HAL strategy wrong? Go upmarket, better than going down market?

[BruceMuzz]

Why should you care about what other people spend on-board? And what do you mean that HAL sells cabins at "cost?" Did you follow people around to check out how much they were spending?

 

We should all care about how much money our fellow cruisers are spending onboard. This directly affects the financial health and future profitability of the company - and decides how user friendly - or not - the cruise line will be.

 

Currently the business model being used by all the Mass Market lines requires selling nearly all staterooms at cost - or below. This was not my idea, and I don't agree with it, but that's what we are dealing with today. And once it gets started, it is nearly impossible to change. Most of today's cruisers cannot even afford a passport. When choosing a cruise, they shop three things; 1. Price, 2. Price, and 3. Price. If one cruise line tries to return to selling cruises at a profit, those prices will be higher than the other lines, and bankruptcy is on the horizon.

So now all the lines are trying to make a profit only from onboard spending

 

Guess who spends less onboard than anyone else?

 

Older frequent cruisers.

 

Guess which cruise line is famous for having more older frequent cruisers than any other?

 

It's not Carnival - who is by the way the most financially successful cruise line in the long history of cruising.

 

Cruise lines are publicly held companies with shareholders who have this crazy idea that they should get some sort of return for their investments. Cruise Line Executives who want to keep their jobs need to deliver profits. They must do it either by increasing revenues and profits - or by reducing costs.

If your favourite cruise line is cutting back and you are unhappy about it, you might want to have a look at your fellow cruisers. The combination of a goofy corporate financial model, and cruisers with no money could be the cause for your unhappiness. Unfortunately you cannot do very much about either issue.

[sail7seas]

What is the goal amount most cruise lines seek for on board spending per guest per day?

Yes, some will spend considerably more than others but what per diem average spending makes a cruise line happy?

[dan1618]

We should all care about how much money our fellow cruisers are spending onboard. This directly affects the financial health and future profitability of the company - and decides how user friendly - or not - the cruise line will be.

 

Currently the business model being used by all the Mass Market lines requires selling nearly all staterooms at cost - or below. This was not my idea, and I don't agree with it, but that's what we are dealing with today. And once it gets started, it is nearly impossible to change. Most of today's cruisers cannot even afford a passport. When choosing a cruise, they shop three things; 1. Price, 2. Price, and 3. Price. If one cruise line tries to return to selling cruises at a profit, those prices will be higher than the other lines, and bankruptcy is on the horizon.

So now all the lines are trying to make a profit only from onboard spending

 

Guess who spends less onboard than anyone else?

 

Older frequent cruisers.

 

Guess which cruise line is famous for having more older frequent cruisers than any other?

 

It's not Carnival - who is by the way the most financially successful cruise line in the long history of cruising.

 

Cruise lines are publicly held companies with shareholders who have this crazy idea that they should get some sort of return for their investments. Cruise Line Executives who want to keep their jobs need to deliver profits. They must do it either by increasing revenues and profits - or by reducing costs.

If your favourite cruise line is cutting back and you are unhappy about it, you might want to have a look at your fellow cruisers. The combination of a goofy corporate financial model, and cruisers with no money could be the cause for your unhappiness. Unfortunately you cannot do very much about either issue.

 

It's no one's business what a fellow cruiser is spending. My job as a cruiser is not to make the company profitable. That's the CEO's job, the CFO's job, and every employee's job. There are multiple ways to profitability. Getting customers to spend more is one. Keeping them coming back is another. But it's not my job to police what others are spending or whine about it. No matter what they spend, it's not their fault if I don't have the experience I want.

 

If you want to get into hypotheticals about economics, sure, it affects it. However, the answer isn't to raise prices automatically or require minimum spending. There is this other concept of "what the market can bear". At some point, regardless of what kind of "premium" experience HAL was offering, apparently there was downward pressure on prices. So corporate decided to lower prices. That's their prerogative. It's my prerogative to buy at those lower prices if I want to. It's also my prerogative to offer to pay extra if I want -- but I'm betting you can't find too many people foolhardy enough to ask to pay more than the asking price. It's my prerogative to buy as many ...or as few...shore excursions as I want...or to book them privately if I so choose. If I book privately, then perhaps the cruise line isn't offering what I want, or perhaps they are inflating rates -- but it's their job to adjust, not my job to buy something I don't want at a price I don't want. For the record, I book excursions through HAL, and I book excursion privately. It's my vacation. I'm going to do what I enjoy most. If HAL offers it, great. If I can do better on my own, so be it. Either way, it's my business, not anyone else's.

