Larry Pimentel Post # 1 - Pricing and Inclusive Amenities

As my first post of this Q&A session, I would like to address the questions we received regarding the new price structure with new inclusive amenities. We have had questions such as why we added inclusive amenities (Molliemandy), why the steep price increases (150edmiston), why do we think our guests feel they are being nickel’d and dime’d (TerryAndDoug), why we are charging for Nespresso (TerryAndDoug), Le Club Voyage benefits versus spirits being included (TerryAndDoug), and why going all-inclusive (pacheco18).

Before I respond, I would like to take you back to April 2010 when we first announced our more-inclusive amenities such as gratuities, wine with lunch and dinner, water, soft drinks, coffees and teas, etc. At the time I was severely criticized for making such a decision. We increased pricing then by 40%. The price increase had very little to do with the amenities. We simply had to increase our pricing in order to sustain the brand. What happened then is what we think will happen now. The brand grew in loyalty, global reputation for satisfying guests, and, most importantly, in sales. We became a financially viable brand.

Let me clarify one thing – and this is important. We are [B][I]not[/I][/B] an all-inclusive brand – our tariffs are simply more inclusive. The amenities we list in our brochures and on our website are complimentary. If guests prefer something else, they will have to pay for it. As an example, we will offer select, standard spirits. If you prefer a top-shelf brand, you will have to pay for it. Premium beverage packages will be available in early 2013. It’s the same concept with our dining. Our Discovery Restaurant is complimentary. If guests would like to dine in our Specialty restaurants, there will be an additional charge. It is a choice our guests have. We simply offer a variety of inclusive amenities. This is value. (P.S.: No need to worry about the Nespresso coffee and additional charges. We listened, and decided to remove that component for now.)

This concept of including features in our tariff such as beverages, complimentary evening tour, shows and entertainment, fitness center, and other amenities allows us to provide extraordinary value at very modest rates catering to the pallets of guests from 40 plus countries. Having stated that, I realize that some people don’t drink… Some will go to bed early and will skip our shows or other entertainment… Some don’t use the gym… We are all individuals and like different things. So maybe what we have done is imperfect, but many of our guests will love it.

I mentioned in my general letter at the outset of this thread that I would "do my very best to explain our forward direction.” Simply stated, I've taken the business decision of adding spirits and a custom-tailored* evening experience to punctuate that we now offer a more compelling value proposition and a tangible demonstration of "destination immersion." As a two ship operation, we realize that our menu of itinerary offerings may be considered by some of you as repetitive and expect that an unknown percentage of you will decide to trade-off our exceptional onboard experience for an opportunity to visit other destinations. To remain viable we must create more "new" Azamara guests to vacation with us now and in the future to ensure that our vessels meet and exceed their revenue targets. (* I listened to you and didn't use the term "bespoke.")

Also, in that letter I shared with you that "We are delighted that the forward bookings for 2013 are excellent. In terms of revenue build we are 46% ahead of where we were last year at the same time. This is a tremendous uptick in business. Following the 2013 enhancements announcement, we are seeing our booking activities increase even further. We have worked hard on evolving our product offering to ensure that our past guests will return, as well as attracting new customers through our new inclusions. And while I realize that it is easy to misunderstand and/or disagree with certain elements, or maybe not see the full context, I will do my very best to outline and explain our forward direction."

There are many reasons for price increases. Typically rates are adjusted every year due to inflation. As a brand gains popularity, and occupancy increases, pricing will go up. Brands need to adjust for operational costs. Brands also need to adjust to be in line with its competitive set. Our pricing for 2013 was increased about 10 – 15% over 2012. In 2014 there is another increase on average of 5%. While certainly a part of the increase, the inclusive amenities are only a small portion of these rate increases. Setting our pricing is based on the above criteria, and to be financially viable.

150edmiston: I asked our Revenue Manager to check into the 17-Mar-2014 voyage. He compared a Club Veranda stateroom based on pricing for the 27-Mar-2012 voyage as listed at the end of February 2012. The Club Veranda in February 2012 was listed at $5,899 per person. The 2014 voyage for the same stateroom is listed at $6,499. That’s an increase of approximately 10%.

TerryAndDoug: Our many Le Club Voyage parties were simply about the social aspect – not the free drinks. We will continue hosting Le Club Voyage parties.

