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-   -   RCI: We Will Not Slash Prices To Fill Ships (http://www.cruisereviews.com/forum/royal-caribbean-cruise-line/24557-rci-we-will-not-slash-prices-fill-ships.html)

Dave 02-01-2009 03:03 PM

Thinking of waiting to the last minute to book that RCI cruise, in hopes of getting a cheap cruise? You may want to change your thinking.

In last week's Earnings Call, RCI management stated they will accept lower occupancy in order to maintain prices and yields.

Offering big discounts to fill ships is not seen as the right way to go in the current financial climate, according to the CEO Richard Fain.

Royal Caribbean’s current average sailing leaves port with 105% occupancy. They figure that might drop one or two percent as a result of this policy change.

The Chief Financial Officer said the company sees diminishing returns when it slashes rates to fill every last bed.

<edit to correct spelling error>

Casanova frankenstein 02-02-2009 04:38 AM

http://bestsmileys.com/nono/6.gif

RCCL you are not making logical decisions
If they keep making these decisions they are going down the roadway of circuit city...

penny3333 02-02-2009 05:50 AM

I don't know how they can possibly see diminishing returns with all the charges. Most people will drink either soda or alcoholic beverages, most people will go into the casino at least once, most people will purchase a couple of pictures, most people will go into the shops, most people will buy some ice cream or visit Johnny Rockets, and the list goes on and on. But, he's the CEO, and heavens knows they do wonderful jobs. Just look at all the great ones in the financial arenas and in the automotive industry. Priceless!

Sandy 02-02-2009 06:37 AM

I don't know the exact numbers, but I assume that cutting the prices lower than they are now will not be made up by the cut they get from their subcontractors. Don't forget that the fare pays the operating costs for running the ship (fuel, staff, maintenance, etc.) plus the cruise line has to make a profit. Most other services are subcontracted out and they don't collect the whole fee the passengers pay for photos, etc. The bars and casinos are major money makers for cruise lines, but I assume they're saying that whatever percentage they get from these subcontractors at 105% occupancy will result in less income than charging a higher fare at 102% occupancy.

Sandy

Casey & Kathy 02-02-2009 09:41 AM

It makes sense to me.Say you have 100 cabins to fill so you drop the price 400 per person at the last minute. You now have 300 cabins all wanting an OBC for the differance or worse yet 700 unhappy people knowing after the first dinner they paid alot more for the same cabin than everyone else sitting at the table.The people these prices attract are people that normally live close to the port and don't spend money onboard.I know if I lived in florida and could sail for 299 a week I would become a permanate fixture on the ship. Last year I met a guy on our transatlantic who told us he sails 40 weeks a year and NEVER pays over 300 a week.He even had a name badge rccl provided him as if he was an employee.This is truely a great way to retire.

johnboy 02-02-2009 09:52 AM

I'm confused. If the average ship leaves port at 105% occupied, that means that there are 5% of the people on board with no accomodations? I would assume that anything over 100% occupied results in "standing room only".

Is there something that I'm not considering?

Dave 02-02-2009 09:57 AM

My understanding is that "100%" refers to all cabins having double occupancy filled. Anything over 100% refers to third and fourth passengers in a cabin. The Freedom Of The Seas has a double occupancy capacity of 3634 passengers, and 4375 for all berths if you count the cabins which can hold more than two people. Thus 3634 is 100%, and 4375 is 120%.

johnboy 02-02-2009 10:19 AM

I just knew that asking Dave anything about cruising would definately enhance my knowledge. Thanks for the explanation!

Seems to me that offering OBCs to everyone who didn't pay the discounted fare would be a lot more expensive for the cruise line than sailing with less occupancy, but you'd have to run the math on some scenarios before you'd get a feel for the cost drivers. I would think that RCCL has a staff that does this continually and would have probably run the numbers and gotten a favorable result before any cruise was discounted.

Dave 02-02-2009 10:35 AM

It is important to note that this doesn't mean "no" discounting will happen, just that it may not always be as deep as it was in the past.

Jill SC 02-02-2009 12:47 PM

If a cruise line offers a "sale" to fill up a ship at the last minute, I don't see why everyone else seems to think they are entitled to the lower price or an OBC. Stores won't give a credit if you bought something last week that went on sale this week, so why should a cruise line? You take a chance to wait for a lower price, or book it ahead to get the choice of cabin. And some cruises are discounted months in advance. The prices change day to day.


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