 

Let's deal with reality here. This isn't about economics on this thread. Some of the main posters here want prices to go up because they want HAL to price themselves out of the range of the "undesirables" in their mind.

[Wakepatrol]

We should all care about how much money our fellow cruisers are spending onboard. This directly affects the financial health and future profitability of the company - and decides how user friendly - or not - the cruise line will be.

 

Currently the business model being used by all the Mass Market lines requires selling nearly all staterooms at cost - or below. This was not my idea, and I don't agree with it, but that's what we are dealing with today. And once it gets started, it is nearly impossible to change. Most of today's cruisers cannot even afford a passport. When choosing a cruise, they shop three things; 1. Price, 2. Price, and 3. Price. If one cruise line tries to return to selling cruises at a profit, those prices will be higher than the other lines, and bankruptcy is on the horizon.

So now all the lines are trying to make a profit only from onboard spending

 

Guess who spends less onboard than anyone else?

 

Older frequent cruisers.

 

Guess which cruise line is famous for having more older frequent cruisers than any other?

 

It's not Carnival - who is by the way the most financially successful cruise line in the long history of cruising.

 

Cruise lines are publicly held companies with shareholders who have this crazy idea that they should get some sort of return for their investments. Cruise Line Executives who want to keep their jobs need to deliver profits. They must do it either by increasing revenues and profits - or by reducing costs.

If your favourite cruise line is cutting back and you are unhappy about it, you might want to have a look at your fellow cruisers. The combination of a goofy corporate financial model, and cruisers with no money could be the cause for your unhappiness. Unfortunately you cannot do very much about either issue.

 

 

I give you a standing ovation for this post Brucemuzz... well done:)

[Wakepatrol]

It's no one's business what a fellow cruiser is spending. My job as a cruiser is not to make the company profitable. That's the CEO's job, the CFO's job, and every employee's job. There are multiple ways to profitability. Getting customers to spend more is one. Keeping them coming back is another. But it's not my job to police what others are spending or whine about it. No matter what they spend, it's not their fault if I don't have the experience I want.

 

If you want to get into hypotheticals about economics, sure, it affects it. However, the answer isn't to raise prices automatically or require minimum spending. There is this other concept of "what the market can bear". At some point, regardless of what kind of "premium" experience HAL was offering, apparently there was downward pressure on prices. So corporate decided to lower prices. That's their prerogative. It's my prerogative to buy at those lower prices if I want to. It's also my prerogative to offer to pay extra if I want -- but I'm betting you can't find too many people foolhardy enough to ask to pay more than the asking price. It's my prerogative to buy as many ...or as few...shore excursions as I want...or to book them privately if I so choose. If I book privately, then perhaps the cruise line isn't offering what I want, or perhaps they are inflating rates -- but it's their job to adjust, not my job to buy something I don't want at a price I don't want. For the record, I book excursions through HAL, and I book excursion privately. It's my vacation. I'm going to do what I enjoy most. If HAL offers it, great. If I can do better on my own, so be it. Either way, it's my business, not anyone else's.

 

Let's deal with reality here. This isn't about economics on this thread. Some of the main posters here want prices to go up because they want HAL to price themselves out of the range of the "undesirables" in their mind.

 

The shorter version is...The cruise prices are the same or cheaper as they were 12 years ago. Meanwhile... Fuel,food,wages have gone up. The end result is a watered down cruise. The old "You get what you pay for" syndrome rears it's ugly head.

[startwin]

We should all care about how much money our fellow cruisers are spending onboard. This directly affects the financial health and future profitability of the company - and decides how user friendly - or not - the cruise line will be.

