How will passenger numbers on future P&O Cruises be reduced?

[No pager thank you]

One of the many unanswered questions from P&O is how they would propose to run cruise ships with reduced capacity, whenever cruises restart. 

 

Some online articles speak of Carnival thinking of avoiding booking adjacent cabins, or only making cabins with fresh air supply available for customers to book i.e. balconies and suites.

 

However, anyone wishing to book a cruise at the moment would appear to have unlimited choice of cabin grade and location, if they are prepared to pay. 

 

Online estimates suggest that more than 1/2 of passengers have taken a FCC and bookings for 2021 are up.  Capacity is said to be limited already on some 2021 sailings as a result.

 

I can't help but think that some people with long advance bookings, including possibly myself, whether paying with normal cash or FCC bookings, could end up being disappointed, even when cruising starts again in earnest - assuming that the pandemic does eventually come under control with treatment/vaccine.

 

I would be interested in your thoughts around how you think P&O would deal with an overbooking problem:

 

Do you think they would:

 

1) Honour bookings based on the date they were made? (looking after early bookers).

2) Honour bookings based on how much people paid, irrespective of grade (i.e. cheaper bookings get cancelled).

3) Cancel all bookings that are not balconies/suites. (maximize revenue per passenger).

4) Somehow prioritise new cash bookings over FCCs linked to the increasingly telephone based booking system?

5) Something else based on your Loyalty Tier status? (rewarding loyalty)

 

Or, do you feel that they already have a confirmed plan, which they are not announcing, which is one of the reasons why fares have already gone up?

 

I think that real availability will need to be taken in to account by those choosing to accept FCCs in the current climate.

 

Thank you in advance.

[Harry Peterson]

Interesting question.  My guess is that they’re trying to get as much cash in as possible to keep Carnival afloat.

 

I imagine they know exactly what they’re doing, but what they don’t yet know is how they’ll be required to operate.

 

 I also imagine they have several scenarios and algorithms on which to operate, depending on circumstances, and the aim will be of course to maximise cash flow and profit. I doubt any other factor will be a consideration, but it’s impossible to second guess their plans.

[majortom10]

They basically will not have a clue at this moment in time it is just about getting as many booking as possible and as much money as they can cash is king.

Edited May 12, 2020 by majortom10

[Selbourne]

I agree with Harry. The acceptance of new bookings (or encouraging people to make new bookings with FCC) is purely about retaining cash in the business, as interest free loans, to cover their costs. I don’t believe that at this stage there is any more logic to it than that. 
 

Nobody knows what the future will hold, but many of the theories being speculated on just wouldn’t work, as cruises wouldn’t be viable operating in that manner. There would be a tipping point where they would lose more money by operating a cruise with lower than normal capacity (given all the costs of crewing the ship, food etc) than they would lose by mothballing the ships as at present. That trigger point could be as little as a 25% reduction in passengers based upon stats I have read in previous years about profit margins on cruises. 

[No pager thank you]

Thank you for the replies. 

 

I had not realised the 25pc margin point, which is clearly significant.  Even with certain per passenger fare increases and the potential reductions in staffing categories which directly relate to passenger numbers (reducing overheads) there is little room for manoeuvre.

 

The short-term strategy of maximizing cash in the business appears to dominate thinking at the moment, from what I'm reading, I agree.

 

At the moment, in my eyes, a surprisingly high proportion of online responders to P&O are being particularly sympathetic to their position, in the current emergency. 

 

Fast forward to a time when the future appears brighter and P&O might start cancelling passengers for any "underhand" reasons, then even the most loyal guests might begin to question this business.

[grapau27]

I agree with what others have said it is far too early to speculate.

The bar prices is one area P&O could look at to increase their profit margins as they are significantly cheaper than the American cruiselines.

