Price Integrity strategy is working

[JLMoran]

From Matt's article yesterday about some interesting facts from Royal's quarterly earnings call:

 

Quote

 

Price Integrity Policy rewarding those that book early

Richard Fain provided an update on its no last-minute price drop efforts, known as the Price Integrity Policy.

"As we have predicted, the early stages cost us revenue in both 2015 and 2016.  That hurt, but once we established our consistency and credibility with the travel agents, with the public, and with our own revenue managers, the benefits started flowing in.  Today, it's clearer that the program is accomplishing our goal of rewarding those who book early, while disincentivizing those who push for last minute discounts."

"The key to this consistency has been consistency. We don't do it only when it's painless or convenient. We maintain the program, even when it hurts, and sometimes, we have to let cabins sail empty. That goes against every one of our instincts. But the focus and the discipline have proven their value."

"Ironically, the program has been so successful, that we're now expecting to achieve a record load factor this year. That in turn, causes slightly higher operating costs per lower berth, but obviously, the bottom line impact is very positive."

 

 

So I think even the days of seeing an occasional "promotion" that saves a bit of money vs. original booking price may be gone, and we'll truly see the best rates only in the promo that's in effect when the itineraries for a given year are released.

[DocLC]

Very rarely have I found a better price if I booked a year or more out. I also think that this leads to happier customers as nothing is more annoying than seeing a massive price drop after final payment and feeling like you got screwed. I saw this happen on my Princess cruise where prices dropped about $300 per person as they tried to fill empty cabins. 

[Matt]

I like the theory of the PIP.  I shouldn't be penalized for booking well in advance.  Like @DocLC, over the last year or so, I've consistently seen prices only go up from where I booked.

The Harmony of the Seas GC is the only exception I've spotted to date, where after final payment date prices for a few suites plummeted.  It turned out to be because someone booked a bunch of suites with no intention of actually staying in them.  I would have preferred the PIP keep those room prices up, but then again, I was able to upgrade to them.

It seems to me the only people who would not like the PIP is someone living near a cruise port who traditionally enjoyed jumping on last minute fares.  I doubt that demographic is a sizeable one, nor one RC is looking to grow.

[DocLC]

Just now, Matt said:

I like the theory of the PIP.  I shouldn't be penalized for booking well in advance.  Like @DocLC, over the last year or so, I've consistently seen prices only go up from where I booked.

The Harmony of the Seas GC is the only exception I've spotted to date, where after final payment date prices for a few suites plummeted.  It turned out to be because someone booked a bunch of suites with no intention of actually staying in them.  I would have preferred the PIP keep those room prices up, but then again, I was able to upgrade to them.

It seems to me the only people who would not like the PIP is someone living near a cruise port who traditionally enjoyed jumping on last minute fares.  I doubt that demographic is a sizeable one, nor one RC is looking to grow.

I think it's a good policy on two fronts. One, I know I'm getting a good deal for booking early. (2) I don't regret booking early when I see that the cabin I had paid X dollars for now costs significantly less after final payment. And in the end, I like being happy. :)

[WAAAYTOOO]

I agree with @DocLC and @Matt.  I can only recall a price drop 1 time in all of my RC cruises and that was way back when the very first BOGO started.  Since then, the price I paid, when the bookings first opened, were the lowest that they ever got.

[JLMoran]

Well, as a guy who booked his first cruise last December and saw a $2,000 price drop for the four of us in a February promo / rebooking, I'm going to miss those glory days!!

I suppose this particular sailing I booked was a situation similar to what @Matt described; but I doubt it since the savings happened just over a year ahead of sail date, not last minute.

[jticarruthers]

In a little bit of two minds on this one ...

Frankly I would never have started cruising if it wasn't for the great deals we used to get in Florida on last minute cruises ... 2 of my first 3 cruises were "hey we can go for a few hundred bucks do you want to try cruising as a vacation" type decisions. (The 3rd one was ultra cheap as a timeshare presentation gift). So from that perspective I miss the idea.

Similarly back in my first few years cruising, I was constantly checking sales and regularly got prices knocked down when new sales started.

Certainly since the great BOGO sale of 2014 (I think) began I have yet to have a sale price come in lower than my first month of availability price so I never bother to check anymore.

It's nice to know that I wont ever feel that someone got a better deal than me .... but kind of makes all the rest of the sales and stuff a joke ....

[F1guynz]

I like the PIP in theory but this thread prompted me to check our 2019 Island cruise booking which I made on the day it became available and it is now $300 cheaper than when I originally booked. I will give RCI a call and get them to re-price the cruise.

Hopefully it will get cheaper again when they next have a 30% off sale.

[DocLC]

@F1guynz Although that wasn't the intent, I'm glad it saved you some money. Even with the policy, I keep checking prices sporadically just in case. 

[monctonguy]

I don't see why dropping the prices to fill empty cabins is a bad thing for a company. For those people that do check and see it lower will be happy to rebook....most people don't check and get upset to be honest.