 

Currently the business model being used by all the Mass Market lines requires selling nearly all staterooms at cost - or below. This was not my idea, and I don't agree with it, but that's what we are dealing with today. And once it gets started, it is nearly impossible to change. Most of today's cruisers cannot even afford a passport. When choosing a cruise, they shop three things; 1. Price, 2. Price, and 3. Price. If one cruise line tries to return to selling cruises at a profit, those prices will be higher than the other lines, and bankruptcy is on the horizon.

So now all the lines are trying to make a profit only from onboard spending

 

Guess who spends less onboard than anyone else?

 

Older frequent cruisers.

 

Guess which cruise line is famous for having more older frequent cruisers than any other?

 

It's not Carnival - who is by the way the most financially successful cruise line in the long history of cruising.

 

Cruise lines are publicly held companies with shareholders who have this crazy idea that they should get some sort of return for their investments. Cruise Line Executives who want to keep their jobs need to deliver profits. They must do it either by increasing revenues and profits - or by reducing costs.

If your favourite cruise line is cutting back and you are unhappy about it, you might want to have a look at your fellow cruisers. The combination of a goofy corporate financial model, and cruisers with no money could be the cause for your unhappiness. Unfortunately you cannot do very much about either issue.

 

 

I totally disagree. I am the customer, I buy a product, it is not my job to police how other customers spend their money or to define how much they paid for the same product. HAL is a big corporation - that is their job and they have financial gurus who make the decisions. What other spend is completely and utterly nothing to do with any of the rest of their clientelle.

 

Comments from some posters here who seem to believe the KNOW how much other passengers spend are complete idiocy. And some of the wealthiest people I know are some of the cheapest. I could go on but what's the point.

[kangforpres]

HAL is currently selling interior Cabins for the first few Alaska Cruises of the year for $299, for a 7 day "Premium" cruise. That's just $42.71 a day for a cabin on a premium ship with all the amenities and more or less all the food you can eat.

 

You can't stay in a Motel 6 and eat Fast food 3 times a day for anything close to $42.71.

 

http://www.hollandamerica.com/find-cruise-vacation/CruiseDetails.action?voyageCode=X329&destCode=A

 

-Paul

[SpokaneDan]

HAL is currently selling interior Cabins for the first few Alaska Cruises of the year for $299, for a 7 day "Premium" cruise. That's just $42.71 a day

 

http://www.hollandamerica.com/find-cruise-vacation/CruiseDetails.action?voyageCode=X329&destCode=A

 

-Paul

 

Princess have similar offering for some of their May Alaska cruises as well.

[iancal]

As a customer, I am not responsible for the business model of any one of the cruise lines.

 

I think the issue is overcapacity. The cruise lines have overbuilt and demand is soft in some areas. I have no doubt that the mass market lines like Princess, HAL, Carnival, etc are all facing the same challenge because they are in the same market. If two or three of the mass market brands were to suddenly cease operations and withdraw their fleets I have no doubt that pricing on the remaining lines would be adusted upward.

 

Some Carnival brands seem to be competing against each other in much the same way as the automobile brands were at GM, Chrysler, and Ford. And we know what those respective companies did to reshape their business.....eliminate competing brands within their respective companies, eliminate dealerships, consolidate.

 

As a customer, this is not my issue. We are taking advantage of the current overcapacity because we are well aware that if demand outstripped capacity, the cruise lines would raise prices just as high as they possibly could. Not blaming them, that is just good business. But, at the end of the day they own the business model and can make the decision on whether to retire or increase capacity.

Edited April 30, 2013 by iancal

[BruceMuzz]

As a customer, I am not responsible for the business model of any one of the cruise lines.

 

I think the issue is overcapacity. The cruise lines have overbuilt and demand is soft in some areas. I have no doubt that the mass market lines like Princess, HAL, Carnival, etc are all facing the same challenge because they are in the same market. If two or three of the mass market brands were to suddenly cease operations and withdraw their fleets I have no doubt that pricing on the remaining lines would be adusted upward.

 

Some Carnival brands seem to be competing against each other in much the same way as the automobile branks were at GM, Chrysler, and Ford. And we know what those respective companies did to reshape their business.....eliminate competing brands, consolidate.

