Richard Fain comments today about pricing

[cruisingsince94]

Just read his claims today that Royal Caribbean has NOT been able to raise pricing for the past 6 years!! Are you kidding me! Is it just me or do all of you buy into his statement.

[joepeka]

I did a real quick google search and couldn't find anything recent in the news about this. Could you please post a link or reference?

Edited March 18, 2015 by joepeka

[ehfl]

Apparently, he's never booked a cruise through their website. I have yet to find a cruise that you could actually book at the advertised price. When you get through to the part about picking a cabin, the price magically jumps up, and is not what you see on the search screen.

[kinesiologynerd]

Apparently, he's never booked a cruise through their website. I have yet to find a cruise that you could actually book at the advertised price. When you get through to the part about picking a cabin, the price magically jumps up, and is not what you see on the search screen.

 

You mean the taxes?

[cruisingsince94]

I did a real quick google search and couldn't find anything recent in the news about this. Could you please post a link or reference?

 

It's right here on Cruise Critic news from today. He made them as part of the industry panel on the state of the cruise industry going on now in Miami.

[robandana]

Royal Caribbean in the last 5 years has more than tripled in value as a corporation!

 

They make more money today per passenger than ever, why?

 

1) They have raised prices, a lot! BOGO...ya right! Makes them more money.

2) They have also implemented new tactics to not reduce prices when they drop. (if you touch your booking everything is re-priced) Saves them money.

3) Can't use multiple discounts (stock owners) like before and other companies do allow this. Saves them money.

4) They have raised port fees/taxes (on exact same ports other companies charge less, where is this extra money going?) Why do they fluctuate so much?

5) They have reduced employees pay structure, now that tips are automated. Saves them money.

6) They have reduced the quality of service by employing less qualified staff. Cost them less.

7) They have increased the prices of Drinks and specialty restaurants. Makes them more money

8) Diesel is at an all time low. Saves them a ton of money.

 

All of these factors increase revenue therefore causing the stocks to rise as the company is more profitable today then ever....

 

I understand that business is business but seeing as they are making more money then ever...why are they making so many cut backs and providing such a sub par service lately?

[cruisingsince94]

Royal Caribbean in the last 5 years has more than tripled in value as a corporation!

 

They make more money today per passenger than ever, why?

 

1) They have raised prices, a lot! BOGO...ya right! Makes them more money.

2) They have also implemented new tactics to not reduce prices when they drop. (if you touch your booking everything is re-priced) Saves them money.

3) Can't use multiple discounts (stock owners) like before and other companies do allow this. Saves them money.

4) They have raised port fees/taxes (on exact same ports other companies charge less, where is this extra money going?) Why do they fluctuate so much?

5) They have reduced employees pay structure, now that tips are automated. Saves them money.

6) They have reduced the quality of service by employing less qualified staff. Cost them less.

7) They have increased the prices of Drinks and specialty restaurants. Makes them more money

8) Diesel is at an all time low. Saves them a ton of money.

 

All of these factors increase revenue therefore causing the stocks to rise as the company is more profitable today then ever....

 

I understand that business is business but seeing as they are making more money then ever...why are they making so many cut backs and providing such a sub par service lately?

 

 

Not bad for a company that claims to not have raised pricing in 6 years!!

[joepeka]

It's right here on Cruise Critic news from today. He made them as part of the industry panel on the state of the cruise industry going on now in Miami.

 

Guess that's what I get for bypassing the CC home page and bookmarking the specific forums I want to visit! :o

 

P.S. I did read a similar article on Cruise Industry News but there was no mention of Fain's comment regarding pricing over the last six years. His only statement of note there was to drive more demand which drives investment in new supply (i.e. more ships).

Edited March 18, 2015 by joepeka

[Paulette3028]

Cruise Critic is covering the convention being held in Miami called Cruise Shipping Miami. Below is a link to todays article that CC has posted:

 

http://www.cruisecritic.com/news/news.cfm?ID=6250

 

It is interesting.

 

One of the things that I found interesting in the piece was about the demographics of the average cruiser:

 

"According to Cruise Lines International Association (CLIA) research, the average cruise traveler is 49 years old, married, and earns $114,000 per year."

 

I am not surprised, because I have personally seen many many more young families with young children on cruises than I ever thought I would. But seeing what there research has delineated is eye opening. I know when I had small children, I could not consider a cruise as a 'family vacation' -- it would have been more than we could afford.

[shipshape sam]

My favorite Richard Fain quote of which I will paraphrase... :)

 

It is the best of both worlds. We can raise prices and increase capacity at the same time.

 

Now he said this many years ago, but I think it was for sure in the last 10 years. I agree and would love to have both increasing profits and increasing capacity.

Edited March 18, 2015 by shipshape sam

[cruisingsince94]

My favorite Richard Fain quote of which I will paraphrase... :)

 

It is the best of both worlds. We can raise prices and increase capacity at the same time.

 

Now he said this many years ago, but I think it was for sure in the last 10 years. I agree and would love to have both increasing profits and increasing capacity.