Edited May 12, 2020 by grapau27

[kenhem]

Personally I'm not sure I would want to cruise if they have to reduce the passenger numbers to supposedly make it safer, that tells me there's a risk involved and a chance you may come down with the virus. Plus there would also likely to be other measures in place, such as wearing masks. What sort of holiday would that be, not that relaxing for sure. Not something I'd want to shell out a few thousand pounds for anyway.  As much as we love cruising we've decided we'll only get on another cruise once there is a vaccine available and deployed widely.

[Harry Peterson]

On a slightly different tack, the conclusion they may reach is that for the time being cruising will just have to go back to the pre-Carnival P&O days when quality was the priority, rather than price.

 

The product now is very different (Saturday night ITV audience targeted it seems from the CEO's recent comments) from the 'old' product, but it may well be that the old product is the only one that will make money if passenger numbers have to be reduced dramatically.

 

Much higher prices, of course, some dramatic refurbs needed, and a complete rethink about the product on offer.

 

Maybe they'll have to woo the BBC4/BBC2 audience - they could be the only ones prepared to pay the prices, though most of them might need a lot of persuasion, and a very different product, to set foot on a cruise ship! 

[Selbourne]

1 hour ago, No pager thank you said:

Thank you for the replies. 

 

I had not realised the 25pc margin point, which is clearly significant.  Even with certain per passenger fare increases and the potential reductions in staffing categories which directly relate to passenger numbers (reducing overheads) there is little room for manoeuvre.

 

The short-term strategy of maximizing cash in the business appears to dominate thinking at the moment, from what I'm reading, I agree.

 

At the moment, in my eyes, a surprisingly high proportion of online responders to P&O are being particularly sympathetic to their position, in the current emergency. 

 

Fast forward to a time when the future appears brighter and P&O might start cancelling passengers for any "underhand" reasons, then even the most loyal guests might begin to question this business.

Like you, I am quite surprised at how relaxed many people are about the time being taken by P&O to refund customers, when the law states 14 days. I think most people would allow some leeway given the extreme circumstances, but they are taking the proverbial with 60 days plus. Other companies faced with the same issues are managing it in a fraction of the time but, of course, others are far worse than P&O. I think that this tolerance is a lot to do with the age profile of P&O customers. Older folk are less likely to go into battle and/or won’t have the cash flow issues that those with young families or mortgages have. However, the contempt with which P&O has been treating their customers over refunds is testing the loyalty of many stalwarts. 

[Eddie99]

It’s difficult to imagine 5000 pax @ £1000pp at the mo

How about, post-C, 500 @ £10k a pop on Iona???

Well, who knows?

It feels like cruising may be back to to mythical “Good Old Days” but It’s hard to see Cunard & P&O “filling” their fleets at that sort of fare

[Selbourne]

4 minutes ago, Harry Peterson said:

On a slightly different tack, the conclusion they may reach is that for the time being cruising will just have to go back to the pre-Carnival P&O days when quality was the priority, rather than price.

 

The product now is very different (Saturday night ITV audience targeted it seems from the CEO's recent comments) from the 'old' product, but it may well be that the old product is the only one that will make money if passenger numbers have to be reduced dramatically.

 

Much higher prices, of course, some dramatic refurbs needed, and a complete rethink about the product on offer.

 

Maybe they'll have to woo the BBC4/BBC2 audience - they could be the only ones prepared to pay the prices, though most of them might need a lot of persuasion, and a very different product, to set foot on a cruise ship! 

I made a similar suggestion a number of weeks back, that they could have a two tier approach. Mass market on the large family ships and more upmarket on the smaller ships. If they stick with the ‘one size fits all’ approach then I fear that there will be an over capacity issue and there won’t be a future for some of the smaller ships, which will be very sad.  

[No pager thank you]

12 minutes ago, Harry Peterson said:

On a slightly different tack, the conclusion they may reach is that for the time being cruising will just have to go back to the pre-Carnival P&O days when quality was the priority, rather than price.

 

The product now is very different (Saturday night ITV audience targeted it seems from the CEO's recent comments) from the 'old' product, but it may well be that the old product is the only one that will make money if passenger numbers have to be reduced dramatically.