 

As a customer, this is not my issue. We are taking advantage of it because we are well aware that if demand outstripped capacity, the cruise lines would raise prices just as high as they possibly could. Not blaming them, that is just good business. But, at the end of the day they own the business model and can make the decision on whether to retire or increase capacity.

 

Of course you are not responsible for any cruise line business model.

I work for the cruise lines, and I am not responsible either.

Even if you or I wanted to do so, we would be unable to change that model.

 

But both of us suffer for it on a regular basis.

I get dinged every day I go to work and have to listen to the non-stop complaints about cutbacks and reduced services and amenities.

These are all being done in the name of profitability

Since the mass market lines are unable to convince middle America to spend more money onboard, we are forced to reduce costs to protect profits. That means you get less for your money, while we make the same profits.

 

You realize that it is, indeed, YOUR issue when those cutbacks directly affect YOUR cruise experience when it fails to meet your expectations.

[iancal]

Not really. We have many options for our vacation budget.

 

We can move to a premium line...perhaps Oceania or Azamara. We can stop cruising altogether. We absolutely avoided cruising when our currency was very low vis a vis the US dollar. We can avoid it again if at some point we believe that the value of cruising, as we percieve it, is no longer there for us-as compared to other vacation alternatives.

 

We can do more all inclusives, we can switch to destination resorts, we can buy more vacation packages, or we can do what we like best...independent travel on our own terms and our own timetable/budget.

 

For us, this is not about the cruise industry, it is about the choices that we make on how we spend our travel dollars.

[Boatdrill]

That is what we like about NCL. We don't see the arrogance and insults over what people wear.

 

You may not "see the arrogance and insults" but they're being said ! :D

 

NCL passengers aren't immune to sharing their thoughts on how their fellow passengers dress.

[Jimbo59]

Let's not worry too much about poor Holland America. Their current business model produces enough profit that they can invest several hundred million dollars in a new ship.

 

http://www.cruisecritic.com/news/news.cfm?ID=5327

[arewethereyet]

Not really. We have many options for our vacation budget.

 

We can move to a premium line...perhaps Oceania or Azamara. We can stop cruising altogether. We absolutely avoided cruising when our currency was very low vis a vis the US dollar. We can avoid it again if at some point we believe that the value of cruising, as we percieve it, is no longer there for us-as compared to other vacation alternatives.

 

We can do more all inclusives, we can switch to destination resorts, we can buy more vacation packages, or we can do what we like best...independent travel on our own terms and our own timetable/budget.

 

For us, this is not about the cruise industry, it is about the choices that we make on how we spend our travel dollars.

Once again, you get it.

[kazu]

We should all care about how much money our fellow cruisers are spending onboard. This directly affects the financial health and future profitability of the company - and decides how user friendly - or not - the cruise line will be.

 

Currently the business model being used by all the Mass Market lines requires selling nearly all staterooms at cost - or below. This was not my idea, and I don't agree with it, but that's what we are dealing with today. And once it gets started, it is nearly impossible to change. Most of today's cruisers cannot even afford a passport. When choosing a cruise, they shop three things; 1. Price, 2. Price, and 3. Price. If one cruise line tries to return to selling cruises at a profit, those prices will be higher than the other lines, and bankruptcy is on the horizon.

So now all the lines are trying to make a profit only from onboard spending

 

Guess who spends less onboard than anyone else?

 

Older frequent cruisers.

 

Guess which cruise line is famous for having more older frequent cruisers than any other?

 

It's not Carnival - who is by the way the most financially successful cruise line in the long history of cruising.

 

Cruise lines are publicly held companies with shareholders who have this crazy idea that they should get some sort of return for their investments. Cruise Line Executives who want to keep their jobs need to deliver profits. They must do it either by increasing revenues and profits - or by reducing costs.

If your favourite cruise line is cutting back and you are unhappy about it, you might want to have a look at your fellow cruisers. The combination of a goofy corporate financial model, and cruisers with no money could be the cause for your unhappiness. Unfortunately you cannot do very much about either issue.

