designated grenade catcher in a price stabilization/elevation strategy. RCL has already set a new pricing floor with the BOGO strategy, so even if they ultimately capitulate to market pressure, they will do so from a baseline that is 30-60% higher than a year ago. i'll stand on my original assessment. They only threw this carrot out to shareholders to soften the hit from their earnings shortfall (stock rallied more than $ after the statement came out). Counting on a circular firing squad joining in the process isn't going to happen.

[splash_in_the_water]

There is a business/marketing aspect to all of this that I think most people are missing. Market position is a valid and key element to business. You see this all over the place and probably don't think much of it.

 

Walmart sells clothes. Saks Fifth Avenue sells clothes, at a much higher price. How is Saks still in business?

 

Ford, Chrysler, and GM all sell a wide range of cars. Not a one of them has a car that is close to the starting price of the cheapest Lamborghini (ok, maybe one super-car each). Yet, Lamborghini remains in business.

 

The closest and most relevant example would be hotels. Motel-6 has rooms by the night. So does the Ritz-Carlton. You can bet that the Ritz-Carlton has many nights throughout the year with empty rooms. Yet, they keep their prices high and continue to profit.

 

The point is that a business can be entirely successful without being a low-cost leader. There are many other viable market positions and some of them depend on high pricing to keep the product/service "exclusive". It is not discrimination to do this as anyone with the money is more than welcome to purchase the product/service. The catch is that many simply cannot afford it.

 

Royal is clearly going from a Motel 6 position to a Ritz-Carlton position (ok, maybe not that big of a jump). Intelligent minds can disagree if that is a move to a new position or a return to an old position. Personally, when I look at the Song of Norway and it's super-swanky lounge called the Viking Crown, I lean towards a return to an old position. Either way, those whose budgets/values/preferences no longer fit with the new position are going to be upset. To put it bluntly, they are being shown the door. By the same token, those whose budget/values/preferences fit with the new position will welcome another option to consider.

 

There is no guarantee this new position will work out for Royal. Maybe it will, maybe it won't. Given some of the other more "exclusive" options out there, I would be surprised if it doesn't work out for them.

 

This is probably the best post here. This makes a lot of sense. IF RC wants to jump up a couple price points and test those water for a bit, it's their decision. Sure, they may be leaving some behind, but you can't make everybody happy.

[sassy0930]

I don't know about other cruise lines following suit. While the last minute cruisers may not be a huge percentage of any one company's revenue, with RCI making this announcement, those people who do specifically look for last minute deals will be going with another line, more than likely. The boost in the other lines might make them consider marketing the fact that they DO have last minute deals even more heavily. I abide by the idea that empty cabins have a ZERO percent chance of earning on-board revenue, while discounted rooms have at least some chance.

 

I have to say, though, I've NEVER seen anyone complaining that someone else got a last minute deal when they paid more, at least not legitimately. Like, an "aww, bummer" kind of thing, but never where people are actually offended. ALL industry is at the mercy of supply and demand. In industries like cruising, flights, hotels, etc demand fluctuates much quicker than in some other industries so the pricing often reflects that. Do people complain that they had to pay an extra $100 for a last minute flight? What about having to pay more for a nearly booked up hotel? Why are people whining that cruising is the same way?!

[Big_G]

 

I have to say, though, I've NEVER seen anyone complaining that someone else got a last minute deal when they paid more, at least not legitimately. Like, an "aww, bummer" kind of thing, but never where people are actually offended. ALL industry is at the mercy of supply and demand. In industries like cruising, flights, hotels, etc demand fluctuates much quicker than in some other industries so the pricing often reflects that. Do people complain that they had to pay an extra $100 for a last minute flight? What about having to pay more for a nearly booked up hotel? Why are people whining that cruising is the same way?!

 

I've seen it right here on these boards. Think about how many times people complain here that they aren't eligible for a price drop. Indirectly they're complaining that someone else got a better deal.

[BecciBoo]

I agree with you. But...what about the other posters on here, calling Coach T elitist and making political comments and mocking him? Just because someone has a different viewpoint makes it okay to bash them?

 

He did absolutely NOTHING that would get him banned. That is a really ridiculous suggestion.

 

That is exactly what I meant. Both sides! No bashing of anyone! Everyone is entitled to air their opinions on these boards without censure, even if it is unpopular!

Edited April 22, 2015 by BecciBoo

[coldflame]

I've seen it right here on these boards. Think about how many times people complain here that they aren't eligible for a price drop. Indirectly they're complaining that someone else got a better deal.

