Time To For A Reality Check For Mr. Fain

Well Mr. Fain agrees with me or I agree with him and he knows a lot more about ships than you or I. I am THRILLED that the discounting will end and prices are going up!

I can't help but read this and think......wow. Who in their right mind gets that exited about price increases and discontinued discounts?

Lets pretend it costs $100,000 to sail the ship for a 7 day cruise. Assume all cabins are booked, and pretend that brings in a revenue of $200,000; I just made a profit of $100,000. Any additional onboard expenses are just extra change for me.

 

Now listen to your theory, if I don't sail at capacity and NOT all cabins are booked, i'll have <$100,000 profit. That's ok and good, according to you. What logical person wouldn't look at this picture and think that slashing prices would create CLOSER to that $100,000 profit mark, instead of sailing with unsold cabins. Sure they'll get more money on board with customers spending, but they'll loose that revenue AND cabin costs by not selling at all.....

 

I've read through this thread and apparently I'm not the only one who thinks your thinking is off....It's like that idiot driver on the road; if you're driving like a maniac and thinking that EVERYONE else on the road is an idiot....maybe it's time for a reality check...

This scenario makes some assumptions that go against reported numbers.

Let's look at this using a bit of logic, and avoid hyperbole regarding classes and discrimination.

Generally speaking, the profit that RCI makes on a sailing is in the onboard spending, and cabin prices cover the expenses of the cruise.

So, what happens if you discount cabins, and the people who purchase these discounted fares also are a bit more thrifty in their onboard spending (which seems to have been the trend in recent years)?

Two things happen:

1) fares don't cover expenses

2) onboard spending doesn't hit expected profit levels

In other words, revenues aren't maximized.

There are a couple of things that the higher fares do:

1)It eliminates first time cruisers on a budget

2)It eliminates repeat cruisers that know how to game the system to pay as little as possible

Does it matter if these people don't book cruises if your cabin fare revenue is higher with less occupancy? It might not even have much effect on occupancy.

And what's that leave us with for customer types?

1) New cruisers who haven't been tracking cruise prices for 5 years, so they wouldn't even know if prices are higher

2) Repeat cruisers who aren't bothered by the higher prices

These are the customers you want if you are trying to maximize revenues on both cruise fare AND onboard spending.

I can't help but read this and think......wow. Who in their right mind gets that exited about price increases and discontinued discounts?

Shareholders.

They cannot afford to sail with unprofitable cruisers and as a rule, those seeking discounts and cheap last minute prices are unprofitable cruisers in the grand scheme of things. I know they went so far as to sell staterooms at a loss and did not make it up in onboard revenue. Far better to sail with a certain percentage of empty staterooms than with a full ship of unprofitable cruisers.

I don't necessarily agree with everything you've posted here, but I do agree with this and I see where you're coming from. The fact of math is if you get people onboard for rock-bottom dollar and then they don't spend anything once onboard by the time you add up their food, drink, and labor cost to serve them that stateroom may have lost money for that particular trip. BUT allow me to present the flip side of this to you. My wife and I do tend to spend pretty significantly once onboard between drinks, gambling, and whatever else she decides she wants. But we will only book a cruise if we consider the fare to be "low enough". We're blessed enough that we could go a few times a year at a higher price, but for me the value proposition of a cruise goes away once the price gets up around $100-ish a day (for an interior cabin of course) because I know we'll be spending 3-4 times that per day on the boat. For people like met, give me a deal to get me on the boat and we will be profitable guests every time. I just wonder what the percentage of people like us vs. those who don't spend would be?

I don't necessarily agree with everything you've posted here, but I do agree with this and I see where you're coming from. The fact of math is if you get people onboard for rock-bottom dollar and then they don't spend anything once onboard by the time you add up their food, drink, and labor cost to serve them that stateroom may have lost money for that particular trip. BUT allow me to present the flip side of this to you. My wife and I do tend to spend pretty significantly once onboard between drinks, gambling, and whatever else she decides she wants. But we will only book a cruise if we consider the fare to be "low enough". We're blessed enough that we could go a few times a year at a higher price, but for me the value proposition of a cruise goes away once the price gets up around $100-ish a day (for an interior cabin of course) because I know we'll be spending 3-4 times that per day on the boat. For people like met, give me a deal to get me on the boat and we will be profitable guests every time. I just wonder what the percentage of people like us vs. those who don't spend would be?

Profitability is going to be based on the sum of fare + onboard spend revenues. If you set an overall budget but it's below RCI's profitability line, then you are going to be a less desirable customer. They aren't looking for a customer who's onboard spending is dictated as inversely proportional to their cruise fare.