We all have different perspectives. “Some say why mess with what we have – it’s great!” I understand that. My perspective is a little different, though. We will continue to be a value leader. “Value” is in the eye of the beholder, and what is value to one person, can be very different to what others think of as value.

A product is measured on many value points. Serving complimentary drinks does something to the ambience. I have seen this in my past. Guests socialize more. They are relaxed, and it is comfortable to meet with friends – old and new – without having to decide who pays the bill. That is value to many guests, and it allows us to provide this value at a modest rate. We have created a product that delivers, and we will continue to build on that. While the awareness of Azamara Club Cruises has increased greatly over the last 2 – 3 years, we still have a long way to go.

In closing: There is more than one way to do things. While we clearly follow what other cruise lines are doing, we don’t make changes to our product because of what they do. My focus is to further differentiate the Azamara brand as the best of two worlds – upper premium and luxury into its own niche called “up-market”. We have found a niche that belongs to us – destination immersion. Longer stays, more overnights, night touring. Along with our superior onboard delivery by extraordinary onboard teams and our value proposition, we will not lose that niche – to the contrary, we will continue to build on it. Throughout my career, I understand that all business decisions are "risks." I believe this “risk” is worth taking.

Well stated! Thank you and we look forward to joining the Quest for 30 days this coming January! I can't wait to hear, Bon Voyage!

Mr. Pimentel, thank you for your very reasoned response to our concerns. We fell in love with Azamara on our first cruise on Quest in August 2010. It was the best cruise experience we had ever had, although we did enjoy our other cruise vacations. We booked Quest again for this coming January (we made our booking a year ago!) However, we are now rethinking things for 2014 and beyond. While some itineraries indeed have increased in price perhaps 10%, I also took a look and compared the per diem for our January 2013 cruise and a similar cruise in 2014; the per diem increased 25%! I think other cc'ers have noted a similar price increase for other itineraries. I certainly see Azamara's appeal in its late nights and overnights, but whether this is value enough to justify the very high prices, I don't know. I suspect "immersion" for us may mean more land travel and we will be, sadly, going back to the main stream lines for our cruise vacations. I am keeping an open mind and if we do find an itinerary we love and can get a reasonable price, we may be back.
p.s. Thank you, thank you, for dropping the "bespoke" in the description of Azamara's offerings. Way too pretentious, imo.

Awesome first post Larry! Comprehensive, articulate, and thoughtful.

Looking forward to reading more of what you have to say!
[IMG]http://www.jaguarforums.com/forum/images/smilies/icon_beerchug.gif[/IMG]

Thank you Mr. Pimental. Everything you have said makes perfect sense. We are looking forward to many many more cruises on the Journey and the Quest. You have given us a very special way to spend our vacation dollars. We are especially looking forward to the "special" evening excursions. What fun! We can hardly wait until our "next" vacation with the fabulous officers and staff on board Azamara Club Cruiseships. I know we are not alone when we say that your cruise line is #1 and we appreciate all of your efforts to keep improving on what we already feel is close to perfection! Thanks again!

Mr. Primentel,
Your post quickly demonstrates why you are at the helm of Azamara. It was not only well reasoned, but more importantly honest and showed leadership. It' too bad more executives don't have your courage and style to face issues head on!

[COLOR=red]larry[/COLOR]
[COLOR=#ff0000][/COLOR]
[COLOR=#ff0000] I missed you in July but Johaness kept us updated on your visit to your home away from home.. i am fully booked thru july 2014.[/COLOR]
[COLOR=#ff0000] [/COLOR]
[COLOR=#ff0000]Hopefully we will meet one day on a Quest or Journey!![/COLOR]

Larry, all though I appreciate your comments I have to tell you with your new price struture you are now charging the same as a Crystal cruise line 7 day cruise. I looked at April and May 2014 and your pricing is the same as Crystal and Crystal offers more then Azamara does.That makes no sense. Their starting rate is $2499 for an OV that is 226 ft. and they include all restaurants in their price, and the same as Azamara grats, soft drinks, wine and cocktails. Azamara price $2599 for an ov 170 ft.

I am not saying I am going to take a Crystal cruise but with your new price sturture you have made me look at what other lines are offering. I did consider Azamara the value leader in your market but with the increased pricing I am sad to say has disappeared. I respect what you have to do to run your business but Larry I honestly can not get my arms around what you are now charging and feel good about it. And as you said so often we can agree to disagree it was good while it lasted and time to move on.

