Pricing Strategy..Start High, Big Sales..does it work?

[Cruise Junky]

Last year we were looking at both Celebrity Solstice and Pacific Princess for a 10 day Honolulu to Vancouver cruise. Princess price for a basic balcony was approx. $2,600... Celebrity was around $1,400 and came with a drink package. Just received an e:mail from Princess for this cruise on Pacific now for $1,399...well before final payment so most guests could take advantage of new pricing. I don't know what we would have done if they'd have been priced the same to start with.

 

Do you think this strategy of Princess's to start really high and then discount is a good one? Our plans are now made and we wouldn't switch as flights and hotels, excursions, etc. are booked. I know you can always wait around for a sale, but how many do? there's probably a lot that research early and like to have something booked. Do you think Princess loses out by starting so high when they're in direct competition on a similar itinerary?

Edited December 6, 2013 by Cruise Junky

[Astro Flyer]

Airlines at one time gave lower prices to those who booked well in advance which was great for vacationers able to plan so soon. Now the prices long before a flight are ridiculously expensive & it's like they don't want bookings so far in advance. So I am a big fan of the earlier we book any travel having the lowest price.

 

So yes, I agree with you & I'd think the way Princess prices it high is not as good as your Celebrity experience. You're undoubtedly not the only one with this experience which will probably result in lost bookings for Princess.

 

If I could book a good price well in advance instead of booking high & hoping to find a lower price later, then I might do like you.

[Cruise Junky]

It's interesting because the Celebrity price has done the exact opposite. The large balcony we booked for $1,600pp went to $2,300pp before it sold out, lower categories now are around $2,400 for a balcony. So someone booking late would definitely think that Princess is the better deal.

[whataboutport]

I think if you book a few months in advance (but close enough to have to pay in full) it's cheaper, perhaps the cheapest it will be, and as the ship gets close to selling out, the prices go up again. This was our experience last two cruises.

[Astro Flyer]

It's interesting because the Celebrity price has done the exact opposite. The large balcony we booked for $1,600pp went to $2,300pp before it sold out, lower categories now are around $2,400 for a balcony. So someone booking late would definitely think that Princess is the better deal.

Two different marketing strategies...wonder which one is consistently the best way for a cruise line's bottom line? :confused:

[Astro Flyer]

I think if you book a few months in advance (but close enough to have to pay in full) it's cheaper, perhaps the cheapest it will be, and as the ship gets close to selling out, the prices go up again. This was our experience last two cruises.

That's been my experience also when there is less demand & too many cabins closer to sailing. The current 100% FCC shows they'll practically give away a cruise close to sailing to fill the ship to generate onboard spending.

 

Which is the most profitable marketing for bookings far in advance I don't know.

Edited December 6, 2013 by Astro Flyer

[Cruise Junky]

I think if you book a few months in advance (but close enough to have to pay in full) it's cheaper, perhaps the cheapest it will be, and as the ship gets close to selling out, the prices go up again. This was our experience last two cruises.

 

It would be an interesting study to see if they were priced lower to start with, would they have to discount so much last minute.

[Times Prince]

While I thought that "Launch savings" was a good marketing tactic to get people to book early, in practicality the savings weren't that good compared with sales 90-120 days prior to sailing, and so they didn't catch our business.'

 

There are people willing to pay more for their specific cabin of choice.

 

Another interesting bit of info would be what is the percentage of cabins sold prior to initiating last minute price reductions? One would think the price difference would be pure profit (and a tightly kept secret).

 

I keep remembering a cruise documentary in which it was said the cabin cost was not enough to make a sailing profitable, and it was onboard spending that generated the final profit. So however they choose to entice people, I hope that every sailing has enough passengers to generate a profit. Then I hope too that I can find a good deal to be able to cruise again.

[Loonbeam]

It's not as simple as that.

 

There is a very expensive and very complex yield management system that sets initial pricing based on a proprietary alogorithm. The price is adjusted often based on a number of factors (those factors are top secret) but can include bookings on similar ships, past history, prices on other lines, weather forecasts and much more.

 

To over simplify, lets say that Princess had a good year 2 years ago on a given route, and the average price was high. The YMS might start the pricing for the next posted cruises at or about the average price paid for that route adjusting for other factors. Celebrity may have had lesser demand that year, driving average price down.

 

I'm sure if we did analysis we could find examples where Princess started lower than Celebrity. I suspect that in the end, absent any giant sales, the lines end up pretty close to each other as things balance.