 

And I always though that the cruise lines made most of their profits on what ppl spend on board on drinks and meals and extra's...so cruising with EMPTY cabins means that your not getting a penny of revenue for those cabins.....(and still have the same amount of staff and expenses generally)

 

Plus, everyone likes a deal or a sale or last minute vacation.....

 

I think its pretty arrogant of the CEO to proudly state they will sale with empty cabins rather than give customers a break on price......I can't wait till that comes back to bite them....at some point it will....it has to.....

 

When your so big you can openly tell the world that you will rather not sell your product to people than give them a deal cause your making record money off the ones that are paying for your product......that's a terrible attitude to have!

[RBRSKI]

24 minutes ago, monctonguy said:

Plus, everyone likes a deal or a sale or last minute vacation.....

 

I think its pretty arrogant of the CEO to proudly state they will sale with empty cabins rather than give customers a break on price......I can't wait till that comes back to bite them....at some point it will....it has to.....

 

When your so big you can openly tell the world that you will rather not sell your product to people than give them a deal cause your making record money off the ones that are paying for your product......that's a terrible attitude to have!

Plus, everyone likes a deal or a sale or last minute vacation.....Heck Yeah!!!!!!   We did it last year on the Enchantment !!!

 

When your so big you can openly tell the world that you will rather not sell your product to people than give them a deal cause your making record money off the ones that are paying for your product......that's a terrible attitude to have!   Don't you think that some of the current changes allow them to do it
!!!!!

[RBRSKI]

Plus as we have read in the thread PROFIT is one of the most important factor so being arrogant isn't much far behind!  And just because in life if someone or something does it one way doesn't mean you have to follow!!!

[arebee]

I've done the last minute cruises before, living in Fl its a perk.  Just like the deals you can get at Disney, Universal or Bush Gardens.  I've also had cruises drop prices after my final payment and there was nothing that they could or would do about it.   

[monorailmedic]

As S FL resident those last minute deals can be nice, but I understand the business reasoning completely.  

What would be interesting to better understand is how this changes booking patterns for specific groups - such as first time cruisers.  Someone who doesn't know any better may look at prices for sailings leaving in 2 weeks then just assume that RCI is more expensive than CCL or other lines, and in that specific scenario, they may be right.  I see so many people on twitter saying, "I think I want to take my first cruise next month" and things like this - not everyone is as informed as us.

That in mind I'm not sure if the challenge will be a great one, as ships are filling across the board, so other lines don't have the incentive to adjust prices that they once did.  Further, others have, just as RCI has, started incentivizing cruisers in other ways.  Instead of price drops offering beverage packages, onboard credit, etc.  For most businesses there are ways to move inventory without impacting revenue as much as flat cost reductions.

[Orange Crush]

I like the idea of the earliest price being the best price and knowing I don't have to keep checking up until final payment date.  I'd also get mad if a price significantly dropped after I got locked in.  But they should be filling all of their balconies and suites.  If any of those are going to sail empty, upgrade the C&A customers from lower berths.

[WAAAYTOOO]

While nobody enjoys it when someone else gets a lower price than they paid, I would rather pay a little bit more and get the cabin that I want in the location that I want than save a few bucks and have them stick me some place I would rather not be.

This is the trade-off.  It seems like a win-win to me.  I know there are some that don't care where their cabin is.  For them, the lower fare is a great value.  It's all about what you want, I guess.

I try and get the best of both worlds - book early for the lowest price and get the cabin I want.  I won't be doing this quite as often from now on with the non-refundable deposit policy (sorry to be beating this dead horse....) but I will do it when I can.

[monctonguy]

I think they should try and have a competitive price year round...but to say you would rather sail with empty cabins, then that's an issue for me. That doesn't even seem like a good business practice....flying or cruising with empty seats is never a good thing.....empty tables a restaurant is not a good thing.....you get my point....

 

Anyways....I still like Royal and will cruise with Royal for the time being..but I can tell you that no one else that I know that has booked cruises in the next cpl years has booked with Royal so far...based on high pricing and drink packages.....so it maybe just a matter of time till I have to/end up changing as well which is too bad after 11 consecutive cruises with them!

 

If Royal wants to not drop prices or give sales or last min deals..they need to start including some promos......compared to their completion(MSC, NCL) they really don't.

[DocLC]

33 minutes ago, monorailmedic said:

 

What would be interesting to better understand is how this changes booking patterns for specific groups - such as first time cruisers.  Someone who doesn't know any better may look at prices for sailings leaving in 2 weeks then just assume that RCI is more expensive than CCL or other lines, and in that specific scenario, they may be right.  I see so many people on twitter saying, "I think I want to take my first cruise next month" and things like this - not everyone is as informed as us.

This is a great point. My first cruise was a last minute booking. I went looking to plan a trip to San Francisco and saw a flyer for a last minute sailing on a Royal ship, which got me hooked. At that time, the regular price point was much too high for me as I was still in college, so I had never considered a cruise and probably wouldn't have if they hadn't had aggressive last minute pricing. I also took my mom on her first cruise aboard the Monarch because of last minute pricing about 15 years ago. 

[BrianAlt]

Let's put it this way...

If someone tells me that they paid less than I did and I ask WHY?  

