Just for Discussion

[JohnGaltny]

I am an avid reader of these boards and I think I am seeing an interesting trend across all lines. I post it here because I am an RCI person first above all.

 

The short question: Did the cruise industry price itself to non-profitability?

Second short question: Will they alienate repeat cruisers too much by adding costs and cutting services?

 

We all know on this board about Royal cutting perks and adding costs (ie: the 40% drink price hike, the room service charge et al.)

 

However, NCL has added a total room service charge of $7.95 (excluding suites), forbidden taking full plates from the buffet and also hiked drink prices.

 

I haven't researched Princess or Carnival, but I wonder if they are doing similar things.

 

SOOOOOO, are the cruise lines coming to the point where the all inclusives on land will be competitive? Are they deciding to go after the "new" cruisers and alienate the veterans? Is it a valid business plan??

 

What say you all?

Edited May 19, 2015 by JohnGaltny

[celebrity]

Are they targeting new cruisers? Absolutely! They are the ones that perpetuate the brand.

If you don't garner new blood, you are doomed to become obsolete.

Should they continue to reward loyal clients? Absolutely! They tell family and friends to join them and create a whole new clientele.

 

Are they competing with all inclusives? Yes and no.

 

I have no desire to park myself at a resort when I can see a new port each day and unpack once. The beauty for me is being at sea, walking the deck at night knowing the next day will bring me to another port. I could never have managed my Med trip on land seeing 7 countries in 12 days.

 

To some, vacations are all about the budget and while I am definitely a value based traveler,

I look for value on a cruise ship. If I can't find a cruise on a particular cruise line that meets my needs, I will seek another.

[ColoradoGurl]

I don't think they're pricing themselves out of the market at all. With all the complaints about decreased service and food quality, increased prices etc, those same people still have 2, 3, 7 future cruises already planned and booked. It's kind of like the person in a bad relationship who keeps threatening to leave but never does.

 

Royal definitely is able to fill ships, even though they may be alienating repeat cruisers, they seem to have no problem replacing them with new people. As it is, the people who cruise the most are getting so many discounts and freebies that Royal probably doesn't care if they do lose them.

 

From a busieness perspective, I was always taught that it's easier to keep a customer than to find new ones, but it doesn't seem to be affecting the cruise line enough to worry about it. I think there are a lot of people who cruise and really enjoy it, who probably don't cruise 2 and 3 times a year, but who still rave to their friends about it and do come back. Sometimes it sounds like the repeat cruisers assume that "newbies" cruise once and never come back. I don't think that's the case. If it was, the business model would not be encouraging all the newer, bigger ships to be built.

[Funbobby68]

I have to say that even with the increases ,I believe there is still value there , I'm not a fan of paying more for less but , with that said I think that the land based holiday is still just as much , but you tend not to notice , because the initial payout was not so high , but I tend to think that when the dust settles , it's the same . Visit disneyland for a week and compare it to a 7 day cruise , and at least with us cruise is where the value is

My guess is that new cruisers don't realize what a good price is and some my not even care , they have no point of reference to the good old day prices (8 months ago ) and they buy in to the bogo sales not realizing they are really no sale at all , and I believe the cruise lines thrive on that fact , it's the seasoned veterans that cause all the grief , because we know what the price use to be and what we got for the money , my business is about 60 percent repeat customers and I'm proud of that , but if I offered less and charged more I'm sure that number would dwindle, and over the long haul I would make less

Not a chance I would be willing to take , but I'm fairly certain that if this new price structure fails for the cruise line , and all of a sudden prices dropped again , we would all be in like a fat kid on a smartie

But seeing as one of the next cruise I wanted to take is already sold out 1 year in advance , I'm not holing my breath

[Ashland]

RCI is still making $$$$'s....yes....I miss some of the perks as an upper level cruiser...but will that stop me from cruising....no...of course not...I'll happily go on as many as I can each year ;)

[klingoncruiser]

Interesting questions. Has RCL chased me off with bigger and more expensive ships? Yes. Have they stripped most of the perks I once had? Yes. Seems there is some validity to chasing off the "faithful" and replacing them with the new. I no longer spend as much on board as I used to so maybe it was time to run me off. :rolleyes:

 

Will I ever sail RCL again... Of course at some point I will. However, for now, my 2-3 cruises per year are going to NCL.

 

Op is correct, all the boards are becoming increasingly grumble sessions about all the cutting back on a lot of things we once took for granted as well as not following though on taking care of the "faithful." I for one question the wisdom of these moves.