[bachcruise]

Celebrity seems to drop their prices heavily after final payment whereas Princess has great prices prior to final payment date.

[RickEk]

Another thing to factor in for the OP's situation here is the very different sizes of the ships involved. Solstice can carry 2,800+ passengers while Pacific Princess holds 680. Two very different cruising experiences...:)

[Cruise Junky]

Another thing to factor in for the OP's situation here is the very different sizes of the ships involved. Solstice can carry 2,800+ passengers while Pacific Princess holds 680. Two very different cruising experiences...:)

 

Yeah they are very different sizes. But in this case, it looks like Radiance and Solstice were the ships in demand with no discounting. I notice Princess does the same on Transatlantics, but I think they both end up selling those cheap at the end.

[runnerodb83]

Putting it simply, there are 2 main models for the travel industry

1. Prices are based almost completely on load factors. Low load factors sustain lower prices. High load factors create higher prices. Its supply and demand at its simplest. The airlines dont do this much anymore but Amtrak still does.
   
2. The second is more of the car dealership model where sticker prices are high and over time prices come down with deals and coupons. Obviously a travel agent helps here and I would imagine some/many make a % of the cruise sale in the form of a commission.
   
3. Princess sales are probably a mix of both based on past histories.
   

 

The second strategy doesn't seem to jibe too well with the industries mantra of "fill every cabin" but we cant see the sales results so maybe it does? I read once that airlines best profit is made when the aircrafts fly 2/3rds full. Sure they aren't making $ on every seat, but they are charging more per seat, using less fuel, and having less delays. This doesnt take into account supplemental charges like wifi, booze, and checked luggage. Those are linear relationships and obviously the more people on the flight, the more potential income.

 

I'm an engineer not an economist, but I've arrived at these conclusions over time.

[hightownCO]

Do you think this strategy of Princess's to start really high and then discount is a good one? Our plans are now made and we wouldn't switch as flights and hotels, excursions, etc. are booked. I know you can always wait around for a sale, but how many do? there's probably a lot that research early and like to have something booked. Do you think Princess loses out by starting so high when they're in direct competition on a similar itinerary?

 

I've thought that for a long time now. I like Princess but check every cruise line when I'm looking for something. Princess starts out at their brochure price - maybe knocks a 100 off for launch savings. Then goes down if they have to to fill the ship.

 

RCL/Celebrity start out rock bottom and then raise their rates as the ship fills. Usually, the only time you will see lower than opening prices is a flash sale before sailing.

 

Carnival, I think, starts low.

 

But the issue with Princess is that TAs can still discount. So if you have a good TA, you can get below the opening price by 10 - 15%. What I've experienced though when I did use a TA and got a good price --- eventually the price dropped with Princess enough that the TA's price was = or maybe just a hair less and they wouldn't discount any further. So in the end, using a ta made no difference to me price wise and only prevented my dealing with Princess directly.

[tgmtgm]

Last year we were looking at both Celebrity Solstice and Pacific Princess for a 10 day Honolulu to Vancouver cruise. Princess price for a basic balcony was approx. $2,600... Celebrity was around $1,400 and came with a drink package. Just received an e:mail from Princess for this cruise on Pacific now for $1,399...well before final payment so most guests could take advantage of new pricing. I don't know what we would have done if they'd have been priced the same to start with.

 

Do you think this strategy of Princess's to start really high and then discount is a good one? Our plans are now made and we wouldn't switch as flights and hotels, excursions, etc. are booked. I know you can always wait around for a sale, but how many do? there's probably a lot that research early and like to have something booked. Do you think Princess loses out by starting so high when they're in direct competition on a similar itinerary?

 

 

I guess it depends on how badly one wants to travel a certain ship/itinerary.

 

As an example, I've always had it on my bucket list to do a transatlantic. This past summer I started researching Spring crossings on several different cruiselines. Narrowed it down to the Royal and Celebrity Equinox. The first at $1799 for the cheapest balcony (15 days) and the latter at $999 cheapest balcony (13 days). Granted the Royal is a new ship and an extra two days, but not worth $799 more in my opinion. So I booked the Equinox. And yes travel agents can discount Princess and lower the price, but I also received $185 obc with the booking.

 

So with that analogy, Princess lost my cruise $$ because they started out high. Sure the price might plummet to $999, but by then it's too late plan flights and hotels- at least for me.

 

Tony

Edited December 6, 2013 by tgmtgm

[skynight]

It is difficult to compare pricing for the Celebrity Solstice with the Pacific Princess. They are different ships with the Solstice carrying 2800+ passengers vs. the Pacific Princess with only 670. They offer different cruise experiences.

