Lower Oil = Higher Cruise Prices

Why should Celebrity charge higher cruise prices when oil prices have gone down so low ? :eek:

What say you ?

Well, they have to pay for their new Edge ships, with smaller cabins and sinks in the bedrooms, they have to pay high salaries for their brilliant big wigs, and WE have to pay for all these wonderful perks that the not so wise cruiser thinks are free. IMHO, it's time for someone else to run Celebrity and not Lutoff-Perlo. But I guess the stockholders love her for upping the bottom line and lowering the standards for what used to be a very great cruise line.

We do not know what Celebrity is paying for oil as they buy contracts for oil well in advance if they think it is a favorable price. So they may be stuck with some contracts at higher prices. Unless they disclose the information in their 10Q or 10K filing, we will not know.

Having said that, I am not happy with the pricing either!

Ken

Obviously, cruise lines and airlines buy oil futures and use other derivatives to smooth out big fluctuations in their biggest cost. Otherwise, they'd have to frequently buy and sell ships, have big layoffs and new hires, etc.

Supply and demand - the idea that oil has anything to do with prices is a folly. Cabin prices are supply and demand - nothing else. With no new ships coming on line for a year and demand up as cruising is cheaper than a car, meals out, and hotel room; prices asked are up. Celebrity contracts about 3 years out for oil. They are probably using about $60 oil this year and finally falling a bunch in late 2016.

Probably more important is if you looked at lots of cruises close to sail date there are lots of BIG price cuts. Patience is needed.

Higher prices do not work if folks refuse to pay and look elsewhere. We just (yesterday) booked a 55 day HAL cruise after there was a huge price drop. This would have been multiple Celebrity bookings, but "Lisa's" new pricing strategy has made an impact :(. Since we are "equal opportunity cruisers" and routinely cruise many different lines, we simply look for the best price/value/itinerary across many of our favored cruise lines. One can trust that if Celebrity bookings decline, prices will also decline. Cruise lines need to fill most of their berths (Celebrity is currently doing just fine in this regard) and testing the market with high prices is a reasonable business plan. But if there is resistance to those high prices, the worm will turn.

Hank

Why should Celebrity charge higher cruise prices when oil prices have gone down so low ? :eek:

 

What say you ?

Seriously? Big businesses reducing their costs is just another way they increase their profits.

Celebrity continues to charge high prices because enough people are booking at those higher prices.

When oil reached $145 and Celebrity didn't raise their prices as advertised that they could, I didn't see anybody complaining. :rolleyes:

When oil reached $145 and Celebrity didn't raise their prices as advertised that they could, I didn't see anybody complaining. :rolleyes:

Exactly.

Why should Celebrity charge higher cruise prices when oil prices have gone down so low ? :eek:

 

What say you ?

Oil price isn't the only thing that drives cruise price. If the ships are filling, no need to lower prices. Business 101.

When oil reached $145 and Celebrity didn't raise their prices as advertised that they could, I didn't see anybody complaining. :rolleyes:

Agreed. The OP's question is pointless. Why ?

1. It's all about supply and demand. As long as folks are willing to pay the higher price, why should they charge less ? That's business.

2. You'd think some folks think Celebrity is a non-profit organization.

Agreed. The OP's question is pointless. Why ?

 

1. It's all about supply and demand. As long as folks are willing to pay the higher price, why should they charge less ? That's business.

 

2. You'd think some folks think Celebrity is a non-profit organization.

Thanks Andy, spot on. I would add:

3. Pricing is based on more than oil prices - higher port fees, new environmental standards, refurbishment of older ships, increased benefits for rank and file employees, incentive programs, etc.

Getting differences of opinion is good ;).

Fuel is one of the 2 major costs of operating a cruise ship .The other big one is food costs

From our point of view Celebrity cruise costs have mainly accelerated by marketing into prices the Celebrity Big Better Best . When the Fords of this world can no longer afford the higher prices that the Cadillacs pay ,then the prices will adjust .imo . Additionally the world markets now in slower growth impact Corporate sales & incomes .This too will impact the cruise industry pricing :eek:

When oil reached $145 and Celebrity didn't raise their prices as advertised that they could, I didn't see anybody complaining. :rolleyes:

Thank you people seem to forget that.

No one book a cruise for the thirty days and just like magic cruise prices would decline.

Currently, bacon is very cheap (wholesale prices) so Celebrity could lower the price of my cruises by $100 per person.

13 night Constellation transatlantic on 2 April, $509pp with minimum $200 OBC. :D

12 night med cruise on Constellation 15 April, $729pp with minimum $200 OBC. :)

If I wasn't already booked on a RCCL 35 night b2b at that time, I'd be booking the above b2b right now. :cool: :o :rolleyes:

Thanks Andy, spot on. I would add:

 

3. Pricing is based on more than oil prices - higher port fees, new environmental standards, refurbishment of older ships, increased benefits for rank and file employees, incentive programs, etc.

Pricing comes from Supply vs. Demand. Input cost like oil, port fees, wages, and food costs have nothing to do with pricing. If those costs are up but demand is less than supply, prices will go down. If those costs are down, but demand is greater than supply, prices will go up. The only time costs come into play is when the accountants calculate profit or loss, or more importantly, positive or negative cash flow.

