Cruise Pricing Problems

[mac66]

Thought this article from The Street was interesting. It basically says that cruise lines don't charge enough for the value you get. That you can take a cruise cheaper than a comparable vacation on land.   My wife and I have known that for sometime. We live in the north, we often look for a cheap cruise out of Florida in the winter because it's cheaper than getting a hotel, not even counting the meals, entertainment and free activities you get on a ship.  If you figure in transportation costs (about a 22 hour drive or 2.5-3 hours by plane) it was still a good value and would be the same if you stayed on land or took a cruise.  When you fly down (when flights were cheap) but pay $200+ night for a hotel room the night before the cruise it offsets the value somewhat. I used to drive 17 hours straight, spend a night or two at the inlaws* house then drive another 2-4 hours (depending on which port we go out of) for $100 in gas. Maybe two or three times that now with the higher gas prices.  

We have a 8 day cruise the end of November (just after Thanksgiving) that with on board credit from our travel agent, stock and other incentives is costing us less than $100/ night for the two of us.  We will drive down to the inlaws house straight through. Spend the night and then it's a 4 hour drive to the port.  We have another cruise the first week of Feb. I think that one is costing us $107/night (after OBC rebates) and is a two hour drive from the in-laws house.

*inlaws=94 year old mother in law w/alzimers who now lives in a home near us. FIL died last year. My wife maintains their Florida house. We would live there in the winter but for my 95 year old mother and 94 y/o MIL.

...Carnival, Royal Caribbean, MSC, Virgin Have a Pricing Problem 

Both Carnival and Royal Caribbean, along with rivals MSC and Virgin Voyages have returned to sailing with ships that can carry their full passenger loads. In many cases, the two public cruise companies are actually sailing at 90% or higher capacity. Neither has quite hit pre-pandemic passenger levels, but they're well on their way to getting there.

Carnival CEO Josh Weinstein shared a lot of positives during the call but did point out a major problem.

"We are delivering a great all-inclusive vacation experience, convenient, great dining and entertainment choices, fantastic itineraries, beautiful and innovative ships, and the most amazing onboard teams, providing a hi level of personalized service than you can find anywhere on land or sea," he said. "The issue is we are way too much of a value. We should not be priced at a significant discount to land, which is exactly the case today, anywhere from 25% to 50% based on itineraries."

Basically, it's cheaper to take a cruise -- a vacation that includes all the food you can eat -- than it is to take a comparable trip on land. That's very good news for would-be passengers (and what Weinstein said is very obvious to people who cruised regularly before the pandemic).

Neither MSC nor Virgin Voyages are public, so they don't report results but you can book many trips (there are always exceptions) on those cruise lines at prices well below what each line charged pre-covid.

Royal Caribbean, Carnival, MSC, and Virgin can only raise prices if demand increases. Weinstein has some ideas as to how to do that.

"As our brands have now been increasing their advertising investment, we will increase awareness and consideration and actively target those that are new-to-cruise. While we're still carrying a higher proportion of repeat guests, we have seen an improving trend in new-to-cruise and are already two-thirds of the way back to 2019 levels," he said.

Advertising (and low prices) can bring in customers who have never cruised before, but that's not the only way Carnival expects to bring those passengers onboard.

"About one-third of our guests have historically been new to cruise. And as you probably know, two of the most important drivers of new-to-cruise are word of mouth and advertising," the CEO said. "With respect to word of mouth, after the pause, we have been building back our army of advocates that leave the ships, spreading the word about the unparalleled vacation experiences we deliver day in and day out."

[Seafarer]

We view cruising as a 4 week time-share (two B2B's annually). And with sons in FL and CA, we combine visits with them with our sailings.

[Pattycruise]

It appears their new strategy of getting in new cruisers is happening in the casino department with the comped cruises.  Many newbies to the casino are reporting a large amount of offers for comped cruises while many who have been cruising this past year and/or have numerous cruises books are receiving none, or next to none comps.  