 

But, I do feel that the best prices and promos should be offered to the earliest bookings. It just seems like a good way to project your business income. Then maybe good prices during the last months to fill out cancellations. It doesn't seem like a sound business model to accept a booking at a high fare only to know that you will reduce it six months later.

[ECCruise]

This kind of sums up our experience--and reaction to it. We used to book Celebrity and Princess about equally, generally 12 to 24 months out. When Princess changed their marketing focus to "nose bleed" prices up front while Celebrity's prices began lower (sometimes HALF for similar itineraries) our Celebrity bookings have gone to around 2x our Princess bookings. Currently have 46 days booked on Celebrity and 0 on Princess, so for us, their strategy definitely does not work. Whether or not it works for the masses is a question for the bean counters.

 

I guess it depends on how badly one wants to travel a certain ship/itinerary.

 

As an example, I've always had it on my bucket list to do a transatlantic. This past summer I started researching Spring crossings on several different cruiselines. Narrowed it down to the Royal and Celebrity Equinox. The first at $1799 for the cheapest balcony (15 days) and the latter at $999 cheapest balcony (13 days). Granted the Royal is a new ship and an extra two days, but not worth $799 more in my opinion. So I booked the Equinox. And yes travel agents can discount Princess and lower the price, but I also received $185 obc with the booking.

 

So with that analogy, Princess lost my cruise $$ because they started out high. Sure the price might plummet to $999, but by then it's too late plan flights and hotels- at least for me.

 

Tony

[geoherb]

But the issue with Princess is that TAs can still discount. So if you have a good TA, you can get below the opening price by 10 - 15%. What I've experienced though when I did use a TA and got a good price --- eventually the price dropped with Princess enough that the TA's price was = or maybe just a hair less and they wouldn't discount any further. So in the end, using a ta made no difference to me price wise and only prevented my dealing with Princess directly.

What I have done is booked directly with Princess and taken advantage of price drops along the way. When I don't think the price will go any lower before the final payment date, I'll call or email my TA and see if he can do better than the Princess price. He usually has been able to. I then transfer the booking to him.

 

But most of the time we book after the final payment date. For our upcoming cruise, I ended up using a different travel agency because mine was unavailable. That is the downside to using a small agency. The new agency was able to save us nearly $100 from the Princess prices for each of our upcoming cruises.

[drakes2]

We booked the Royal in November just after final payment was due and I've noticed prices have done nothing but go up and considerably so. I booked a "guarantee balcony" and hoped for the best as the price was too good to pass up and a week later checked my personalizer and found we'd been upgraded to a "deluxe balcony" (although I feel the deluxe are overpriced), midship location on Emerald. That's at least 9 categories higher than what we paid for.

I think if you book a few months in advance (but close enough to have to pay in full) it's cheaper, perhaps the cheapest it will be, and as the ship gets close to selling out, the prices go up again. This was our experience last two cruises.

[Budget Queen]

Supply and demand. Each ship is on it's own. :) I am a late booker, can't be bothered booking sailings years out. :) Especially with the one way cruises, sometimes late price dumps can be significant. I see this with trans Atlantics every year. Everyone is different, I travel often, (at least every other month) and don't really have to go with a certain itinerary, I "have" to take. I frequently will book a nice discounted cruise- late booked. I do go to certain locations every year, but am very flexible. Just depends on specific preferences.

[Smiles3usa]

I like booking 18 months to 1 year in advance; the anticipation of the cruise and the planning contributes to my enjoyment of the cruise. That said, I am taking my first cruise on Celebrity due to Princess pricing strategy. I simply refuse to pay double to cruise on Princess. Perhaps the pricing strategy won't stay around for long. I did notice that Princess cruises coming up in the next 90-120 days are very similarly priced compared to Celebrity. But for some reason, Princess prices its initial cost far above what they will accept. Ce la vie! The market will decide. To me, while I enjoy Princess, it is not a luxury brand--especially with 3000+ folks aboard--and I will not pay for it as such.

[netorders]

My last cruise w/princess was in May of 2012. Recently checking Northern Europe, compared pricing @ box retailer travel co, and princess. Princess has certainly changed their business strategy. Now the cabins are segmented , early booking has no advantage & promos have greater value at box TA. IE credit, speciality dining & tips. This varies on different dates and embarking ports. So the discount in the early stage of booking goes to TA.

 

I am glad to come across this thread. It explains/confirms what's I noticed. Thanks for your insights.