 

Much higher prices, of course, some dramatic refurbs needed, and a complete rethink about the product on offer.

 

Maybe they'll have to woo the BBC4/BBC2 audience - they could be the only ones prepared to pay the prices, though most of them might need a lot of persuasion, and a very different product, to set foot on a cruise ship!

 

Possibly, splitting the market in these terms will become a direction that they pursue, particularly for the post 2022 bookings.

 

It would feel to me though that the traditional "quality" market is congested at the moment - even within the Carnival umbrella. 

 

Thinking across the rest of the industry, would customers of Seabourn (and similar) really move back to a rebranded P&O for instance?

 

In any event, good or bad, am expecting a decent rate of inflation on the drinks prices, particularly with few people buying the overpriced packages!

[ollienbertsmum]

25 minutes ago, kenhem said:

Personally I'm not sure I would want to cruise if they have to reduce the passenger numbers to supposedly make it safer, that tells me there's a risk involved and a chance you may come down with the virus. Plus there would also likely to be other measures in place, such as wearing masks. What sort of holiday would that be, not that relaxing for sure. Not something I'd want to shell out a few thousand pounds for anyway.  As much as we love cruising we've decided we'll only get on another cruise once there is a vaccine available and deployed widely.

 

And don’t forget that you have to travel to get to your cruise.  

 

It may be that many of the UK cruisers leaving from Southampton can use their own transport, but you will come into contact with people who have been on planes and trains.  I didn’t think that much about it until my daughter got on to a plane from Heathrow at the weekend.  She was horrified saying that she could not see how airports and social distancing worked.  

 

Despite the numbers of cruise ships arriving in Gibraltar, I would have to take at least one plane or a train to get on any cruise.  That puts me at a huge risk and I have not even got to see my stateroom!!

[Josy1953]

53 minutes ago, kenhem said:

Personally I'm not sure I would want to cruise if they have to reduce the passenger numbers to supposedly make it safer, that tells me there's a risk involved and a chance you may come down with the virus. Plus there would also likely to be other measures in place, such as wearing masks. What sort of holiday would that be, not that relaxing for sure. Not something I'd want to shell out a few thousand pounds for anyway.  As much as we love cruising we've decided we'll only get on another cruise once there is a vaccine available and deployed widely.

+1

[SarahHben]

In March when we transferred our June 2020 booking to June 2021 there were very few balcony cabins available, for online booking at least. We booked the last 2 available mid ship deluxe balcony cabins on our chosen deck. I have wondered since, if they have to reduce passenger numbers to allow for more social distancing, how they would decide which bookings to cancel. It all remains to be seen I suppose.

[ToxM]

I’ve gambled on the offering being upped in some way to make it a bit more luxury due to changes arising from the post covid landscape ... have rebooked from November this year and upgraded to a suite in March 2022. 

 

I cannot see cruisers OR companies wanting to pack people in sardine like on the mega ships going forward.

 

Am happy to pay more for less people - let’s also hope they revamp the buffet with either servers or do away with it altogether and add another dining venue. It is P&O’s weak spot after all. 

[Son of Anarchy]

12 minutes ago, ToxM said:

Am happy to pay more for less people - let’s also hope they revamp the buffet with either servers or do away with it altogether and add another dining venue. It is P&O’s weak spot after all. 

 Agree with the buffet could improved.  I found the layout of Britannia's buffet very good, but the others leave a lot to be desired at peak times.  Some of the offerings could do with being updated as well.

[Captain_Morgan]

I think it's safe to say that the concept of 'social distancing' (SD) is here to stay and will very much be a part of any re-launch from any cruise line, especially those sailing to/from the hardest hit areas.