Larry,

Thank you for your response which is helpful to me in understanding the direction of Azamara. Having booked in 2012 in reliance on Azamara's 50% off Land Discoveries Program, I am anxious to see your response on that issue. While I haven't crossed checked pricing increases to the extent others have, my own experience shows a fairly substantial increase:

July 2013 Norwegian Fjords cruise booked in January 2012 price: $10,342

Same July 2013 cruise/same category price today from website $11,292

2014 price/Norwegian Fjords cruise/same category/
same number of days from website $13,209

Deleted - sorry, I was "discussing":(

Thank you Mr. Pimental for clearly setting out how and why recent decisions regarding Azamara's pricing policy, inclusions and enhancements were arrived at. It is refreshing to receive open and unapologetic explanations for decisions that are clearly unpopular with a portion of Azamara's current clientele. Your explanation regarding attracting new customers - in the past and in the future - makes perfect sense. Likewise, individuality regarding services offered is respected on Azamara and balance has been achieved in that regard. No doubt more of us will 'shop around' a bit more than in the past as price-service-inclusions become very comparable between several cruise lines, but Azamara's special (or bespoke - I have no problem with the word at all) style will continue to be very attractive, if the ambiant that currently exists continues.
We are looking forward to our January 2013 Indonesian cruise after a too-long interval since our 30 day Quest cruise Dec-Jan 2010/11. The refurbishment will be interesting to see and experience. Best wishes.

Thank you Mr Pimental, for an insight into the Pricing and Inclusive Amenities policies. I do appreciate the exclusion of the Nespresso coffee idea.My questions are:
[U]New ports to visit in 2013-4:[/U]
Has Azamara planned further excitment of future new Ports?
Our amazing back to back cruises this year, where we visited Ports up stream in the rivers in Bordeaux, Pasajes and Seville? Earlier in the year Klong Toey and Ho Chi Min City.
Thank you for these ground/water breaking ports.The breathtaking manouvering into these Ports, aboard "The Journey & Quest" were spectacular. Our arrivals and departures in these Ports were memorable due to wonderful seamanship of our Captains.On top of which we were caught up in the excitement of the local folk, their warm Welcome's and fond Bon Voyage's very moving. Azamara Cruises an affair to remember.More please if possible.[U]Open passages:[/U]Does the status quo remain for these certificates? This was our belief and Azamara's promise on purchasing our certificate for future cruising.
Please confirm.Jenny & Philip

[quote name='koalapanda']Thank you Mr Pimental, for an insight into the Pricing and Inclusive Amenities policies. I do appreciate the exclusion of the Nespresso coffee idea.My questions are:
[U]New ports to visit in 2013-4:[/U]
Has Azamara planned further excitment of future new Ports?
Our amazing back to back cruises this year, where we visited Ports up stream in the rivers in Bordeaux, Pasajes and Seville? Earlier in the year Klong Toey and Ho Chi Min City.
Thank you for these ground/water breaking ports.The breathtaking manouvering into these Ports, aboard "The Journey & Quest" were spectacular. Our arrivals and departures in these Ports were memorable due to wonderful seamanship of our Captains.On top of which we were caught up in the excitement of the local folk, their warm Welcome's and fond Bon Voyage's very moving. Azamara Cruises an affair to remember.More please if possible.[U]Open passages:[/U]Does the status quo remain for these certificates? This was our belief and Azamara's promise on purchasing our certificate for future cruising.
Please confirm.Jenny & Philip[/quote]

Hi Koalapanda,

As the deadline has passed, we are no longer accepting new questions for Mr Pimentel. I suggest posting future questions on the main Azamara Forum. Our community members, myself, and Bill Leiber will always try to assist. Thank you.

thankyou Larry for your interesting and full reply to my question. We are sailing on the Quest in November and met you earlier this year on the Journey. Hopefully we will carry on cruising on Azamara if the pricing is right.