[John&LaLa]

I think it's the new norm. Prices were artificially low, could not sustain. Economy got better for many, and the prices went up. I'm one of those with 13 or 14 booked because it still represents value. I stay with Royal because the grass isn't always greener on other lines and I live next door to a great port and there are three others within 3 hours drive that consistently have 6 or 7 choices within the line.

 

Safe travels

[celebrity]

I don't think they're pricing themselves out of the market at all. With all the complaints about decreased service and food quality, increased prices etc, those same people still have 2, 3, 7 future cruises already planned and booked. It's kind of like the person in a bad relationship who keeps threatening to leave but never does.

 

Royal definitely is able to fill ships, even though they may be alienating repeat cruisers, they seem to have no problem replacing them with new people. As it is, the people who cruise the most are getting so many discounts and freebies that Royal probably doesn't care if they do lose them.

 

From a busieness perspective, I was always taught that it's easier to keep a customer than to find new ones, but it doesn't seem to be affecting the cruise line enough to worry about it. I think there are a lot of people who cruise and really enjoy it, who probably don't cruise 2 and 3 times a year, but who still rave to their friends about it and do come back. Sometimes it sounds like the repeat cruisers assume that "newbies" cruise once and never come back. I don't think that's the case. If it was, the business model would not be encouraging all the newer, bigger ships to be built.

 

I've never read anything about newbies never cruising again. Let's face it, we were all newbies at one time.

Are they pricing themselves out of the market? In some cases, yes .

 

Two examples: co-worker seeking to book Anthem 9 day next Aug for a family of 5 on a 9 day cruise was quoted $ 8500 for 2 inside cabins. Looked to NCL and quoted $ 3k for a 7 day to Bermuda the same time frame and accommodations. Would you spend an additional $ 5500 for 2 extra days at sea?

I wouldn't.

 

 

We were ready to book a 5 day to Bermuda this August and quoted $1800. With insurance it would have cost $400 per day. We took a pass.

 

We did book a 12 day on Brillance for next year at a much more acceptable price per diem.

 

If the perceived value isn't there, you can expect a lot of empty cabins.

Edited May 20, 2015 by celebrity

[Cruisin-Family]

Did the cruise industry price itself to non-profitability?

 

RCL’s last quarterly report stated: Adjusted Net Income was $45.2 million, or $0.20 per share, versus a forecast of $0.10 to $0.15 per share. Currency and fuel negatively impacted the first quarter.

 

Yes they are profitable.

 

“It is gratifying to post another strong quarter with both revenues and expenses exceeding expectations,” said Richard D. Fain, chairman and chief executive officer. “Despite ongoing volatility in the currency and fuel markets, our Double-Double program remains solidly on track.”

 

Their current portion of long term debt is up 36% year over year! They build large, beautiful EXPENSIVE ships. They do WOW, but at a cost. They are taking large loans to pay these ships off.

 

Will they alienate repeat cruisers too much by adding costs and cutting services?

 

Their occupancy is favorable year over year while their onboard revenue is down about 6%. So you could argue that their on board pricing increases have decreased their total sales volumes.

 

They don’t seem to be adversely affected given their passenger occupancy rates.

 

I speculate that executive management is experiencing revenue pressures to cover their debt covenants. As long as there isn’t another 9/11 type terrorist disaster, particularly one directly affecting the cruise, or some other unforeseen event that severely degrades their industry, they probably can sustain this large debt load….they better hope for smooth seas!

 

My family? We are no longer a loyal RCL customer, but RCL management doesn't care about me (I wouldn't either given their financials.) because we stopped cruising with or recommending them about 2011 when the costs increased and the services starting noticeably going away (for us, this is a family and subjective point of view. They didn't seem to care much about our loyalty.). Will we cruise with them again, yes, but just way less often…and we seldom recommend them…

Edited May 20, 2015 by Cruisin-Family

[JohnGaltny]

Really interesting discussion.. Thanks you all.

 

Amyone else?

[legaljen1969]

I stay with Royal because the grass isn't always greener on other lines

 

Sometimes greener grass doesn't mean a better environment. It may just mean more fertilizer. Just sayin'!:D

[Goodtime Cruizin]

I think your statement of increasing costs and decreasing services might be misplaced. Or at least IMO. The economy in the US is just now showing signs of reversal from the past 8 years. Having said this, I think as a whole, the cruise industry has held tight on the costs of sailing. Three years later, I'm still finding cruise fares of prices of 2012. Some are including the drink specials. Some are even lower. Yes, the newer ships are priced steep, but in the main, prices can be found that are very affordable.

 

The newer ships offer more today than a few years back. My point is, IMO, no, the industry is not pricing themselves out of biz. In fact, I think the industry is at an all time high right now. More passengers than ever are cruising.