 

With that said, there is no practical way you can fill Britannia, or Iona (as examples) to their maximum capacity and adhere to SD, nevermind trying to accomplish the same on the likes of Oceana or Aurora.  I like the idea of separating the ships based on demographic but don't they already do that with the adults only ships?  Add to the fact that the Carnival Corporate model has been for the last number of years to build bigger, sell the fares cheaper, fill the ships with people and pick away at them for every little 'extra' which is where the $£€ are made.  It's no secret that someone can pay under $£€ 1000 per person on a 7 day cruise and walk away having spent at least double on the aforementioned 'extras' and that is how Carnival likes it even if it means a drop in quality.

 

I see a phased re-entry with the larger ships going into service first due solely to the fact they can fill more beds, albeit not to capacity and still earn on short runs.  The likes of the older and smaller ships will likely be shuttered for the time being with one or two possibly even being sold off either for scrap, or to independent lines (i.e. Saga Sapphire, Oriana) 

 

As for the future bookings and the touting of strong numbers moving forward its surely nothing more than smoke and mirrors to increase confidence in both investors and share holders, as well as the general public as lets face it we all need/want something to look forward to and if we hear there is an increase in demand we want to be part of it.  Will that demand (artificial or otherwise) be met or realized?  I'm sure it will in some ways but until there is a proven vaccine I think many will give cruising a wide berth (pun intended).

[No pager thank you]

10 hours ago, SarahHben said:

In March when we transferred our June 2020 booking to June 2021 there were very few balcony cabins available, for online booking at least. We booked the last 2 available mid ship deluxe balcony cabins on our chosen deck. I have wondered since, if they have to reduce passenger numbers to allow for more social distancing, how they would decide which bookings to cancel. It all remains to be seen I suppose.

I have been thinking about this too.

 

The recent announcement on refunds and the extension of the FCCs will probably mean that more bookings will be cancelled in the future, once cruising resumes in social distancing conditions.

[P&O SUE]

Interesting - when I was on hold to P&O this morning one of the hold ‘messages’ said  they were working on ways to make cruising ‘safe’

[No pager thank you]

Yes, interesting that they have recently updated the spiel.

 

As a guess, I think that is part of the reason for the extension of the Future Cruise Credits in Rylan's announcement may be linked.

 

If a plan emerges to resume cruising in any form, passenger carriage may reduce (if that can be afforded economically) to make cruising safe.

 

This would create too many used/cancelled FCC bookings with too little time to redeem them, hence why the deadline needs to be extended - to prevent more people from cottoning on too soon, causing them to ask for refunds and taking cash out of the business now.

[Denarius]

Interesting post.

First, let me say that imo P&O will not recommence operations until social distancing measures are lifted or substantially relaxed. Should they do so on reduced capacity however, and cancellations were necessary to achieve this, the imperative would be to maximise revenue. The obvious way to achieve this would be by cancelling the bookings of those who paid the lowest fares. Which in practice would probably mean inside cabins and saver fares.

[terrierjohn]

This is an interesting conundrum for all mass market cruise lines, we will just have to see how the first ships to dip their toes in the water manage to observe social distancing on board.  Which is possibly why the first ones back are most likely to be the luxury lines that have fewer passengers, although even they will have to sort out restaurants, theatres, show lounges and bars, to ensure adequate social distancing.

[Happy2b@sea]

By next year several people will have had the virus.   They have just developed a reliable antibody test, so perhaps it will be those who can prove that they've had it, who will be welcomed on board first.  That could be many more young people, who I believe they are trying to attract to sale on Iona anyway.

[Denarius]

41 minutes ago, Happy2b@sea said:

By next year several people will have had the virus.   They have just developed a reliable antibody test, so perhaps it will be those who can prove that they've had it, who will be welcomed on board first.  That could be many more young people, who I believe they are trying to attract to sale on Iona anyway.

A random thought. If all passengers and crew had tested positive for antibodies and were immune, social distancing would not be necessary. So would it be possible to sail one of the smaller ships with an immune (or if/when available vaccinated) crew and only accept similar passengers? I suppose it would depend on what proportion of the population fell into that category and whether it representad a big enough potential market to sell enough cabins to make it profitable.