It appears that RCI's goal is to boost both sides of the revenue equation, and not discount one in favor of the other.

Since you don't know me, let me explain about me and my wife. We book at a discount, so that we do have more to spend. After paying off the cruise, several months before the cruise, we then book Chops, buy our soft drink packages, book our excurisions. So besides being discount cruisers, we also spend lots of other money. We stay at top of line hotels at the cruise site.

then when onboard, my DW loves going to the shops and spending more money, which we can certainly afford. So don't be so quick to judge discount cruisers.

Like you I book the best discounted price I can get usually a year in advance. But I don't consider this last minute discounting that is sort of being discussed and what Richard Fain indicated they were stopping.

Dropping prices brought about cheap cruisers who did not spend once on the ship. They CAN afford to sail with empty staterooms. When the discounting started and the cheap cruisers came, onboard revenue went down as much as 75%.

 

He is a smart man and I for one am glad prices are going up and the discounting will come to an end!

Let me guess you work for royal caribbean. :D :eek:

I am also going to pursue your banning from this site, CoachT. Your blatant prejudice has no place here.

I have violated no such community standards and this is nothing others have not said for years on CC.

Here is what I learned here:

1. There are many people here that I am glad have nothing to do with my business budget.

2. RCL should be bankrupt in a short time.

3. Poor people should be forced to cruise other lines.

Here was what was forgotten by all but a few...BALANCE. Every business needs balance. RCL has years of financials to back up their decisions, and for the ones who asked others to "prove it" it is in the annual report. I am not saying the opinions on past revenue given here are right or wrong, I have not looked at numbers, but the proof is published for all to see. Empty berths translate into reduced food and beverage consumption, reduced energy to power the ship and so on, my point is that there is cost associated with each berth and it may be better to let some go unfilled than to discount at a loss. There were some very valid points made on both sides in this discussion, too bad people are not mature enough to accept the different views and their insight was overshadowed by their personal attacks and short-sighted comments.

Still baffled! Empty cabins do not make money for the cruise line. How can they? Costs are fixed per cruise. Any amount spent for the cabin fare and onboard equals some type of profit for RC.

The crew members who rely on tips would be hurt by not filling cabins. I have to believe Royal wants to maintain their loyal, well-trained crew. Lost wages will not help to retain these hard working people.

Since September I have been on 7 Royal trips. Last week I booked 2 more for next month and have 2 booked for October. Most were discounted -- being solo most times this makes the trips affordable. I spend anywhere from $50 - $200 onboard per trip after paying gratuities. And I always make a contribution to the casino "charity". I have to think that Royal would prefer that I book these cabins than have them be left empty.

And does anyone think the "class" of people of Royal changes dramatically dependent on the price of the cruise? Not in my opinion (and 2 of my cruises were on the high priced Quantum - same old Royal crowd - very nice folks)!

So . . . I like Royal and will continue to sail with the company as long as I have value and a good product for my money. I really think this is much ado about nothing. Katherine

This thread is WAY too funny!!!!!!:D I bet you guys will have it to 200 posts soon, debating nothing of any consequence whatsoever:D

Thanks for the advice, but who mentioned politics?

You're a poor debater and a worse liar.

Well Mr. Fain agrees with me or I agree with him and he knows a lot more about ships than you or I. I am THRILLED that the discounting will end and prices are going up!

I am old. There is dirt younger than I am. This is the first time I have ever heard a sane person say they want to pay a higher price for a product they are purchasing.

There's something very sad about people who equate wealth with class. IME people who make statements like this have far more of the former than of the latter. I've observed behaviors of suite passengers and those who book interior cabins; nothing I've seen leads me to make that equation.

I'm paying over $10,000 for four adults and two small children to take a 10-day cruise on RCCI this summer. This is about as high as I'm willing to go. Any price increases will mean that we will not cruise any more, or at least not cruise on lines whose fares increase above that. I'm not going to forego vacations for two or three years to be able to afford higher fares. I can afford them now, but for me, the value is simply not there.

Pricing a mass market line out of the reach of the mass market seems like a illogical marketing plan.

You're a poor debater and a worse liar.

Sorry you feel that way Bill; give Hillary my regards! :D

Well I;m glad the price will go up a bit, it will price a lot of the younger people out of the market, then we might get back to what most people want. Traditional dining, formal nights, proper service, etc. etc.

LMAO I dont think there is any resolution to this one. Holy crap!

 

 

There's something very sad about people who equate wealth with class. IME people who make statements like this have far more of the former than of the latter. .

Agreed.