 

A very interesting post Bruce Muzz. I guess there are exceptions to everything. Our cruise on the Elegant Explorer is sold out for the TA and just about for the Collectors' Cruise. It never went on sale. On that cruise of 31 days I suspect the majority are 'older'. No one got a 'bargain' and I am quite sure (judging by our roll call) that there will be generous on board spending;) Perhaps that explains why the service was so good last time on this ship?

 

Like Judy, I am now curious, what is the ideal amount of spending that the cruise lines are looking for?

 

Inquiring minds want to know:D

 

[Irish Eyes Are Sailing]

There really seem to be two issues here. The dress code is one. Everyone is entitled to their opinion about the dress code.

 

The other issue -- and the one that is rubbing some people the wrong way -- are the rants by a select few who seem to have a serious case of superiority complex. Listening to Rotterdam's ramblings, you can help but sense his frustration with the fact that HAL no longer prices itself so that only those he deems of sufficiently high estate can ever afford to cruise. For him, and a select few others, there seems to be a significant ego boost that comes from having what other people can't have -- and it annoys them when "commoners" are able to share in some of the amenities that used to make them feel exclusive.

 

A truly dignified person doesn't have to make others feel inferior to enjoy themselves. Decent people enjoy it when others get to experience amazing things -- rather than needing the exclusivity so that they feel important.

 

I sincerely hope they take their fragile egos to another cruise line. I would rather cruise with nice people -- of any social class -- that boorish people -- of any social class.

 

 

Very well stated.....I agree.

[iancal]

As a very asture retail manager said to me once....the store can be full of looky loos but if the cash register is not singing and the customers are not lined up at least 2 deep at the cash then we are not doing good business.

 

This reminds me of the difference that I see between HAL and our last Carnival cruise a few months ago. Carnival's bars were busy, and they were busy well past the 10:30 mark when HAL typically goes to sleep. The Carnival patrons were buying, and Carnival had lots of wait staff on duty to hussle the orders. Same story poolside. It is easy for me to understand why Carnival is so successful.

[Wakepatrol]

As a very asture retail manager said to me once....the store can be full of looky loos but if the cash register is not singing and the customers are not lined up at least 2 deep at the cash then we are not doing good business.

 

This reminds me of the difference that I see between HAL and our last Carnival cruise a few months ago. Carnival's bars were busy, and they were busy well past the 10:30 mark when HAL typically goes to sleep. The Carnival patrons were buying, and Carnival had lots of wait staff on duty to hussle the orders. Same story poolside. It is easy for me to understand why Carnival is so successful.

 

 

The bars are hustling because they don't have passengers "Slapping Luggage Tags" on cases of two buck chuck

[chrispb]

Not really. We have many options for our vacation budget.

 

We can move to a premium line...perhaps Oceania or Azamara. We can stop cruising altogether. We absolutely avoided cruising when our currency was very low vis a vis the US dollar. We can avoid it again if at some point we believe that the value of cruising, as we percieve it, is no longer there for us-as compared to other vacation alternatives.

 

We can do more all inclusives, we can switch to destination resorts, we can buy more vacation packages, or we can do what we like best...independent travel on our own terms and our own timetable/budget.

 

For us, this is not about the cruise industry, it is about the choices that we make on how we spend our travel dollars.

 

Well said. I think this whole thread is much ado about nothing. We are all consumers (some discerning, others not:D) and can pick and choose where to spend our money.

 

The only people affected by Hal's strategies are the few who refuse to try any other cruiseline or holiday type. Personally, I think they're insane but they are free to make that choice.

[sail7seas]

Well said. I think this whole thread is much ado about nothing. We are all consumers (some discerning, others not:D) and can pick and choose where to spend our money.

 

The only people affected by Hal's strategies are the few who refuse to try any other cruiseline or holiday type. Personally, I think they're insane but they are free to make that choice.

 

How do you know what other vacations some posters here take aside from cruising? Do you know about the resort vacations we take? The city hotel vacations we enjoy? Again, those generalization are never good. ;)

We're insane? :confused: Huh?

 

Then there are also those of us who have sailed other cruise lines plenty enough to know we don't wish to sail them again.