The value is definitely there, however they need to take into account it will likely still be a rough year ahead until they get their crew trained and settled.  The ships I've been on have had about 1/2 of the people sailing as C&A members.  Of course there could be some who don't sign up for C&A but if thats still a lot of people who are new to the line.  Are they impressed enough to come back?  When the prices increase, will they stay?  and of course the current economy impacts a lot of that extra $ people would use for travel.  

[mac66]

I still hear a lot negative things about cruises from those who have never cruised.  I guess I will have to stop trying to change their minds as it may be cutting my own throat in the process.  On the other hand cheap cruise prices to draw in newbies just benefits us veterans as well. 

It does appear that the upscale lines (Celebrity, Princess and others) have raised prices considerably. We booked three X cruises in 2019 for 2020 and they were cancelled until this year. Our FCCs held but when we looked at the prices they were charging this year, we wouldn't have been able to afford them (okay, that's not true ) but it we probably wouldn't have gone had we not booked at 2019 prices.

[mistertomatohead]

Meanwhile NCL has always maintained they never lowered their prices. If anything they've raised prices due to inflation recently.

I only started cruising this year and took advantage of the low prices. It's starting to look too expensive to continue. Unless I can find some really good deals, I'm done by March eight cruises later with Royal, Carnival, X, and NCL. I'm glad I got them in while it was still affordable. 

[ChessE4]

As has been reported elsewhere, pricing is all over the map.  I see good prices for some itineraries booked a year or more away, but then I see outrageous prices for holiday cruises or peak season.  While I see some impact of inflation, when I look over my old cruise invoices I find I got worse deals years ago.  If one really wants to cruise, there is a way....

[twangster]

Cruise lines don't have a pricing problem, they have a capacity problem.  Namely excess capacity.  Massive excess capacity.  

When margins were higher they masked their excess capacity and still managed a handsome profit.  Now the mass market cruise industry has so much excess capacity the cheaper lines start offering heavy discounts and the other mass market lines have no choice but to follow as they can't allow another line to exhaust the smaller market of potential consumers.  

Pricing is a symptom of the real problem - excess capacity.  

[mac66]

On 10/6/2022 at 7:41 PM, ChessE4 said:

As has been reported elsewhere, pricing is all over the map.  I see good prices for some itineraries booked a year or more away, but then I see outrageous prices for holiday cruises or peak season.  While I see some impact of inflation, when I look over my old cruise invoices I find I got worse deals years ago.  If one really wants to cruise, there is a way....

There has always been up and down times during the year. We tend to book a cruise between Thanksgiving and Christmas during the cheapest time and typically the end of Jan, early Feb another cheap time.  We specifically go with the cheapest cabin as it tends to be just an excuse of getting out of the cold weather where we live.

[PeloAl]

You lost me at driving 17 hours straight. I'd rather shell out the $600+ for airfare. 

[Vancity Cruiser]

58 minutes ago, PeloAl said:

You lost me at driving 17 hours straight. I'd rather shell out the $600+ for airfare. 

Which ends up being cheaper at todays fuel prices

[mac66]

1 hour ago, PeloAl said:

You lost me at driving 17 hours straight. I'd rather shell out the $600+ for airfare. 

LOL,  I like to drive.

So we plan to take a couple extra days, drive down straight through, relax and spend some time at our place then go on a cruise.  So it kind of works out for us to drive.  Not all the time but sometimes.  The 17 hour thing started because we got about half way down and couldn't find a hotel. The longer we drove the closer we got to our destination and the less sense getting a hotel made. So it was 10 pm and we were 4 hours away. Didn't make much sense to get a hotel when we could make it in 4.  Since then we pack our road meals, leave at 5 am put on an audio book and get in about 10 pm. Done that half a dozen times and it works well.

What I don't like doing is driving to the airport a couple hours early and waiting around on the tarmac to take off or landing and taxiing then transporting to a hotel, then to the port the next day and doing it all over on the way home.  A 2.5 hour flight usually takes 6.5-8 hours out of the day anyway. 

 

[Xaa]

24 minutes ago, Vancity Cruiser said:

Which ends up being cheaper at todays fuel prices

  Probably not quite.

