Bon Voyage's Value and Lost Revenue

[CanadianConnection33]

So a few thoughts: I’m not a money guy. I don’t work in finance. I went to school but it wasn’t in business. When I was in school, however, I did learn about the “time value of money.” (The longer you have money the more you can do with it via investments, interest, and avoiding borrowing.)

 

So I’m going on my first NCL cruise next month. I phoned up NCL to ask them about pre-purchase of packages/wines, etc. I suggested to them I was aware they usually have a sale but would be willing to give them the money now if they would offer a similar discount (note to NCL, these sales probably end up with me spending more because my eyes are bigger than my wallet so I would suggest keeping them), as expected, the NCL rep said they don’t do that. So I said, fine, I’ll buy on board.

 

By comparison, RCI has a wine package available for presale on-line and my understanding is a lot of other lines do also.

 

Now, going back to the value of money, let’s play with some numbers that I completely made up off the top of my head:

 

Multiply a $200 wine package across, let’s say conservatively 300 sales, and all of a sudden you have $60,000 earlier than you expected. Then you have $60,000 you DON’T have to borrow from a lender and pay interest on so you can buy the gas and food in preparation of the cruise you just sold a lot of wine for. Your company gets a temporary spike in revenues and has slightly lower operating expenses, never mind that you can now better predict how much wine/liquor you’ll need on board and not have to keep as much in storage or risk running out and having annoyed guests.

 

Sure in the end, you’re not saving that much, but given the slim profit margins of the cruise industry it seems like a wasted opportunity. I would say in general that NCL’s pre-buy options are lacking and are costing them.

 

So you’re wondering, if you can do all this with money, why wouldn’t I keep it as long as I can? Well, $200 doesn’t do that much for me, despite time value of money. Also, I’m Canadian and our currency fluctuates against the USD. Right now it probably isn’t in my favour to buy early but, one day, that will certainly change and it will save me money to buy early while earning NCL money by them taking it.

 

NCL’s pre-buy options/deals compared to their competitors cost them, temporarily, $200 or so from me. It actually cost them, conservatively, $60,000+ which, who knows, maybe they now have to borrow and pay interest on. Simple way to boost revenue, keep costs (and may even fares) down, and keep cruisers happy; everyone wins.

 

Just my two cents.

[newmexicoNita]

So a few thoughts: I’m not a money guy. I don’t work in finance. I went to school but it wasn’t in business. When I was in school, however, I did learn about the “time value of money.” (The longer you have money the more you can do with it via investments, interest, and avoiding borrowing.)

 

So I’m going on my first NCL cruise next month. I phoned up NCL to ask them about pre-purchase of packages/wines, etc. I suggested to them I was aware they usually have a sale but would be willing to give them the money now if they would offer a similar discount (note to NCL, these sales probably end up with me spending more because my eyes are bigger than my wallet so I would suggest keeping them), as expected, the NCL rep said they don’t do that. So I said, fine, I’ll buy on board.

 

By comparison, RCI has a wine package available for presale on-line and my understanding is a lot of other lines do also.

 

Now, going back to the value of money, let’s play with some numbers that I completely made up off the top of my head:

 

Multiply a $200 wine package across, let’s say conservatively 300 sales, and all of a sudden you have $60,000 earlier than you expected. Then you have $60,000 you DON’T have to borrow from a lender and pay interest on so you can buy the gas and food in preparation of the cruise you just sold a lot of wine for. Your company gets a temporary spike in revenues and has slightly lower operating expenses, never mind that you can now better predict how much wine/liquor you’ll need on board and not have to keep as much in storage or risk running out and having annoyed guests.

 

Sure in the end, you’re not saving that much, but given the slim profit margins of the cruise industry it seems like a wasted opportunity. I would say in general that NCL’s pre-buy options are lacking and are costing them.

 

So you’re wondering, if you can do all this with money, why wouldn’t I keep it as long as I can? Well, $200 doesn’t do that much for me, despite time value of money. Also, I’m Canadian and our currency fluctuates against the USD. Right now it probably isn’t in my favour to buy early but, one day, that will certainly change and it will save me money to buy early while earning NCL money by them taking it.

 

NCL’s pre-buy options/deals compared to their competitors cost them, temporarily, $200 or so from me. It actually cost them, conservatively, $60,000+ which, who knows, maybe they now have to borrow and pay interest on. Simple way to boost revenue, keep costs (and may even fares) down, and keep cruisers happy; everyone wins.

 

Just my two cents.

 

I think you lost me somewhere? If you are talking wine packages you can buy them the when you get on the ship and if you are talking about bottles in your cabin, there are some available on the bon voyage list. Other than that I guess my mind isn't sharp this morning.

 

Nita

[Happy HALer]

I like numbers.

Let's say NCL can save 8% interest on the amount of money they would not have to borrow (which is speculation).

 

You buy a $200 wine package 3 months in advance. That would result in NCL saving $4.00 in iterest payments (assuming they pay their vendors cur 0, which is very unlikely) Let's say the are willing to split that with you 50/50. You then would realize a $2.00 savings or 1%. Is that really enough to change your spending habits?

I do like your way of thinking. We could come up with all sorts of discounts.

[terrymtex01]

I think you lost me somewhere? If you are talking wine packages you can buy them the when you get on the ship and if you are talking about bottles in your cabin, there are some available on the bon voyage list. Other than that I guess my mind isn't sharp this morning.