 

But, someone reading here isn't likely to know that unless someone of us included in that generalization say so. :)

 

Edited April 30, 2013 by sail7seas

[Wakepatrol]

Get a poster who works on the cruise lines, day in and day out,and there will still be those that disagree with him.

 

Then again if he said the sky was blue there would be those (seems like it's always the same ones:rolleyes:)that would argue it's not:rolleyes:

Edited April 30, 2013 by Wakepatrol

[kazu]

Get a poster who works on the cruise lines, day in and day out,and there will still be those that disagree with him.

 

Then again if he said the sky was blue there would be those (seems like it's always the same ones:rolleyes:)that would argue it's not:rolleyes:

 

I only know what I know - I only know what I paid - I only know what I spend in on board spending - the generalities don't seem to work in our case.

 

I think we spend a fair bit of change on board but since I don't know what the 'acceptable' level is - I don't know if we do or not. I know I have a hefty bill when we get off.

 

But what the heck do I know?

 

You, obviously know more than I. smooth seas

Edited April 30, 2013 by kazu

[Wakepatrol]

I only know what I know - I only know what I paid - I only know what I spend in on board spending - the generalities don't seem to work in our case.

 

I think we spend a fair bit of change on board but since I don't know what the 'acceptable' level is - I don't know if we do or not. I know I have a hefty bill when we get off.

 

But what the heck do I know?

 

You, obviously know more than I. smooth seas

 

 

You are fortunate enough to go on longer voyages ie (not cruises)

Longer voyages and world cruises have a different passenger than the $299 a week Caribbean cruise or the $299 a week Alaskan cruise.

 

The discussion in my opinion is the service is suffering on these short runs,with people paying $299-$399 How can it not.

 

You are exempt from this and great for you. Have a great cruise.

 

I don't know more than you,and I certainly don't know more than Brucemuzz knows. Who would be brash enough to think they knew better than a guy that's down in the trenches working for the cruise ships daily?

[dan1618]

You are fortunate enough to go on longer voyages ie (not cruises)

Longer voyages and world cruises have a different passenger than the $299 a week Caribbean cruise or the $299 a week Alaskan cruise.

 

The discussion in my opinion is the service is suffering on these short runs,with people paying $299-$399 How can it not.

 

You are exempt from this and great for you. Have a great cruise.

 

I don't know more than you,and I certainly don't know more than Brucemuzz knows. Who would be brash enough to think they knew better than a guy that's down in the trenches working for the cruise ships daily?

 

Please tell me where to routinely find the $299/week Alaskan cruise. I will be glad to sign up for a few of those.

 

Last minute discounts meant to fill cabins aren't quite the same as an entire ship of $299 cabins. And how do those last minute cabins open up? From people who have been upsold, frequently. HAL believes -- and I suspect with evidence -- that they make more money filling those cabins -- even at $299 (a fare I haven't personally seen as a rule), than by leaving them unfilled. HAL knows exactly how much extra spending they get from each guest -- including last minute fare discount passengers. Everyone here is just guessing.

 

No matter what your opinion on on-board spending, human decency and respect should still prevail.

[swedish weave]

Please tell me where to routinely find the $299/week Alaskan cruise. I will be glad to sign up for a few of those.

 

Last minute discounts meant to fill cabins aren't quite the same as an entire ship of $299 cabins. And how do those last minute cabins open up? From people who have been upsold, frequently. HAL believes -- and I suspect with evidence -- that they make more money filling those cabins -- even at $299 (a fare I haven't personally seen as a rule), than by leaving them unfilled. HAL knows exactly how much extra spending they get from each guest -- including last minute fare discount passengers. Everyone here is just guessing.

 

No matter what your opinion on on-board spending, human decency and respect should still prevail.

 

The figures you are looking for regarding onboard spending are not ever going to be available broken down by passenger. The cruise lines know how much they must generate in the various departments, and can project if the cruise will turn a profit. However, they do not normally divulge those figures.

 

If you watch the show that was filmed on the NCL Pearl a few years ago (Money on the high seas), you will see the big picture, but still won't see specific numbers.

Edited May 1, 2013 by swedish weave