Cruise line budgets

[tetleytea]

I was interested to know where the majority of the cruise lines' budgets were going? To salaries? Fuel? Advertising? A pie chart would be really interesting.

The reason is to better anticipate where prices might go if oil prices change, or similar developments in the economy. I remember back when oil prices jumped, the cruise lines started adding fuel supplements. But it took awhile for those to kick in, and they were not as large as you might think.

[Keith1010]

Have no idea but large components are:

Sales and Support from Land.
IT
Advertising
Tour Operators
Salaries and Benefits
Commissions to TA's
Buildings On Land
Food
Fuel
Cruise Ship Builds and Dry Docks
Maintenance
Insurance
Entertainment

And I am sure another list of items are am forgetting.

[AmazedByCruising]

If [URL="http://www.cruisemarketwatch.com/home/financial-breakdown-of-typical-cruiser/"]this[/URL] site is correct, even when fuel prices were doubled it would add about 10%.

Among the things that look a bit weird about these numbers is that there must be many people not taking a single ship-sponsored shore excursion. It's also possible that I totally underestimate the percentage of cruises going to a beach, another beach, yet another beach, and back again. :)

[Underwatr]

The "cruise line portion" of a shore excursion would be the line's commission for the excursion which is actually conducted by an independent contractor. Edited August 18, 2015 by Underwatr

[AmazedByCruising]

[quote name='Underwatr']The "cruise line portion" of a shore excursion would be the line's commission for the excursion which is actually conducted by an independent contractor.[/QUOTE]

I've been on a bus with about 40 other passengers for a full day excursion which was about $100. It's not my line of business, but at that price I'm quite sure the commission would be $70 or even more. If not, maybe I should start a new business :D

[Underwatr]

You think the line keeps $70 of your $100 and gives the company doing the excursion $30? Why do you think that?

[sfaaa]

While there are industry standard on different costs, those are for guidelines only. No cruise company is going to tell the world its line-by-line budget and give away any trade secret to its competitors.

[AmazedByCruising]

[quote name='Underwatr']You think the line keeps $70 of your $100 and gives the company doing the excursion $30? Why do you think that?[/QUOTE]

Because for Amsterdam, Internet tells me about very similar excursions (live guide, bus & boat, 3.5 hours) costing $30-40 for individual tourists. Group tours must be even cheaper, let's say $25.

The guest doesn't pay the contractor so I don't think the ships get commission, they just pay a lot less than what they charge to the guest. At $86 earnings/8 day cruise, that would be about just one ship excursions/week on average. I would have expected 3 or 4 at least.

[tetleytea]

That's a nice site, AmazedByCruising. What strikes me: agent commissions. They pay more for that than payroll! Edited August 19, 2015 by tetleytea

[dorisis]

Fare prices also depend on completion. More and larger ships mean more competition look for new sales gimmicks.

[paul929207]

Fuel is often bought well in advance. I read recently that several airlines were taking a bath since they locked in fuel at much higher prices. I am sure some cruise lines are in the same position

[njhorseman]

[quote name='AmazedByCruising']Because for Amsterdam, Internet tells me about very similar excursions (live guide, bus & boat, 3.5 hours) costing $30-40 for individual tourists. Group tours must be even cheaper, let's say $25.

The guest doesn't pay the contractor so I don't think the ships get commission, they just pay a lot less than what they charge to the guest. At $86 earnings/8 day cruise, that would be about just one ship excursions/week on average. I would have expected 3 or 4 at least.[/QUOTE]

Your numbers are totally off base because you're making an invalid assumption about how much the cruise lines make on an excursion. In fact 3-4 excursions would account for the $86 average. In many instances where you can book an identical (not similar, but identical) excursion either directly with the tour operator or through the cruise line, I've found the cruise line's price to usually be in the $10 - $30 range above the tour operator's direct booking price. For more complicated and expensive tours the mark up will be more.

I've owned a travel business, among others, and no tour operator is keeping only $30 of a $100 booking. It's the booking agent...in this case the cruise line that's keeping $30. The tour operator is keeping $70. It's the the tour operator that takes all the risk and is making the investment in equipment such as buses as well as paying the salaries of employees such as bus drivers and tour guides.

[tetleytea]

[quote name='njhorseman'] I've found the cruise line's price to usually be in the $10 - $30 range above the tour operator's direct booking price. For more complicated and expensive tours the mark up will be more[/QUOTE]

What excursions are you looking at? I have priced ship excursions vs. independent many times, and the ship's is to the tune of 75% more expensive. Just a simple bus ride to the airport is closer to the $30 markup number.

And I would be surprised if the independents are taking home less pp than the ship contractors. If anything, the ship's operators probably take home less pp because of the volume they get out of the deal.

[njhorseman]

[quote name='tetleytea']What excursions are you looking at? I have priced ship excursions vs. independent many times, and the ship's is to the tune of 75% more expensive. Just a simple bus ride to the airport is closer to the $30 markup number.

And I would be surprised if the independents are taking home less pp than the ship contractors. If anything, the ship's operators probably take home less pp because of the volume they get out of the deal.[/QUOTE]

Read my words carefully...I said the identical excursion, not something similar offered independently. There are cases where a tour operator sells the excursion both directly to the public and through the cruise line. Both the general public and the cruise line passengers will be on the same excursion. This is fairly common in certain ports like Bermuda.

[tetleytea]

Read mine carefully, too. I know. I would be very surprised if the cruise line contractors are taking home more per person than the independents, whether they sell direct to the public sometimes or not. They would take less pp, in exchange for the increased volume the cruise line gives them. The balance goes to the cruise line, and that is a heckuva lot more than $10-$30 most of the time. The operators who both contract out and sell direct to the public don't want to offend the cruise lines, so they have to raise the prices to the public. If they offered half-price excursions direct, pretty soon they will be going independent, real quick.

This is hardly unique to cruise excursions--this is classic middle-man economics.