Actually, I didn't find his comments arrogant or suggesting that he could control something he had no control over. The comments (or at least a portion of them) were:

""As a result in March we adopted a new policy that we would not do any last minute discounts on bookings in North America. Depending on the type of cruise, that last minute may be 10, 20 or 30 days out, but from that point on we will hold our price at the prior level,” Fain continued."

That is something that he and the others who run the company can certainly control. If they want to have no last-minute discounts, they can do that. That doesn't mean that they have complete control of the prices they can charge. If they want the ship full, or mostly full, they'll still have to charge a fare that people are willing to pay. So, demand still drives overall pricing strategy, but there's no reason you have to have discounted prices at the last minute. As he said (in other parts of his comments), that kind of thing tends to upset other customers who purchased early and are ineligible for the later discounts.

This thread is WAY too funny!!!!!!:D I bet you guys will have it to 200 posts soon, debating nothing of any consequence whatsoever:D

We couldn't do it without you. ;)

LMAO I dont think there is any resolution to this one. Holy crap!

RESOLUTION

Elitist to the LEFT

Discount Seekers and Cheap Cruisers to the RIGHT!!!

oops there I go again ;)

Lets pretend it costs $100,000 to sail the ship for a 7 day cruise. Assume all cabins are booked, and pretend that brings in a revenue of $200,000; I just made a profit of $100,000. Any additional onboard expenses are just extra change for me.

 

Now listen to your theory, if I don't sail at capacity and NOT all cabins are booked, i'll have <$100,000 profit. That's ok and good, according to you. What logical person wouldn't look at this picture and think that slashing prices would create CLOSER to that $100,000 profit mark, instead of sailing with unsold cabins. Sure they'll get more money on board with customers spending, but they'll loose that revenue AND cabin costs by not selling at all.....

 

I've read through this thread and apparently I'm not the only one who thinks your thinking is off....It's like that idiot driver on the road; if you're driving like a maniac and thinking that EVERYONE else on the road is an idiot....maybe it's time for a reality check...

So you have 100 cabins that you sell at 2000 apiece, and at that price, you sell 100%- with revenue of $200,000.

So raise the price by 50% to 3000 total per cabin- to get the same 200,000 of revenue, you only need to sell 67 cabins (66 and 2/3 technically, but you can sell part of a cabin).

33 fewer cabins are used, and there is the same revenue.

On top of that, some of the cost to cruise goes down, since there are 1/3 fewer passengers- the only real fixed cost is fuel and labor (assuming the labor numbers stay the same). Food costs go down by 1/3.

That's how raising cabin prices allow the same revenue even with empty cabins.

CoachT's point is that the person who spends $3000 on a cabin will spend more net money on the ship. It's a theory...

Actually, due to the lower operating costs- this is how Oasis/Allure work. The fuel cost to run the same route as the freedom is marginally less on the Oasis/Allure. And having 1/3 more passengers to spread that out- that's one of the big things for those ships. Totally ignoring the big increase of places where customers can spend money on board.

Supply and demand. Trying to discourage people waiting until last minute bookings.

It's a very simple concept.

It's not discrimination.

It's about the bottom line, and satisfying the owners (shareholders.)

I am at a total loss.

Just about every top thread on this board is about another change that RCCL is making that affect return cruisers.

Whether it be charging a la carte for a specialty restaurant, the disgraceful BOGOH special that refuses to die, the higher prices, the elimination of last minute 'sales', the constant exclusions of any specials for Quantum class ships, the redesign of the next cruises, changes to dining - whether MTD or fixed, the email offers that never seem to make it to many mailboxes, and I'm sure I'm leaving something out.

If it wasn't for social media sites such as CC - we would find out about all of thiese onboard.

Since when does booking a cruise have to be a constant set of upheavals.

How many people are going to move off RCCL after these changes - and how is that good for the bottom line?

If I was a shareholder, which I once was - I would be worried.

Dropping prices brought about cheap cruisers who did not spend once on the ship. They CAN afford to sail with empty staterooms. When the discounting started and the cheap cruisers came, onboard revenue went down as much as 75%.

 

He is a smart man and I for one am glad prices are going up and the discounting will come to an end!

So with empty cabins and fewer people in the dining rooms, bars, etc. who is paying the gratuities that their contract employees will lose? In my view this will drive the experienced ones away and we will definitely get worse service!

There are many facets to this but all in all we like the experience with RCI/Celebrity; but, if their employees aren't happy I guarantee that we won't be either. RCI is making too many changes/additions too soon and the loyal guest base will soon erode!

Supply and demand. Trying to discourage people waiting until last minute bookings.

It's a very simple concept.

It's not discrimination.

It's about the bottom line, and satisfying the owners (shareholders.)

Agree