New Royal Caribbean Pricing Policy

[Ted]

I recently called Carnival customer service. Because it sounded like a Philippine accent, I asked the location of the call center, and was told Manila.

However, I am advised that their sales office remains in Florida.

[Beth 2001]

As a Platinum Crown and Anchor member who will have cruised with RCI three times in 15 months as of this November, I am sorry that I will have to look into other vacation options due to the price increases that will result from the new policy.

In recent years, as cruise lines have added new ships and cruise-only agents have begun offering significant discounts, the price of cruising has dropped dramatically. I still cringe when I recall that, in 1993, I paid $1750 to share an inside triple on a 7-night Southern Caribbean Cruise on the Monarch. I now pay less than that for a Junior Suite -- and it's 11 years later!

I love RCI, but not at any price. We are booked in a Royal Family Suite for our upcoming cruise, and paid at least $800 less by booking through an internet TA instead of RCI. That $800 paid for four round-trip tickets to Fort Lauderdale for my family.

If all RCI prices will be the same as of the 16th -- through RCI, internet agencies, and mom-and-pop TAs -- I seriously doubt that they will drop anywhere near the prices that are currently available. RCI is banking on its customers' loyalty and goodwill, but if the price is too high, I will look elsewhere when it is time to book my next vacation.

Perhaps RCI has been blinded by its own success? The AP article below touts the positive impact that higher passenger prices have had on the company's bottom line. I am sure that we can all look forward to many more such increases in the coming months -- unless we vote with our wallets by refusing to book with RCI.


Associated Press
Royal Caribbean's 2Q Earnings Double
Wednesday July 28, 4:42 pm ET
By John Pain, AP Business Writer
Royal Caribbean Says 2Q Earnings More Than Double As Number of Ships, Ticket Prices Increase

MIAMI (AP) -- Royal Caribbean Cruises Ltd.'s second-quarter earnings more than doubled from the same period a year ago, when the war in Iraq kept many people off ships. But the world's second-largest cruise company also did better because it added new vessels and more people took vacations at higher prices.

The Miami-based company reported Wednesday its net income totaled $122 million, or 59 cents a share, in the April-thorugh-June period, compared to $56 million, or 28 cents a share, a year ago. That beat the average estimate of 53 cents a share from analysts surveyed by Thomson First Call.

Investors reacted well to the news. Royal Caribbean shares rose $1.57, or nearly 4 percent, to close at $42.76 on the New York Stock Exchange.

The company has had two strong quarters in a row as the cruise industry as a whole is luring more passengers to travel and as the economy strengthens and fears of terrorist attacks and the Iraqi war subside. Except for an expected slim loss in the fourth quarter, which is typically the weakest for cruise travel, the company believes its success will continue into next year, barring major events that scare travelers away.

"Everyone recalls (the) second quarter of last year was the quarter where we were most affected by the war in Iraq," said Richard D. Fain, chairman and chief executive officer. "Now it's a year later and the strength that we've been describing for some time has really sustained itself."

He said that the market hasn't been this positive since 2001, when economic recession and the Sept. 11 attacks kept people home.

"What's been so exciting about this year is that after sprinting during the early part of the race and filling the ships early, we've found that there's still plenty of demand left over as we approach the finish line," he told analysts in a conference call.

Revenues were $1.14 billion, up 26.2 percent from $906 million a year ago. They climbed mostly on a 12.4 percent capacity increase, as the company added four ships since the second quarter last year. Rising prices, occupancy and onboard revenues also helped offset higher fuel prices.

Net yields, a key performance gauge measuring revenue from cabin berths minus the costs of air transportation and travel agent commissions, were up 12.6 percent.

"Except for 'catching a breath' in June, the industry's pace of bookings continued healthy relative to that typical for the April-early August period," Tim Conder, an analyst with A.G. Edwards & Sons Inc., said in a research note this week.

Prices have even been climbing for reservations made for the coming winter, which is "very encouraging considering this is the seasonally weakest period for sailings," Conder said.

For the first six months of the year, Royal Caribbean said it earned $218 million, or $1.05 a share, compared to $109 million, or 56 cents per share, in the same period last year. Six-month revenues were $2.2 billion, up from $1.79 billion.