 

 

They are in business to make money and I am fine with that. However, when I see first-hand all the cutbacks in services, staffing, etc, the current rates going ever higher, I am not fine with that. For him to say today that they have NOT raised pricing in 6 years is IMO a bold faced lie.

[John&LaLa]

Cruise Critic is covering the convention being held in Miami called Cruise Shipping Miami. Below is a link to todays article that CC has posted:

 

http://www.cruisecritic.com/news/news.cfm?ID=6250

 

It is interesting.

 

One of the things that I found interesting in the piece was about the demographics of the average cruiser:

 

"According to Cruise Lines International Association (CLIA) research, the average cruise traveler is 49 years old, married, and earns $114,000 per year."

 

I am not surprised, because I have personally seen many many more young families with young children on cruises than I ever thought I would. But seeing what there research has delineated is eye opening. I know when I had small children, I could not consider a cruise as a 'family vacation' -- it would have been more than we could afford.

 

Cruising was our family vacation between 1998 and 2006. Stopped when the oldest one graduated high school. Demographic you mentioned is pretty close to us

[cruisinfanatic]

Apparently, he's never booked a cruise through their website. I have yet to find a cruise that you could actually book at the advertised price. When you get through to the part about picking a cabin, the price magically jumps up, and is not what you see on the search screen.

example?

[SPacificbound]

We are currently on Infinity in South America.

 

The cruise booking people here told us March 11-16 RCCL would have Europe 2016 out.

 

Those dates have passed. Anyone have any good information?

[Beachammo]

You can't go 30 minutes without seeing a Royal ad on television.....they are bringing in soo many new customers to fill the ships. They are creating demand!

[thrifty99]

If you really want to see what is going on with Royal Caribbean, read their SEC filings. This is from the annual 10k for 2014 recently posted. Note that ticket prices for Caribbean sailings were actually down in 2014 while ticket prices were up for Europe and Asian sailings.

 

"Passenger ticket revenues comprised 73.0% of our 2014 total revenues. Passenger ticket revenues increased by $171.1 million, or 3.0%, to $5.9 billion in 2014 from $5.7 billion in 2013. The increase was primarily due to:

 

• a 2.4% increase in capacity, which increased Passenger ticket revenues by $134.6 million. The increase in capacity was primarily due to the addition of Quantum of the Seas which entered service in October 2014 and the transfer of Monarch of the Seas to Pullmantur in April 2013 reducing capacity in 2013 due to the two-month lag further discussed in Note 1. General to our consolidated financial statements. Passenger ticket revenues also includes the impact of the change in our voyage proration methodology; and

 

• an increase in ticket prices driven by greater demand for close-in European and Asian sailings, which was partially offset by a decrease in ticket prices for Caribbean sailings, all of which contributed to a $99.1 million increase in Passenger ticket revenues.

 

The increase in passenger ticket revenues was partially offset by the unfavorable effect of changes in foreign currency exchange rates related to our revenue transactions denominated in currencies other than the United States dollar of approximately $62.5 million.

 

The remaining 27.0% of 2014 total revenues was comprised of onboard and other revenues , which decreased $57.2 million, or 2.6%. The decrease in onboard and other revenues was primarily due to a $177.2 million decrease in revenues related to Pullmantur's non-core businesses that were sold in 2014 as noted above. The decrease was partially offset by:

 

• a $45.5 million increase in onboard revenue attributable to higher spending on a per passenger basis primarily due to our ship upgrade programs and other revenue enhancing initiatives, including various beverage initiatives, the addition and promotion of specialty restaurants, the increased revenue associated with internet and other telecommunication services and other onboard activities;

 

• a $46.0 million increase attributable to the 2.4% increase in capacity noted above, which includes the impact of the change in our voyage proration; and

 

• a $28.7 million increase in other revenue of which the largest driver is attributable to an out-of-period adjustment of approximately $13.9 million that was recorded in 2013 to correct the calculation of our liability for our credit card rewards program.

 

Onboard and other revenues included concession revenues of $324.3 million in 2014 and $316.3 million in 2013."

[ehfl]

You mean the taxes?

 

Taxes are shown separately. It's the base price that changes.

[garycarla]

I surely do not KNOW (as some folks seem to), but when someone at that level talks about rates, he is talking fleetwide and across all ships.

 

Just because some rates are higher, it does not mean they all are. They do deep discounting often to fill cabins and not everyone will see those rates.

 

On each sailing, the same category cabin will sell for MANY different prices.

 

I am thinking rates have not gone up in that time myself.

[DreamingBig1]

Here's the thing I am noticing about these type of posts. Many people who are complaining about RCI have multiple RCI cruises booked.

 

Supply and demand. If your booking they aren't forced to adjust.

 

In fact Richard Fain should be fired if he doesn't take advantage of demand.

 

I have to be honest. After considering cruises with RCI over the past couple years, the prices have been relatively the same.

 

For whatever reason there is more pricing gimmicks. That's what I notice.

[hrrsamrovk]

I have yet to find a cruise that you could actually book at the advertised price.