 

15% to 18% gratuities? Phooey... I always tip 20% unless the service is bad. And to be honest, I've never recv'd such bad service on a cruise ship that I wished to withold anyones gratuities.

 

I'm one that also thinks that less tham 5 to 10% of all cruisers even visit this website. The masses are happy IMO.

Edited May 20, 2015 by Goodtime Cruizin

[abridalmaven]

I am paying less fit more exotic cruises than I did for my first cruise to Bermuda on a teeny tiny ship in 2001.

 

 

Sent from my iPhone using Tapatalk

[dacsmom]

I believe people will still cruise, but may shop around other cruise lines to find the bast value. Since many of the lines are also cutting services and raising prices people may be less likely to stick with one line. This may not be such a bad thing. I have stuck with RCI for a while now but I am researching NCI and looking at going back to Carnival for 2016 cruise. I think there will be less customer loyalty.

[griffy116]

We're Diamond with Royal and never even thought about shopping around. With the recent changes that don't allow us to combine discounts, we have one cruise booked with Royal and we are shopping around the other lines. I'm sure we would still consider Royal when comparing cruise lines, but it have given us the freedom to feel we have nothing to lose and that we aren't being disloyal to look elsewhere for the best bargain and best itinerary.

[Big_G]

Did the cruise industry price itself to non-profitability?

 

Thanks for bring facts to the discussion. It's a rarity here on Cruise Critic. :D

[WhenIsLobsterNight]

I think the cruise industry as a whole overreacts to trends. A few years ago when the economy was in the crapper and Carnival ships were on the news nightly, the cruise lines all but gave away cruises to those that had the money to still sail. We were all spoiled and thought those cheap prices would stay that way forever. Basically the cruise lines panicked. Here we are several years later. The stock market is high and people have cash again. The cruise industry again overreacts and thinks they can price their product at whatever they choose and people will still sail with them happily forever. It does not work that way and cruise lines are nickle and diming their customers to the point of absurdity. RCCL is perhaps the worst with the drink prices the highest in the industry and also cruise fares vastly higher than Carnival and NCL. However, all lines are doing this to various degrees. The cruise lines are targeting first time cruisers with disposable cash at this time. Long time cruisers such as myself are fed up. My family sails on the Independence in 10 days. Our cruise fare is $3800 for the four of us. Air fare is $1700. Drink packages are $800 and spending money will likely be at least a grand with gratuities and doing an excursion or two. Thats $7300 for a seven day cruise. Honestly, there are just other things I would rather do vacation wise with the money going forward. I could take the family to Hawaii for that amount of money even. Heck, I honestly think I could pull off a decent trip to Europe for not much more. So yeah, this will be our last cruise for awhile I am guessing. If we do cruise again in the short term, there is absolutely no chance on earth I will consider RCCL. I have cruised on other lines and am not loyal to anybody. Other cruise lines provide a better value at this point in time. At some point though, RCCL (and others) will realize their former loyal Diamonds have not sailed in awhile and that the economy is cooling back down. The industry will panic again and some really good deals with be tossed toward the former loyal members. Some will return and some will not. Overall though, it is just a poorly run industry imo.

Edited May 20, 2015 by WhenIsLobsterNight

[iuki]

If cruise lines did not have any loyalty programs, it would cost cruise lines more money competing with customer service, entertainment, quality of food, better destinations, ship design and, most of all, PRICE of the cruise. IMO, in the long run, loyalty programs save them money. We just made Platinum and even though the perks are miniscule, we always check with RCCL before Holland America (one of our favorites). For those in the higher levels of loyalty programs, they spend more money on other things because they feel it off-sets the money they would have spent on the "freebies." ;)

[wolfganghowell]

The vast increase in the drink prices seems to me that those folks are subsidizing the big drinkers that buy the packages. It also provides incentive for more people to buy the package and in turn, gives Royal the ability to cut back on servers since they now don't want people drinking as quickly as they did before. Think of how we were all bombarded with pool servers back 5-10 years ago and now how few we see.

 

Change is life and the cruise industry will always fluctuate. We haven't seen massive changes in costs BUT we usually sail in GS or JS and those prices have always been stable due to the high demand and the fact that there just aren't that many of them.

[Thetrail]

I am an avid reader of these boards and I think I am seeing an interesting trend across all lines. I post it here because I am an RCI person first above all.

 

The short question: Did the cruise industry price itself to non-profitability?

Second short question: Will they alienate repeat cruisers too much by adding costs and cutting services?

 

We all know on this board about Royal cutting perks and adding costs (ie: the 40% drink price hike, the room service charge et al.)

 

However, NCL has added a total room service charge of $7.95 (excluding suites), forbidden taking full plates from the buffet and also hiked drink prices.