Earnings per share for 2004 are forecast to be in the range of $2.25 to $2.40. Analysts surveyed by Thomson First Call expect $2.23 a share.

Royal Caribbean operates two lines, Royal Caribbean International and Celebrity Cruises, which have a combined 29 ships. Only Carnival Corp. & plc is larger, with 77 ships.

[rsinj]

a few weeks ago I made a reservation for a 2005 cruise, owners suite. total cost for my family was $5306. I thought it was a good deal as the RCL site showed $5600 for the same cabin on the same cruise.

a week later, as someone on this board suggested, I checked through a different site and their price was $4945 for the same cabin. I canceled the first (paying $50 to cancel) and switched to the other company - same cabin #, just pocketing the $300 difference (after fee). Since then I had checked other sites, none were near that $4945 price.

last night, I checked on the site we have our reservation with now, and it is at $5350 - even higher than the one we made with the first company.

this policy change has already started to have an effect. glad we are locked in already.

[bUU]

Nothing has had any lasting effect yet. The cruise lines haven't even all weighed in yet. In the end, the cruise lines will most likely negotiate a common pricing structure. The law requires that they do this negotiation publicly, so we're seeing it.

Someone in another thread said it very succinctly: Prices will be whatever people are willing to pay. We the passengers will determine the value of cruising, and will, through our purchasing decisions, determine how much fares will be.

[rsinj]

[QUOTE]the cruise lines will most likely negotiate a common pricing structure. The law requires that they do this negotiation publicly, so we're seeing it.[/QUOTE]
I don't think a common pricing structure will be something that happens. The problem is that there is enough product differentiation among the cruise lines, ships, cabins, itineraries that it would be extremely difficult to do. This does happen in the airline sector because you are essentially talking about a commodity product - there is very little differentiation among what is being offered. Additionally, because of the commodity nature, there is intense price competition as well which drives the price down for the consumer.

the other issue you have here, is that I believe the travel agents are going to do exactly what the cruiselines tell them - because they are paid well by the cruiselines, and after having their commissions taken away by the airlines, they really can't afford to lose the cruise commissions.

[QUOTE]We the passengers will determine the value of cruising, and will, through our purchasing decisions, determine how much fares will be.[/QUOTE]
To a certain extent that is true. It is all supply and demand - and demand is going to be dictated to a certain extent by price. Further, you do have new supply coming online with additional ships being built - and bigger ones at that. The other side of it - demand is high right now and the cruiselines can and have been filling the ships - so high demand means little pricing pressure by consumers.

[bUU]

They call them "mainstream" cruise lines for a reason, eh? Do you really think that there is that much differentiation between RCI's product and Carnival's?

[imsulin]

No - not much difference at all, bicker. I've done both lines for many years, and see very little difference b etween the two lines. But...it all has to do with ADVERTISING, and little to do with the actual price you may pay for a cruise.

[rsinj]

[QUOTE]Do you really think that there is that much differentiation between RCI's product and Carnival's?[/QUOTE]you mean to tell me that you don't think there's much difference between RCI's and Carnival's products?

hey, that's what makes a market. you can shop at Nordstrom, or you can shop at JC Penney - not much difference in the product they offer either - right?

you cannot get my wife on a Carnival cruise.

[Gillian2]

rsinj
Gosh I would agree, though I have never been on a party cruise ship (ie Carnival) so can't really speak with authority. Just the stories I hear are bad enough. Best Western has beds in the room just like the Ritz, but any comparison??? NO way!! I will say (segue) that Princess tops my list with RCCL second. I have done maybe 20 some cruises on Princess and 12 on RCCL. I love the Elite benefits on Princess...wow!! But, I just experienced the Concierge Club on RCCL and had complimentary Mums Cordon Rouge champagne poured non stop from 5-8:30pm every evening. Is this true on all of the Radiance class ships or did I just get lucky? the complimentary bar was a full open bar, but I l;oved the champers!!

