Cruise Lines: Learning From The Airlines (And It’s Not A Good Lesson)

I’m a big fan of cruising and tend to write a lot about them. They’re an excellent value and can be a good way to see multiple locations on the same trip. But one of the trends in the industry, particularly in the mass market, is troubling: fees.

Cruise Lines: Not The New Airlines, But…

cruise, fees

Comes with its very own list of surcharges

Cruises are often thought of as a luxury vacation, much in the same way that traveling on an airline used to be only for the affluent. It was the highest of the high end, with extravagant meals, top entertainment and Fred Grandy all included in the price.

Over the years, though, a few things have changed. First, cruises have expanded to the mass market. That is undoubtedly a good thing, as a vacation that had once been open to only a few is now open to many. Second, most cruise lines are now owned by major corporations, with Carnival Corp and Royal Caribbean owning approximately 75% of cruising capacity, either through their namesake brand or a subsidiary. That’s not as good for consumers. An oligopoly of publicly traded companies (You can throw Norwegian in, as well.) means that they not only have control of pricing in the market but also do anything they can to cut costs or generate additional revenue. And it’s not just the end of the tableside Caesar Salad.

“There’s A Charge for That…”

For the fiscal year ending in November, 2018, “onboard and other” revenue represented 25% of Carnival Corp’s total revenues. That compares to 21% a decade earlier and 18% in 2001. All that free food and midnight buffets turn out to cost the companies money. Or, at least, they’ve discovered that there’s a way to charge for it.

So why is this happening? The answer, not surprisingly, is similar to the airline phenomenon. As cruising became more mainstream, it started to take in customers who were looking for both luxury and value. That comes at a price. The problem for the cruise lines is the same one that the airlines face. Passengers are becoming increasingly likely to book based on the ticket price. They don’t factor in the extras to the same extent. Thus, it’s easier to give a low list price and charge for the add-ons.

New Patterns Of Charges

While there are plenty of opportunities to spend money on ships, the cruise lines don’t want a one-off here and another there. Rather, they are packaging benefits. Noticeably, these benefits target the “pain points” on the cruise, such as long lines at dinner, show availability and getting on and off the ship. Princess, for example, offers “club mini-suites,” which include a private section of the dining room and priority embarkation/disembarkation, in addition to the standard mini-suite product.

There are also packages available which are independent of the cabin you have. Royal Caribbean, for instance, is testing “The Key,” which includes priority times at amenities and reserved seating at shows, in addition to the private dining room benefit. They’re charging $15-25 per person per day, and if one person in your cabin has the package, everyone else must, also. That could be as much as $100 per day.

Even one of the most beloved cruise perks, free room service, could be disappearing on Carnival. They already charge for overnight service, but now, you could be paying for that club sandwich at lunch.

But Cruise Lines Won’t Be Spirit Airways

While I expect these patterns of charges to continue, I don’t see an “ultra-low cost cruise” coming. First, the industry has already tried that. But second, the purpose of a cruise is different than that of a flight. A flight is simply a means to an end, something you suffer through to get to where you are going. On the other hand, a cruise is supposed to be relaxing and pamper you. And if you don’t like a cruise, there are alternative. If you don’t want to fly, enjoy the bus ride to Florida.

The other thing is, it is still easy to have a great cruise without spending another penny on-board. If all you want to do is sit by the pool and participate in the free activities, it’s paid for. If you don’t mind a bit of a wait at the dining room (or are willing to eat at the same time every night), there’s no need to pay extra at a specialty restaurant. Gratuities get added on, but most cruise lines offer deals that include pre-paid gratuities.

Some things won’t change, of course. If you buy a suite, or pay up to be on a luxury cruise line, you may not have to reach for your wallet at any point. You’ll still be paying for all of the extras, but you’ll be doing it upfront. There won’t be any piece-meal charges. And there’s something to be said for that. After all, cruises are often based on that.

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