Larry, your message was quite direct and clearly states the rational behind the changes being made. Thank you. I understand the need to increase prices due to inflation, just wish my pension would increase at the same rate. We are booked on a B2B next August on the Quest and if it continues to provides us with the same remarkable and pleasurable experience that we've had on our past 2 B2B cruises with Azamara, then I feel our first choice for future cruises will remain Azamara, as how can you put a price tag on such exceptional service and tremendous enjoyment. We have sailed in the past on the big ships and another smaller ship and the overall experience came nowhere near what we have enjoyed on Azamara. Your crew and staff treat us like we want to be treated. Thanks again, Mary Lou

[quote name='dfishner']Larry, all though I appreciate your comments I have to tell you with your new price struture you are now charging the same as a Crystal cruise line 7 day cruise. I looked at April and May 2014 and your pricing is the same as Crystal and Crystal offers more then Azamara does.That makes no sense. Their starting rate is $2499 for an OV that is 226 ft. and they include all restaurants in their price, and the same as Azamara grats, soft drinks, wine and cocktails. Azamara price $2599 for an ov 170 ft.

I am not saying I am going to take a Crystal cruise but with your new price sturture you have made me look at what other lines are offering. I did consider Azamara the value leader in your market but with the increased pricing I am sad to say has disappeared. I respect what you have to do to run your business but Larry I honestly can not get my arms around what you are now charging and feel good about it. And as you said so often we can agree to disagree it was good while it lasted and time to move on.[/QUOTE]

I agree with dfishner. I don't see value in Azamara for us.

Hi Larry.
We enjoyed meeting you on board SeaDream a few years back. You are one of the most approachable cruise line executives out there. I am happy to hear your beverage policies at Azamara. You are most correct in saying that it is a social issue. I have always disliked having to sign a chit for each and every item consumed. It intrudes into the relaxing feeling of the cruise (IMHO). The example of having to determine who is to pay for this round is spot on. The more inclusive the better as far as we are concerned. Looking forward to sailing with Captain Tysse again in the near future and hope to see you on board.

Thank you for your frank response to concerns expressed by some posters here.

One question I asked that was not responded to, was a confirmation that 2014 fares are NOT included in the increases that are coming in November. Is this definitively the case?

[quote name='Jim Avery']Hi Larry.
We enjoyed meeting you on board SeaDream a few years back. You are one of the most approachable cruise line executives out there. I am happy to hear your beverage policies at Azamara. You are most correct in saying that it is a social issue. I have always disliked having to sign a chit for each and every item consumed. It intrudes into the relaxing feeling of the cruise (IMHO). The example of having to determine who is to pay for this round is spot on. The more inclusive the better as far as we are concerned. Looking forward to sailing with Captain Tysse again in the near future and hope to see you on board.[/quote]


As always Jim you are much more eloquent than I can ever be.

[quote name='cpgrneyes']Thank you for your frank response to concerns expressed by some posters here.

One question I asked that was not responded to, was a confirmation that 2014 fares are NOT included in the increases that are coming in November. Is this definitively the case?[/quote]

[FONT=Calibri][SIZE=3][FONT=Calibri]Hello Cpgrneyes -[/FONT][/SIZE][/FONT]

[FONT=Calibri][SIZE=3][FONT=Calibri]I'm please to let you know the 2014 tariffs that are shown on our website are final and will not be adjusted on November 1, 2012. The only pricing to be changed on November 1 are the 2013 tariffs as of March 27, 2013 on the Azamara Quest and May 15, 2013 on the Azamara Journey. I had posted this information on October 9th on the "Big Announcement " thread and I'm sorry that you did not notice it on that very busy thread and for your confusion.[/FONT][/SIZE][/FONT]

[FONT=Calibri][SIZE=3][FONT=Calibri]Sincerely,[/FONT][/SIZE][/FONT]

[FONT=Calibri][SIZE=3][FONT=Calibri]Bill Leiber[/FONT][/SIZE][/FONT]
[FONT=Calibri][SIZE=3][FONT=Calibri]__________________________[/FONT][/SIZE][/FONT]
[FONT=Calibri][SIZE=3][FONT=Calibri]Chief Blogging Officer*[/FONT][/SIZE][/FONT]
[FONT=Calibri][SIZE=3][FONT=Calibri]Azamara Club Cruises [/FONT][/SIZE][/FONT]
[FONT=Calibri][SIZE=3][FONT=Calibri](*CBO is an authorized and compensated representative of ACC)[/FONT][/SIZE][/FONT]

Thank you Bill! Great news, as I'm sailing on Celebrity over the holidays and can now relax and take advantage of the booking on board credits for my 2014 back to back sailings.

Now, if only Azamara would give us a taste of the upcoming Azamazing evenings when we sail in January! ;)

wow - I am blown away with this message board.

taking a hard look at Azamara now for our next cruise.

Truly, truly impressive.