Why should Celebrity charge higher cruise prices when oil prices have gone down so low ? :eek:

 

What say you ?

Very simple - Because they can.

If people book at higher prices it's because they perceive it to be a good value at that price. If people refused to book due to higher prices, prices would come down.

2014 RCI Annual Report.

"In the fourth quarter of 2014 we began to experience extreme volatility in the fuel and currency markets. While the price of oil declined dramatically, it was coupled with the strengthening of the US Dollar. As we entered 2015, fuel began to rise modestly and the US Dollar has continued to appreciate. While over time these two factors have historically had an inverse correlation, offsets are not exact and short-term movements are inevitable. This will create fluctuations in our earnings, but it does not change the underlying fundamentals of our business. In fact, I have never been more bullish about our future.

In the fourth quarter of 2014, we saw a rapid decline in fuel prices that was coupled with a strengthening in the U.S. dollar. This produced some volatility in our earnings and this trend is persisting in the first quarter of 2015 as fuel prices continue to fluctuate consider-ably while the U.S. dollar continues to appreciate. Our fuel hedging program and some natural currency off-sets within our results of operations will help mitigate the volatility but will not eliminate it completely."

I kind of remember Carnival charging you a line-item "Fuel Surcharge" that they explicitly stated could go up and you'd be responsible for the increase. Not sure if they still do that or if it's common in the cruise industry.

I'd have to assume the cruise lines buy fuel on contracts and/or hedge with oil futures so they don't deal with big fluctuations. So regardless if oil goes up or down in the short-term, the cruise line is still paying a previously agreed to price.

Agreed. The OP's question is pointless. Why ?

 

1. It's all about supply and demand. As long as folks are willing to pay the higher price, why should they charge less ? That's business.

 

2. You'd think some folks think Celebrity is a non-profit organization.

Agree, Andy, it was a pointless question. As a shareholder, I'm happy, and as a cruiser, I still find Celebrity a good value for my cruising dollar. There are many other choices out there if a cruiser doesn't feel he or she is getting a good value for the money. Celebrity sails full, so they're still appealing to many.

We are seeing very good explanations on this thread ,about Celebrity cruise pricing regardless of low oil pricing .:D

Because Celebrity decided to market it's Big Better Best perks into it's cruise prices ,the costs per cruise from Outside cabin up has escalated substantially :eek:

13 night Constellation transatlantic on 2 April, $509pp with minimum $200 OBC. :D

 

12 night med cruise on Constellation 15 April, $729pp with minimum $200 OBC. :)

 

If I wasn't already booked on a RCCL 35 night b2b at that time, I'd be booking the above b2b right now. :cool: :o :rolleyes:

Yes the inside cabins do not get impacted by the Big Better Best price increases . Thus ,if the pax wishes to take one of their inside cabins lower prices are definitely doable Because we have been to Alaska 4 times in the past with outside & Vernada cabins,this 5th time we decided to take a inside cabin on Millenium .Our price is $797.44 per pax with a $200 OBC .This is a 8 night cruise Vancouver to Seward . Under $100 per day per pax is good imo

Before that cruise we are doing a 3 night inside cabin LA to Vancouver (all Sea days ) on Island Princess & the inside was under $250 per pax with a $80 OBC

We loved doing the TAs & always get a veranda cabin at low costs .What one must add though is their one way airfares onto that cruise price .;) Unfortunately with all the turmoil in Europe we are staying away for now .

We just completed a 21 night San Diego to Sydney Australia on Holland Americ

a Noordam ;in a Veranda cabin ;which is a comparable class ship to a Millennium class & our cost was $2850 per pax with a $600 obc .We stold a first class return via 3 airlines ;but ,it took 25 hours Sydney to San Diego .that was a fabulous cruise:

13 night Constellation transatlantic on 2 April, $509pp with minimum $200 OBC. :D

 

12 night med cruise on Constellation 15 April, $729pp with minimum $200 OBC. :)

 

If I wasn't already booked on a RCCL 35 night b2b at that time, I'd be booking the above b2b right now. :cool: :o :rolleyes:

It will be interesting to see what kind of deal,you can get for the fall 2017 TA and beyond. The launch prices have increased significantly, but we will find out if the prices hold up. Of course I am not sure if the inside cabins increased as much.

I am sure you will let us know.

It all comes down to supply and demand.

As Host Andy said it's a business.

When you adjust for inflation it is less expensive to sail Celebrity today than when I first sailed in the early 1990's.

Keith

Why should Celebrity charge higher cruise prices when oil prices have gone down so low ? :eek:

 

What say you ?

Lower oil prices translates into lower energy costs for most consumers; one of the largest variable costs in any household (home power, heating/cooling, fuel for cars, running small business, etc).

So what happens is John and Jane Doe have more disposable income.

John and Jane Doe decide they want a cruise vacation. So do the Smiths. And the Jones family. So now more people are vying for the same spot on a cruise ship.

So all the cruise lines can raise prices because demand has increased from the consumer side.

If consumer demand WASN'T on the rise, prices would be dropping; it would just be easier for cruise lines to be able to absorb that hit with lower fuel contract prices.