[bUU]

[quote name='rsinj']"Do you really think that there is that much differentiation between RCI's product and Carnival's?"

you mean to tell me that you don't think there's much difference between RCI's and Carnival's products?[/QUOTE]That's what I asked you. :rolleyes:

[quote name='rsinj']hey, that's what makes a market. you can shop at Nordstrom, or you can shop at JC Penney - not much difference in the product they offer either - right?[/QUOTE]Good example. And JCPenney has a legal right to impose pricing policies on all its sales channels.

[quote name='rsinj']you cannot get my wife on a Carnival cruise.[/QUOTE]And you can't get my wife to drink Pepsi. What's your point? :D

[bUU]

[quote name='Gillian2']Best Western has beds in the room just like the Ritz, but any comparison??? NO way!![/QUOTE]Of course, and that's why I asked about RCI and Carnival, instead of RCI and Cunard. Best Western is comparable to Holiday Inn.

[rsinj]

bicker, a cruise is not a commodity - period. I will place money down (and have much better odds than winning at a casino) that there is no legal body that would agree with your belief that a cruise is a commodity.

[QUOTE]Good example. And JCPenney has a legal right to impose pricing policies on all its sales channels[/QUOTE]
but, JCPenney is still at the control of a supplier if they say they cannot sell a product below a certain minimum price. it happens in many products in the market place where manufacturers don't want their products and brands "cheapened". for some reason you've decided that you like the idea that this is price fixing. unfortunately there are some here who might actually believe you.

[smeyer418]

[quote name='rsinj']JCPenney is still at the control of a supplier if they say they cannot sell a product below a certain minimum price. it happens in many products in the market place where manufacturers don't want their products and brands "cheapened". QUOTE]

The supplier can't do this legally. I know with some product people say that they do but its just not accurate. Price fixing by a manufacturer is illegal when they sell through independent distributors(like JC Penney's) as opposed to employees or agents. I know that people say Saturn price fixes but listen to the ads carefully they say the policy is no haggling. The price posted is what you pay but they also say at their website(on page 163 of the students manual pdf file) that they don't set the prices. I do know that people do believe that some retailers loss the right to sell a product if they discount but generally they come up with another excuse and if they sue to maintain it other producers will not sell them in the future. So that is how its enforced but everyonce in a while someone sues them for pricefixing and invariably they "change" their policies or fires some poor employee who was doing this "unbeknownst" to them. I always remember the scene for Casablanca where Claude Rains is closing Ric's down because "he shocked to learn there is gambling going on there" as the cropier brings him his winnings....

[bUU]

[quote name='rsinj']bicker, a cruise is not a commodity - period. I will place money down (and have much better odds than winning at a casino) that there is no legal body that would agree with your belief that a cruise is a commodity.[/QUOTE][font=Times New Roman][size=4][/size][/font]
[font=Arial][url="http://www.ftc.gov/os/2002/10/cruisestatement.htm"]http://www.ftc.gov/os/2002/10/cruisestatement.htm[/url]
[/font]

[smeyer418]

I think the issue is whether it is a commodity a fungible(interchageable) item...or is product like coke. Sugar is a commodity. But I am not sure whether a cruise is a product or a service(I think a service). It does make a difference some anti-trust laws do not cover services... I know if I put all my threads together I should give continiuing ed credits for anti-trust issues...a car is a product... and I am not sure what question the FTC was answering or that they forsaw Bicker using it as proof the cruise line was selling a commodity.
No offense meant...

[bUU]

[quote name='smeyer418']I am not sure what question the FTC was answering or that they forsaw Bicker using it as proof the cruise line was selling a commodity.[/QUOTE]Perhaps not, and the Statement was actually aimed at a much bigger issue. I've replaced my out-of-context quote with a link to the entire statement. What you'll see, by reading the whole Statement, is that the inquiry was provoked by anti-trust concerns, but they quickly got past any question that there was like-for-like competition in the marketplace, and dug down deep into the question as to whether the mergers proposed would have reduced the competition so much as to constitute an anti-trust violation. Their determination, of course, that it was [b]not[/b]. Read closer and you'll see that the whole issue of TA rebates was considered to be only a parenthetical aspect of discounting. They listed a whole bunch of other mechanisms for discounting, which are still in place protecting competitiveness in the marketplace. Indeed, the fact that TA rebating was parenthetical is very telling.