If the answer is that they booked really early, that makes sense to me and I have no issue with it.

If the answer is that they booked really late, it makes me feel foolish for not waiting.

It creates a culture where it's best to wait for the last minute.

[RBRSKI]

Ok, I know I sound like a broken record but here we go!!!! And just a disclaimer, I have no affiliation with , own stock or solely fly on Southwest!!   How can an airline have 43 consecutive years of profit WITHOUT taking anything away from the consumer??????????????????????  Have one of the best LOYALTY programs and most of the time(we all can have bad days) friendliest flight attendants in the industry.   Guess what?  The only thing they charge you if you change your flight is if there is a difference in price.  Now that is a WOW deal!!  Hey on another side note, I think RCCL better look out for Virgin Cruises.  I can see them have very similar business models and corporate philosophy as there airline and southwest.  

[RBRSKI]

It's called Virgin Voyages.  Check it out!

[jticarruthers]

As a longtime Virgin Atlantic flyer, I am very interested to see what Virgin Voyages brings to the table .. couple of years to go still though.

[monctonguy]

It was a last min cheap deal that got me to take a chance on my first cruise ever and it was with Royal!

 

10 cruises in 4 years with them since. If it was not for that cheap deal, I would never have taken 1 cruise, so they would have lost out on the next 9 I booked with them.

 

People pay different prices based on state, age, job, type of cabin, different travel company booked with.....its a choice. If someone gets a better deal for you than any reason, it's life!

[cruiselife]

Personally I don't even care what "promotion" they have running, because I know that the price of the cruise is going to be approximately the same price no matter what the "deal" is. Seasonality is the only real impact on the Royal Caribbean cruise rates in my opinion, but I can only speak for the Galveston market which is much less diverse.

I love Royal Caribbean and I think it will always be my favorite cruise line. I've enjoyed them so much in the past that I haven't even wanted to try a different cruise line. However, now we have sailed on all of the best ships Royal Caribbean has to offer in Galveston. Recently we came across a great last minute rate on a Carnival Breeze sailing and we couldn't resist giving it a try. That's actually the same way we have booked our other Royal Caribbean cruises.

My wife and I have been married for 2 years now and we're in the planning stage of having children. It is very hard for us to book a cruise 1-2 years in advance when we have no idea what will be going on in our lives during that time period in terms of kids. This new pricing strategy, coupled with the non-refundable deposit policy makes it incredibly difficult for us to get a good deal on a Royal Caribbean cruise. It's unfortunate, but a great example of how these new policies can effect loyal customers and give other cruise lines a chance to win over a customer's business. Hopefully they've thought that part through, because it definitely played a large role in our decision to try a Carnival cruise.

[DocLC]

@#cruiselife One of the reasons we took a 10 year hiatus from Royal is because we had a child. The third berth pricing was extremely high for him, even as an infant and toddler, that other cruise lines were simply more reasonable. Even Disney routinely came in cheaper or at the same price as Royal because of the greatly reduced third passenger rate. As a result, we ended up on Disney four times Holland America three times, and NCL once in a penthouse--which is the best way to cruise with a young child--because the pricing was better. On Holland America and NCL, he was free to $99 plus taxes, whereas it was approximately $799 on Royal.

Royal has a great product and I believe the best ships. Their cabins, even on some of the older ships, and overall design can't be beat. However, I'm looking for different itineraries, which the largest ships in the fleet simply can't do and Royal hasn't varied their itineraries enough for me in Europe. As a result, I'm looking at other lines to visit places like the Arctic Circle that I can't do on Royal.

[RestingBird]

I'm pretty sure my wife booked our first cruise due to a past-final-payment lowered price.  Sadly I was hooked after that, now I'm willing to pay much more (land vacations just don't seem to go well for me).  As for trying other lines, I have a ways to go before RC ships and itineraries bore me, I haven't even started scratching the surface.

[Matt]

21 hours ago, #cruiselife said:

Personally I don't even care what "promotion" they have running, because I know that the price of the cruise is going to be approximately the same price no matter what the "deal" is. Seasonality is the only real impact on the Royal Caribbean cruise rates in my opinion, but I can only speak for the Galveston market which is much less diverse.

I think I generally agree with this.  It's a big part of why I advocate just to book early. Pricing has become relative, rather than a constant.

[cruiselife]

1 hour ago, RestingBirds said:

I'm pretty sure my wife booked our first cruise due to a past-final-payment lowered price.  Sadly I was hooked after that, now I'm willing to pay much more (land vacations just don't seem to go well for me).  As for trying other lines, I have a ways to go before RC ships and itineraries bore me, I haven't even started scratching the surface.

I would probably be the same way if I lived closer to Florida. There are tons of Royal Caribbean ships I would love to sail on there. If I had my way I would probably sail an Oasis class ship every time but I haven't gotten the chance. I just prefer not to fly to the port so I stick with what we have here in Texas. One day we will fly out and sail on Harmony or Symphony though.

[KLA]

5 hours ago, Matt said:

I think I generally agree with this.  It's a big part of why I advocate just to book early. Pricing has become relative, rather than a constant.