 

I haven't researched Princess or Carnival, but I wonder if they are doing similar things.

 

SOOOOOO, are the cruise lines coming to the point where the all inclusives on land will be competitive? Are they deciding to go after the "new" cruisers and alienate the veterans? Is it a valid business plan??

 

What say you all?

Have you seen RCL stock price lately? And I am booking more cruises per year now than I ever have in years past......:)...K.O.

[JohnGaltny]

I am really grateful for the exchange of perspectives here.

 

Keep it going.

[cruzeluvr]

I don't think the industry has priced itself to non-profitability, at least not yet. But the direction they are heading in makes me wonder just how far they can go and still attract/keep customers, and sustain profit margins.

 

I don't know if "alienated" is the right word to describe how I feel toward RCCL, but their product has certainly diminished over the years. I am looking forward to my cruise on Liberty (starting tomorrow), but do not have anything booked after that, which is the first time in a very long time that we don't have another cruise booked well in advance. I am actually looking at some of the luxury lines - Silverseas, Seabourn, Regent - and considering spending a bit more if that would allow me to have the cruising experience I originally fell in love with. I'm also considering some land based all inclusive resorts.

[connes1]

I think the reason why prices are going up...new ships. Since most cruise lines are publicly traded companies their is a constant push to show growth. That growth comes from building new ships and the hype that goes along with them. Cruise lines also need to show income so they can borrow money to build these new ships. I often wonder if the push to have people prepay gratuities help them show more profitability? I could be way off but my logic does seem reasonable.

[Margy23]

I am really grateful for the exchange of perspectives here.

 

Keep it going.

I agree. It's really refreshing to see cordial exchanges of opinion as opposed to the personal attacks that sometimes appear on these boards.

 

Thank you all!

 

Margy

[tarheelkate]

I've been in love with cruising since I was a kid. I remember when everyone took formal nights very seriously (my parents even had my 11 year old brother in a tux) and the white-gloved waitstaff would magically whip out those little bread crumbers in between courses. Glorious midnight buffets, not so that people would gorge themselves on food and then use it as a punch line for the comedy show -- but because it was a fantastic display of talent. Ice sculptures, carved fruit, wonderful food. Everything was An Event. I think my parents paid a pretty penny back in the day.

 

The family still loves to cruise, especially since it has become so affordable. And we reminisce about the way it "used to be." But the cruise lines haven't lost us as customers. The new lower price tag comes with a set of new, lower expectations for our vacation. And that's fine.

 

This may be another discussion entirely LOL, but it's very clear to me that the lower price tag does bring aboard a much lower quality clientele. And I don't mean in terms of net worth. Cruises are now overflowing with rude, inconsiderate, selfish, and demanding people. Where did they all come from? What makes some of these people think that a $500 week long vacation entitles them to being a jerk?

 

I hope this explanation doesn't come off as being some kind of attack, so I will attempt to explain. On my last cruise, I went up to a sun deck around 8am. There were a pair of chairs next to me that appeared to be "reserved" with ship towels. As the morning passed, and the time creeped towards 11, no one had shown up to claim the chairs. A couple asked me if they were reserved, and I said truthfully that I didn't know, I hadn't seen anyone in them since I had arrived 3 hours earlier. They couple placed the towels on the ground and took the chairs to another location. The sun moved, and I moved my chair to where the others had been. At noon, the original reservers showed up to claim their chairs and yelled at me for stealing their chairs, and demanded that I give them back. I tried to explain that their chairs were gone, and that I had simply moved mine in their place, but they would not stop yelling and making a scene. I left.

 

I've sat in a Solarium and had people sitting next to me turn on their radio instead of using headphones. I've had an 8pm dinner seating at a large, shared table, where the other party didn't arrive until 8:15 or 8:20 every night. And since the staff typically waits to take orders for the entire table at once, it meant that my husband and I just sat there waiting for them every night. We typically do the self-debarkation walk off, and will have gotten in line at 7am to be the first off the ship. After patiently waiting in line for an hour, an elevator of 15 people will push past and cut in line to get off the ship before us.

 

And the worst part is - the staff usually doesn't do anything about this kind of stuff. In my opinion, doing nothing in this case is the same as promoting the bad behavior. Of course these people will cruise again, and of course they will act like this again, which will encourage future guests to act like that.

 

So I am wildly off topic now. I suppose my point is that the appearance of reduced-fares and supposed "all-inclusive" packages are bringing in a different kind of clientele. I think this clientele will single handedly influence the type of service offered, the level of service provided, and the price charged for said service. I do believe this will eventually affect the bottom line, if it hasn't already.

Edited May 21, 2015 by tarheelkate