[smeyer418]

Bicker thanks for the link. I hadn't looked at that before. It is an interesting discussion of anti-trust issues in general and well written. Note that the "dissent" footnotes was the FTC commissions writting since this was an approved statement of the FTC. So there was some disagreement even by them. It does sound like some of my writing about fact specific etc. I have no doubt(NONE) the market will ultimately decide this and as the FTC said there was a lot of misinformation in the press about the merger... that will be the same here. I am always amazed about how poorly the press sometimes does on some issues and I while I have tremendous repect for the Wall Street Journal-which I think gets things wrong less than the NY Times, they still aren't perfect...


It has at least been an interesting discussion and your views have migrated since you first posted on the issue :) Mine haven't :)
Sid

[rsinj]

so bicker? if I ask "why is the sky blue" and you respond with "18", that should mean something?

[Brad1185]

What I have some how missed here is WHY is RCI doing this???

I have never complained about the price. What I object to is the cost cutting and other cutbacks once you get onboard. If the price is too high, then dont go or go somewhere else. But once you book, you should get a great product and thats what is lacking.

[Gillian2]

It's my opinion that the onboard amenities have been cut or a charge has been instituted as the cruise prices are really [B]so low [/B] for what you get. All you have to do is check Caribbean itineraries over the past few years and they are now a BARGAIN. Cost cutting on board has to occur somewhere. Cruising is the best value vacation I can think of. Personally I don't mind the charges for specialty restaurants, wine tasting etc. as I would rather have the lower base price. However, I don't like to experience any lowering of the high quality of food and presentation in the dining rooms. This has been noticeable on RCCL.
I have booked the majority of my cruises directly with the cruise lines when they have announced special pricing or closer to the sail date when they are trying to fill ships. I have only booked a handful recently with internet agencies and have saved about 10% over the cruise line prices. Maybe the cruise lines have got a lot of calls from people like me who call to check why the cruise line cannot match a price quoted on the internet. I have recently (this year) deposited with cruise lines and then turned over my bookings to internet agencies and got the discounts.
When all is said and done we can't second guess the cruise lines and pricing will all settle down and evolve based on consumer action not reaction.

[jagmanss1]

[font=Book Antiqua][size=3][color=darkslateblue][/color][/size][/font][font=Book Antiqua][size=3][color=darkslateblue]So Gillian2,[/color][/size][/font]
[font=Book Antiqua][size=3][color=darkslateblue] What you are saying is....... You and others like you are to blame for this new policy:mad: Well THANKS, Thank you Very Much for The new and increased pricing to follow, YOU have done your best to Royally MESS THINGS UP........ GREAT JOB, ARE YOU PROUD OF YOURSELF NOW????????? [/color][/size][/font]

[Ocean Boy]

I just want to make sure I have this straight. You have many cruises to your credit but you know neither why the cruise lines won't, or can't, beat a deal you found on the internet nor where the agencies come up with the ability to provide those deals? Therefore, you ACTUALLY call the cruise lines and ask them why they won't beat the deal that you found??

Well, these boards do get more interesting all the time.

[bUU]

[quote name='smeyer418']Note that the "dissent" footnotes was the FTC commissions writting since this was an approved statement of the FTC. So there was some disagreement even by them.[/QUOTE]Has the FTC ever issued a statement without dissent? I don't think they ever have.

[quote name='smeyer418']It has at least been an interesting discussion and your views have migrated since you first posted on the issue :) Mine haven't :)
[/QUOTE]Don't worry about it. You'll grow. :D

[bUU]

[quote name='rsinj']so bicker? if I ask "why is the sky blue" and you respond with "18", that should mean something?[/QUOTE]I'm sorry you didn't [i]get [/i]the point of my reply. Perhaps Sid can explain it for you.

[jagmanss1]

[font=Book Antiqua][size=3][color=darkslateblue]You all really need to give this topic a break, You are over analizing it to death, And yes I got the right spelling...... Let's wait and see and give it a rest uhhh......... [/color][/size][/font]