During Royal Caribbean's fourth quarter financial results earnings call with investors, Royal Caribbean chairman Richard Fain indicated the company was opting to offer promotions that offer passengers added benefits in lieu of discounting cruise fares.
Fain discussed the strategy and said passengers prefer to get things like onboard credit, free gratuities or drink packages instead of reducing the overall price of a cruise to get more bookings.
"One of the things you've seen is that we are doing more and more with value added versus discounts. We really feel that the consumer prefers that. It works out better for the travel agents, " Fain said during the call.
In addition, cruise promos are preferred by travel agents who get a higher commissionable cruise fare to sell.
This strategy did exceedingly well with sister brand Celebrity Cruises, who had a "123 Go" offer that was focused only on offering extras to guests.
"I think those kind of value added packages are proving from the market point of view to be very popular with the consumer, " Fain explained.
"And it means that instead of touting ourselves on price, we tout ourselves on what we are offering. We think that the market is ready for, and we are very much focused on trying to upgrade ourselves, the image and do less price-fighting and more 'this why you are better on this kind of a cruise'."