17hrs*70MPH=1190 miles/20MPG=59.5 gallons * 3.87(national average=$230.27 for a carload vs $600 per head flying.

I get and feel your point on gas prices though!

[mac66]

27 minutes ago, Xaa said:

  Probably not quite.

17hrs*70MPH=1190 miles/20MPG=59.5 gallons * 3.87(national average=$230.27 for a carload vs $600 per head flying.

I get and feel your point on gas prices though!

Your estimate of distance and speed is real close to actual. I tend to go 70 mph most of the way.  Our car actually gets about 30 mpg at 70 so that would be $153.51/each way.

Of course weather, traffic, construction, season of the year and day of the week affects overall time.

[asquared17]

10 hours ago, mac66 said:

There has always been up and down times during the year. We tend to book a cruise between Thanksgiving and Christmas during the cheapest time and typically the end of Jan, early Feb another cheap time. 

this is us also!! these are two of the best pockets to go, right after hurricane season ends in that weird slot between thanx-xmas and then the first week of february is ALWAYS the cheapest. any following week later in feb and you're running into higher airfares and cruisefares.

...shoot. we've just revealed our secrets!

[mac66]

15 hours ago, asquared17 said:

this is us also!! these are two of the best pockets to go, right after hurricane season ends in that weird slot between thanx-xmas and then the first week of february is ALWAYS the cheapest. any following week later in feb and you're running into higher airfares and cruisefares.

...shoot. we've just revealed our secrets!

  Well, we're on the Explorer the Saturday after Thanksgiving and on the Serenade on Feb 4 so maybe we'll see you around. 

[dmattinson]

MSC just dumping money into building cruise ships, Virgin coming online in the last couple years, bargain cruise lines like Margaritaville at Sea, etc. all have an impact.  Coupled with the new ships coming online for NCL, Disney, Princess, and Carnival and you now have a glut of overall cruising inventory.  The older ships need to go offline (aside from a few niche itineraries or seasonality destinations) and cruise lines need to stop discounting the older (but still new within the last 5-8 years) as soon as a new ship comes into the fold.  The old model of capturing revenue when cruisers are on board isn't what I see as the new way of going.  Sure, you will capture liquor sales revenue and some shopping, but photography isn't as big as it was 10-15 years ago.  Shore excursions seem like poor value for the dollar especially if you do a little research on tours available at and just outside the port and again, not like it was 15 or longer years ago.  Casinos make money I'm sure, but they still seem to be giving away free cruises for fairly low throughput which tells me that perhaps the gambling isn't like it was pre-pandemic.  

I also think that the packages they offer in advance takes some of the revenue away.  If I can pay about $86/day (gratuity included) to drink whatever I want while on the cruise or one of the cruise island destinations, I'm drinking more than if I pay out of pocket for those drinks. A couple coffees, a couple beers, 4-5 bottles of water, a few whiskeys and I'm taking advantage of the package, not adding revenue while paying per drink.  Same with dining, if they charged cover fees and didn't offer the packages, it might net into more overall people trying paid dining vs. catering to the person that bought a package that can get mostly what they want for something like $30/day.

 

[dmattinson]

I'll also say that I spent over $3000 on a vacation in 2003 to the Dominican Republic for my honeymoon.  It was an all-inclusive resort and the package included airfare (direct from PHL to Punta Cana).  At the same time, I was able to cruise for about $500 pp for a week on Carnival or NCL in an inside room.  I had way more fun on the cruise, got to see a bunch of different places (GC, Cozumel, Jamaica, Roatan) and as a bonus, didn't get dysentery like I did at the Riu Palace in Punta Cana. 

I think if cruise lines drive comparisons to all inclusive resorts AND offer some type of beverage inclusion package, the rates could go up and be justified by a majority of the vacationing public, even if they don't drink.  Royal does a good job of touting the adventure aspect of the cruise vacation but very little about the cruise being a destination, a resort, a broadway venue, a casino, and by the way, stops at 3-4 exotic destinations during the course of your week long adventure.  I have in my head all the things that make all-inclusives seem great but after a bit, become boring and could be a bit dangerous should you try to venture out on your own.