Why does NCL offer upgrades on cruises with lots of unsold staterooms?

[alisonslp]

I have tried searches both on CC and google but haven't found an answer. Why does NCL offer upgrades for cruises where there are a lot of open rooms. Particularly, why would they offer it to folks who paid minimal fares for their gty rooms? For instance, I booked a gty balcony (not a bf) 48 days out from sail date and received my cabin number within a couple of days - deck 13, which is now listing for 2x the price I paid. At 42 days out, I received the offer to bid on haven and spa cabins. Now, if I am bidding high for these rooms, it certainly might be worth it to NCL to give me the upgrade, but from what I have read, they often accept much lower bids as well, which is where I am confused. It is not like we are a year out and they anticipate needing a lot more lower tier rooms. It is unlikely they are going to sell many rooms just 6 weeks out. Why accept offers on those higher tier rooms for so little (poor to fair) when they come with higher expenses for the cruiseline (spa/haven amenities)?

[pyrrhus]

All about money.  Most upgrades cost the cruise line zero extra, so why not entice someone to spend a few more bucks while also creating goodwill.  

[AL3XCruise]

There is a marginal cost, but it is probably negligible in most cases.  Regardless, I'm sure it is computed and a bid in that range (if even permitted) would not be accepted.  Remember it isn't like the crew is reduced or part of the spa is shut down for one undersold cruise.  NCL is paying the spa staff, haven staff, etc.  The maintenance and upkeep of those facilities goes on.

 

The bidding process is the method NCL has determined is best to extract the maximum amount of cash from the customer.  A lot of statistical analysis has been conducted to determine what bids are accepted when.  The exact methods are not disclosed.

[BirdTravels]

It's about inventory control. If you move people out of the "cheap" rooms, more people will buy into the cruise. The base room is a small part of the revenue. The more people they get on the ship, the more revenue they will get from other spending. 

[sanger727]

They need to sell every room on the ship. Typically they are still losing money on a sailing when it’s sold out, they don’t make money until people on the ship start spending onboard. So every room needs to be filled to maximize their onboard spend. As the cruise approaches they will run fire sales on the rooms or comp them to casino customers and the cheaper rooms are easier to sell. So upgrading currently booked people to the higher end rooms to open up their lower rooms increases the likelihood of selling out. Plus, ideally they want multiple upgrades into the same room. So person A who is in a suite bids up to the haven, person B who is in a mini suite can now get person A’s room in a bid, Person C who in an inside to balcony can bid up to person B’s Minisuite. They get 3 people to pay extra and only give up 1 new room.

[dcipjr]

24 minutes ago, sanger727 said:

So person A who is in a suite bids up to the haven, person B who is in a mini suite can now get person A’s room in a bid, Person C who in an inside to balcony can bid up to person B’s Minisuite. They get 3 people to pay extra and only give up 1 new room.

 

Bingo. And then, the Inside cabin that person C was in is put back up for sale at a low price. This is one reason why you'll often see last-minute cruises days before departure that have only Inside cabins available.

[alisonslp]

Thanks everyone. I basically understood the concept for cruises that had the potential to sell out but didn't think it would also work for cruises that won't sell out. I didn't realize that they are not making money until people are onboard spending money, so deeply discounting the rooms may cost them money but having more people on board is the real goal to boost revenue

[pete_coach]

Upgrades are not free. They offer and people, for whatever reason, think they are getting a great deal so they buy it. More money in NCL pocket.

[Nclgetawaymenhoney]

1 hour ago, alisonslp said:

Thanks everyone. I basically understood the concept for cruises that had the potential to sell out but didn't think it would also work for cruises that won't sell out. I didn't realize that they are not making money until people are onboard spending money, so deeply discounting the rooms may cost them money but having more people on board is the real goal to boost revenue

Also they are just offering for you to bid, not a guarantee by any means you'll "win" the upgrade, but it gives them valuable data mining info if you do bid

[JamieLogical]

I feel like you answered all your own questions... NCL wants to make money. If those rooms are going to go unsold, they are way better off taking your upgrade money than letting them sit empty for $0. Sailings with "lots" of unsold rooms are EXACTLY the scenario in which the Upgrade Advantage Program shines for NCL. On full sailings, there are few rooms to process upgrades for so the system doesn't net NCL significantly more money. On sailings with a lot of open inventory, the system allows them to maximize their earnings.