 

And who wouldn't? I mean, let's say you bought a plane ticket 6 months out for $750 round trip, and then two weeks before the flight, they are selling the same seats for $500 wouldn't you be upset? I would. Not because someone else got a better deal, but because my ahead-of-time purchase bore no net benefit, or worse, I had my money locked up for 6 months and ended up getting shafted. So, next time, I'm not going to book until the last 2-3 weeks because historically that's when the best prices are.

 

Same applies here, those who game the pricing system, know the timing to make the purchase at a substantial discount and everyone else who paid months in advance are the "suckers" for lack of a better term.

 

So, I do think it's a good long-term move, because more people will plan and buy with confidence that their purchase won't be devalued as sailing date gets close.

[sassy0930]

I've seen it right here on these boards. Think about how many times people complain here that they aren't eligible for a price drop. Indirectly they're complaining that someone else got a better deal.

 

I've not been on the RCI boards very long, but I never saw it on the Carnival boards. And I haven't really noticed it here yet, either, but I trust that it happens if you say it does.

 

My personal philosophy is that you book something like this, a cruise, a flight, a hotel at the price you are comfortable paying and deal with it. The value is not determined by how much someone else paid, but by how much it is worth to me.

 

There are probably people who pay less for a seat in first class than I pay for coach sometimes, but it ain't no thang. I have PLENTY of things to worry about, and money is certainly one of them often enough, but once I have seen a price I'm comfortable booking, who cares if someone else gets a better deal?!

[klct39lg]

People who are tired of cuts in service, lower quality food, reduced entertainment, reductions in staffing,....

 

 

Would increased fares necessarily translate to higher quality food, better entertainment, and increased staffing and service? Maybe they are willing to let that ride for awhile, too.

[The_Big_M]

You couldn't have read the last quarterly call if you consider that as arrogance. Pleas read it and you may have a different take away. As for the OP's 'big talk' comment, how about pot calling kettle. Your whole diatribe is big talk.

 

 

Agreed.

 

Plus he only said 10-20-30 days out.

 

So he can still meet his claim and e.g. never reduce prices on Texas cruisers beyond 10 days out. I can't see ships "not sailing full" on that basis as the OP implies, nor the big disaster about going bankrupt and getting fired. Groan!

[The_Big_M]

Same applies here, those who game the pricing system, know the timing to make the purchase at a substantial discount and everyone else who paid months in advance are the "suckers" for lack of a better term.

 

So, I do think it's a good long-term move, because more people will plan and buy with confidence that their purchase won't be devalued as sailing date gets close.

 

Not at all. Your statements are based on an assumption that prices only fall, but just as many people get burnt waiting for prices to fall and then seeing them rise, or sell out.

 

You play the game, you take your chances.

[GUT2407]

I am in a wheelchair and can never book late - usually 1 - 1 1/2 years out to get the accessible room. On most cruises family and friends were able to join us, often using the price cuts. Many, like us, are teachers.

 

They did spend on the cruise. Photos, souvenirs, specialty restaurants, excursions. Had they paid full fare, they may not have had extra to spend.

With the discounted prices they enjoyed cruising and spent money. Most, who understood working hard for a living, were great tippers as well.

 

Enjoy your cruises with the privileged.

 

 

I must admit that annoys me too, also I have to book a specific category when using a wheelchair, not a guarantee and that is always more too.

[knittinggirl]

I've seen it right here on these boards. Think about how many times people complain here that they aren't eligible for a price drop. Indirectly they're complaining that someone else got a better deal.

I thinks they're complaining about the policy. If the price drops, the cruise line should honor it.

[3dog]

I thinks they're complaining about the policy. If the price drops, the cruise line should honor it.

 

And precisely the scenario that they are trying to avoid. Last minute discounts can be pretty significant; could you imagine the revenue loss if that were applied to all cabins on a sailing? Definitely more profitable (or less costly) to let cabins remain unsold than to allow the discount on all cabins.

[GUT2407]

I thinks they're complaining about the policy. If the price drops, the cruise line should honor it.

 

 

If you go to the shop and buy a loaf of bread and then tomorrow they are on sale, do you expect a refund?

[mr walker]

I thinks they're complaining about the policy. If the price drops, the cruise line should honor it.

 

Only if the opposite also applies ie if the price rises, the cruiser should honour it & hand over the extra :)

[BekkaW]

Thanks for the advice, but who mentioned politics?

 

What were your several 'Hilary' comments about, if not politics?