Less Nickles and Dimes?

[fshagan]

There's a general impression most of us share that cruise lines are "nickle and dime-ing" us on board to subsidize lower fare prices.

 

NCL recently released their required 10Q for 2015, and it shows something interesting. In 2014 just over 30% of their revenue was from on-board spending, and just under 70% from the passenger ticket price. For 2015 on-board spending fell to 28% of revenue and the passenger ticket revenue rose to 72%.

 

So NCL is earning less of their total revenue from on-board spending than before. Maybe that's due to a higher cruise price and "free promos" that used to be purchased like the dining and beverage packages. That's my guess, anyway. It would be interesting to compare these numbers to other cruise lines.

[casofilia]

So NCL is earning less of their total revenue from on-board spending than before. Maybe that's due to a higher cruise price and "free promos" that used to be purchased like the dining and beverage packages.

 

I would expect that to be the case. Going that way guarantees income for NCL rather than hope people will spend.

It would be interesting to see the average cost of the free food or drink "spent" by people with the "free" perks. And then the comparison with the extra cost on a "perk free" ticket price.

Bet that, on average, NCL comes out in front.

 

Mike

[fshagan]

I looked up RCL's 10Q and they have about 37% of their revenue from on-board spending. So in that respect it might be that RCL has more "nickle and dime" stuff than NCL. Or their drinks are more expensive.

 

I think NCL's new promo regime is a lot like what RCL has been doing with their constant free promos over the last year or two. So I'm surprised at the much larger number for on-board revenue.

[fshagan]

And Carnival says 25% of their revenue is from on board spending. So it works out like this:

 

RCL: 37%

NCL: 28%

CCL: 25%

 

CCL describes the on board spending as spending for:

 

• Substantially all liquor and some non-alcoholic beverage sales,

• Internet and communication services,

• Casino gaming,

• Full service spas,

• Shore excursions,

• Specialty themed restaurants,

• Gift shop sales,

• Art sales and

• Photo sales,

• Laundry and dry cleaning services.

[pspercy]

RCL drink prices increased substantially last April +/-, now a bit of a deterrent :(

[Demonyte]

I wouldn't draw OP's conclusions from the change. The bar sales are by far the biggest onboard revenue generator and since NCL has given out free liquor for most bookings for over a year now, that definitely shifts the balance a bit.

 

To me the change does not tell anything about the level of nickle-and-diming.

[Mirrasi]

We went on the Getaway last year. That ship and the crew were the best we have ever had. But I was not planning on going back as long as NCL did things this way. We did buy an UDP and enjoyed the restaurants but I refused to purchase room service. We enjoyed the restaurants but NCL left a bad taste in my mouth when they had made a change to the kids dining while I was already on the ship.

 

 

I am going back next week because there was a deal too good to pass up. But now the dining has changed again. This time we are dining at the included restaurants only. No OBS for us.

 

That being said, I used to travel Disney and no longer do because they are twice as much as everyone else. And I chose this cruise because the deal was half the cost of rccl and ncl's normal price. So I'm not sure I have the right to complain.

 

 

I think they could go about things better. I don't mind a general up charge or package for restaurants. But hate the ala carte. And I'm REALLY annoyed by charging room service. Maybe I just get used to the standards.

[fshagan]

I wouldn't draw OP's conclusions from the change. The bar sales are by far the biggest onboard revenue generator and since NCL has given out free liquor for most bookings for over a year now, that definitely shifts the balance a bit.

 

To me the change does not tell anything about the level of nickle-and-diming.

 

That might explain the drop in NCL's on board spending percentage by a couple of points from 2013 - 2014 - 2015, but why is RCL so much higher at 37% vs. 28%? I think that's extraordinary that so much of their revenue comes from on board spending.

 

I think the "nickle and dime" thing is mostly an impression and not really quantifiable. It's how we feel we are being treated more than something you can point to in the financial results. That doesn't diminish it as an issue, but it isn't something you can prove statistically.

[sfaaa]

The difference has a lot to do with their target market and clientele mix. It's not a secret that budget cruisers tend to spend less onboard than higher end cruisers.

[thatjoeguy]

I am going back next week because there was a deal too good to pass up. ...I used to travel Disney and no longer do because they are twice as much as everyone else. And I chose this cruise because the deal was half the cost of rccl and ncl's normal price.

 

It seems the most important factor to you is the cost of the trip. The line has to make up funds from somewhere.

[fshagan]

The difference has a lot to do with their target market and clientele mix. It's not a secret that budget cruisers tend to spend less onboard than higher end cruisers.

 

That could be ... the RCL cruiser might spend more in the casino. I've heard that drink prices and specialty dining are a bit more expensive also.

 

The other thing that could be happening is that perhaps CCL and NCL are jealous of RCL's higher on board spending and are pestering guests to try and reach that 37% number.

 

I actually don't feel nickel and dimed any more on NCL; when we first started cruising with them they had noisy promotions going on in the atrium all the time ... gold by the inch, artwork, etc. We haven't seen that in a while.

[navybankerteacher]

On recent Gem cruise there was a sales pitch before every show in the theatre for lottery tickets - that was the only really noticeable nickel/diming. I do feel that the steep deterioration in MDR food quality and service, combined with the proliferation of specialty dining facilities represents the most annoying and excessive nickel/diming.

[DirtyDawg]

I looked up RCL's 10Q and they have about 37% of their revenue from on-board spending. So in that respect it might be that RCL has more "nickle and dime" stuff than NCL. Or their drinks are more expensive.

 

I think NCL's new promo regime is a lot like what RCL has been doing with their constant free promos over the last year or two. So I'm surprised at the much larger number for on-board revenue.

 

I just looked at the 10K for 2015. RCL's onboard and other revenue was 27% for 2015 and 2014.

 

All three of the majors are quite close on this.

[Lupush]

The difference has a lot to do with their target market and clientele mix. It's not a secret that budget cruisers tend to spend less onboard than higher end cruisers.

 

This hits the nail on the head. Which explains the Carnival 25% vs. the others in the example provided previously.