[alisonslp]

15 minutes ago, JamieLogical said:

I feel like you answered all your own questions... NCL wants to make money. If those rooms are going to go unsold, they are way better off taking your upgrade money than letting them sit empty for $0. Sailings with "lots" of unsold rooms are EXACTLY the scenario in which the Upgrade Advantage Program shines for NCL. On full sailings, there are few rooms to process upgrades for so the system doesn't net NCL significantly more money. On sailings with a lot of open inventory, the system allows them to maximize their earnings.

My question was more related to NCL accepting low bids for their high end rooms that carry more expenses for them. I had been reading a thread about bids with people mentioning they bid in the "poor" range and won bids for spa and haven rooms. NCL are obviously  getting more money from these folks, but nowhere near their list price for that room. But as others pointed out, it is more about the money spent ON the ship, not before the cruise. and if they can sell the low end rooms more easil, then this makes sense.

[alisonslp]

35 minutes ago, Nclgetawaymenhoney said:

Also they are just offering for you to bid, not a guarantee by any means you'll "win" the upgrade, but it gives them valuable data mining info if you do bid

Obviously, but my question was based on those folks who bid low and were awarded the room, presumably for considerably less than they would have paid straight out. Otherwise why risk placing a bid?

[Nclgetawaymenhoney]

Those bidding low that win, say they are in balcony, and get a haven courtyard, then there balcony can then be either resold at balcony rate or very least it will be given to someone from on or inside bidding.  If ncl sails and their are say 50 open cabins at least they are all inside so they have Maximized profit on that sailing 

[AdoraBelle]

Always check the real-world mock-booking prices, too. On an upcoming sailing I was able to call and upgrade at the listed rate of a higher category after a price drop. The new listed rate was exactly half of the minimum bid I would have needed to offer, had I used the bidding system. 

[havenfan]

2 hours ago, alisonslp said:

I had been reading a thread about bids with people mentioning they bid in the "poor" range and won bids for spa and haven rooms. NCL are obviously  getting more money from these folks, but nowhere near their list price for that room.

If a sailing is looking like it's not going fill up, NCL will be dropping the list prices aggressively as well.  Passengers who are already booked usually have the option to pay the difference to get these lower list prices.  If spa and haven cabins are still empty when the upgrade bidding clears, usually the week before sailing, then NCL found that no one was willing to pay even the reduced list prices and so wouldn't have got that extra money anyway.

 

Btw, I think there's a consensus on this thread that the "poor", "medium" and "excellent" ranges do not reflect the actual chances on any individual sailing.  People have reported situations where the lowest allowed bid was actually higher than the direct upgrade price.

[AdoraBelle]

18 minutes ago, havenfan said:

If a sailing is looking like it's not going fill up, NCL will be dropping the list prices aggressively as well.  Passengers who are already booked usually have the option to pay the difference to get these lower list prices.  If spa and haven cabins are still empty when the upgrade bidding clears, usually the week before sailing, then NCL found that no one was willing to pay even the reduced list prices and so wouldn't have got that extra money anyway.

 

Btw, I think there's a consensus on this thread that the "poor", "medium" and "excellent" ranges do not reflect the actual chances on any individual sailing.  People have reported situations where the lowest allowed bid was actually higher than the direct upgrade price.

 

Yep. The bidding system does not change dynamically to reflect the real-world pricing, so it's not even necessarily a deal. 

[zactak]

3 hours ago, AdoraBelle said:

Always check the real-world mock-booking prices, too. On an upcoming sailing I was able to call and upgrade at the listed rate of a higher category after a price drop. The new listed rate was exactly half of the minimum bid I would have needed to offer, had I used the bidding system. 

 

This is sound advice here. I'm going on the Bliss in May and got a bid email a month or so ago. We're in an inside cabin right now, but balconies are now only about $100 more than what we paid in August of last year. If I went through the bid process, and my bid was accepted, I'd be spending a lot more than what I would if I just called and upgraded normally.