[cx7owner]

To be honest, when I think about what I was paying for cruises from 2007-2010, I don't think I'm paying more now. Taxes and tips have gone up, but not the base fares. Then and now, we typically cruise in the off or shoulder seasons, so maybe peak season fares are up if that's what others are seeing.

Edited March 18, 2015 by cx7owner

[SadmanCruiser]

To be honest, when I think about what I was paying for cruises from 2007-2010, I don't think I'm paying more now.

 

Completely agree!

 

Our first cruise:

 

Radiance Alaska May 2005 Cat N $1753

Radiance Alaska May 2015 Cat N $1520

 

Our first Transatlantic:

 

Independence Nov 2010 Cat PR $1798

Harmony Oct 2016 Cat C1 $1759 (booked yesterday)

 

I do agree that some prices have become very expensive such as the Allure and Harmony in Europe, but overall cruising can still be very good value.

[shipshape sam]

They are in business to make money and I am fine with that. However, when I see first-hand all the cutbacks in services, staffing, etc, the current rates going ever higher, I am not fine with that. For him to say today that they have NOT raised pricing in 6 years is IMO a bold faced lie.

 

 

There would seem to be a point where looking to balance profits with cutbacks is needed.

 

Some "cutbacks" are not really valued by many passengers. We can get into an endless debate on this, but as one example, I could care less about chocolates on my pillow. I give them to DW and she takes them home. On the other side, I lament the 'dumbing down of the MDR food selection/service/quality, IMHO.

 

I would agree that they have raised prices and raised them a lot! They have been playing with this for a number of years. They have continued to raise the prices of speciality restaurant prices to see where we say "enough is enough"

 

I no longer book early and will wait for specials that are not price inflated with then "free/included" perks. If I don't find a cruise, I will sail with another cruise line or won't sail. I have to choose.

 

Celebrity and Royal are appealing to sufficient enough people that I am in the minority.

[Paulette3028]

When we want to find a cruise, we seem to find a cruise at what we consider is a good price, not at a price point that is too high.

 

From our personal experience we only have two very similar experiences to compare:

 

We sailed Liberty in 2009 (7day) and Indy in 2015 (8 day) -- in the end same price.....better value in 2015, since we got the extra day.

 

We sailed Navigator in 2004 (7 day) and will be sailing Navigator in 2015 (6 day) -- the 6 day is $800 less. Sure we are getting 1 less day, but it is $800 less.

 

After these two personal examples, we have looked at cruises and said, "The price is too high for that cruise".

 

There are noticeable things that have changed that I am unhappy with (size of personnel in dining room and cabin steward staff), has it totally destroyed my vacation -- no. From what I have heard from cruisers on other lines, that has happened on them as well....so the Royal cruiser who changes ships, just won't know what it was prior on that line to compare it to.

[chengkp75]

Royal Caribbean in the last 5 years has more than tripled in value as a corporation!

 

They make more money today per passenger than ever, why?

 

4) They have raised port fees/taxes (on exact same ports other companies charge less, where is this extra money going?) Why do they fluctuate so much?

5) They have reduced employees pay structure, now that tips are automated. Saves them money.

6) They have reduced the quality of service by employing less qualified staff. Cost them less.

8) Diesel is at an all time low. Saves them a ton of money.

 

All of these factors increase revenue therefore causing the stocks to rise as the company is more profitable today then ever....

 

I understand that business is business but seeing as they are making more money then ever...why are they making so many cut backs and providing such a sub par service lately?

 

I'm not going to get into the horse race over whether RCI is making more money, or too much money, or whether they are screwing the passengers, but I would take exception to the points you've made, as edited above:

 

4. As I recall, there was a class action suit a few years ago over port fees, and these are now required to be transparent, so if you feel they are too high, why not ask them about it?

 

5. What is your basis for this? In fact, with the implementation of MLC 2006 in 2012 (IIRC), the cruise lines, as well as the rest of the maritime world now has to meet mandated standards for pay, including minimum compensation, overtime, etc., based on the IMO. While I won't say pay has gone up because of this, there has been restructuring of the wages to meet the guidelines, and there for sure has been no reduction in crew wages over the last 2 years, and there are now watchdog measures that allow the crew to report things like this to port state agencies. Last year or the year before, there were a couple of cruise ships detained in Brazil for investigation of MLC violations.

 

6. I guess this is your judgment that the staff is "less qualified". In what areas are they less qualified. Could it be that there is a lot more new staff since some of the more experienced staff is cherry picked to provide training on the new ships?

 

8. While marine fuels are currently low, they are not at "an all time" low. You must realize that your prices for gasoline, automotive diesel and home heating oil have nothing to do with marine fuel prices. Secondly, right up until 1 January this year, the ships could burn low sulfur residual fuel at current prices of $350/metric ton. As of 1 January, when the ships are within 200nm of the North American, Puerto Rican, Hawaiian, and USVI coasts, they must burn low sulfur diesel fuel, at current prices of $600-650/metric ton. So, their fuel cost jumped by 100% this year. The only option to burning the higher cost diesel fuel is to install exhaust gas scrubbers which cost about $1.5 million per engine (figure 4-6 per ship) and have a 5-7 year payback period.