 

Nita

 

I am with you on that, Nita.. I'm going to re-read this thread after I finish my coffee. 8-)

[CanadianConnection33]

I guess the gist is that there is that I see a lost opportunity here which is only win-win (except maybe the cost of creating the system) by improving what you can buy ahead of the cruise. Though I’d be interested to hear any other downside I may not have mentioned.

 

Once you factor volume, having a more options and better pre-cruise purchases would allow for cost, efficiency, inventory, and crew time savings which could all be redirected elsewhere. Individually, it is too small to benefit one passenger but, over time and scaled to the whole fleet across a year, the value could be hundreds of thousands or even millions of dollars. A more profitable and efficient industry benefits everyone.

 

Lets say you do sell 300 wine packages at $200 each early. The line gets $60,000 early, saves on borrowing cost + they now know they need 2,100 of ABC wines and can assume they might not need 2,100 of XYZ type of wine so, each cruise, they won’t buy or load 600 of XYZ wine. This can be expanded across all sorts of products.

 

It scales up quickly. Imagine a larger ship selling 500 wine packages at $300 = $150,000 and maybe 4,000 bottles etc etc.

 

While the wine might not ever become cheaper, maybe service will get better or fares will drop or maybe the stock will rise and keep shareholders happier and they'll stay in business.

[cruisemainiac]

I think your numbers are flawed in a couple of areas. 500 presales on a large ship (i.e. Epic) would represent 1000 people which would be about 23% of the total guests on board. Adjust for children that would go to 30%. Now you have to believe tht 30% of the adults on a cruise not only drink wine, but enough to feel justified to buy multiple bottle ahead of time, unlikely.

The second issue is not how many people would buy the wine package but how many more would buy it if they could buy it ahead of time to save a few $$. Is there enough increased profit from additional sales from this program or can staff energy be put to more profitable endeavors. I'm sure cruise lines have number crunchers doing exactly this kind of thing, and then it's thumbs up or down.

[CanadianConnection33]

I'm sure cruise lines have number crunchers doing exactly this kind of thing, and then it's thumbs up or down.

 

Oh I don't know. Some of the other lines (RCI, for example) do already do this - or it's at least more comprehensively. I wonder why they would think it's a good idea but NCL does not. Maybe in the end it's actually value neutral and I'm wrong.

 

Still, time value of money - it adds up quickly.

 

I just don't see a downside to offering more comprehensive pre-purchase of items/services at the same rate that you would get onboard anyway.

[coka]

I will play! Do I like your idea? Sure! What we might not be thinking of...

 

1. More factors exist other than the “time value of money.” You already touched upon the cost of implementation which includes human resources?

 

2. The demand of 300 orders is only an estimate and makes the assumption it occurs at a given point of time?

 

3. Most passengers also understand time value of their money. Why would passengers give their money in advance when they know they can pay for it onboard. NCL has the purchase 6 wine bottles at the start of the cruise for 20% off total (or something similar to that)?

 

4. Factor in risk or possible error of distribution?

 

5. More money can be made selling wine by the individual glass or by the individual bottle once onboard?

 

Even so, you may be on to something. I have seen many suggestions over the years implemented as a result of people’s ideas here or as a result of writing to NCL offices in Miami. Who knows…maybe when you look at future bar set ups and bon voyage orders…it just might include what you have asked for. So although they said no, we can not do that today, if it is a win-win, then it just might be available in the future.

 

coka

[Ms belp]

I want the hot dog thread! I'm tired and getting tired by the minute.:o

[Sauer-kraut]

I want the hot dog thread! I'm tired and getting tired by the minute.:o

 

LOL!

 

See, this is why I hate looking at my 401k plan, I just start tuning out numbers and theories and never move my money around. Hot dogs are just more appealing and so much easier to comprehend. :p

[coka]

I think I never read the hot dog thread! Although I do love sauer kraut on them.

 

coka:D

[clear2cruise]

I agree and understand with the OP about the number thing.

You said RCI do these number thing is b/c they're a public co. and NCL is a private co. which do not answer to investors. :D

Good or bad, depends on how you see it.

[Cruiser34057348907]

Well, first of all.. I will try to keep this simple. He is not talking about just buying wine. He is discussing the value of money and time.

 

 

A summary of Quantity theory of money in 's Money. ... consumers may demand less money at a given time than they would if cash were difficult to obtain. ... V = P * Y where M is the money supply, V is the velocity, P is the price level, ...

 

http://www.sparknotes.com/economics/macro/money/section2.rhtml

 

I hope this helps you, Nita.

[Happy HALer]

Well, first of all.. I will try to keep this simple. He is not talking about just buying wine. He is discussing the value of money and time.

 

 

A summary of Quantity theory of money in 's Money. ... consumers may demand less money at a given time than they would if cash were difficult to obtain. ... V = P * Y where M is the money supply, V is the velocity, P is the price level, ...

Very similar to the Cruise Intimate Relations Equation which is P goes into V Y times and Y is inversely proportional to N where N= (Not right now, I have a headache) :rolleyes:

[NEW 2 CRUISIN]

I guess some of the confuison comes from the fact that you actually CAN buy wine (and any other booze you want) before you get on any NCL ship and it will be waiting for you in your cabin when you board. :confused:

 

It's not called a "package", per se, but it's the same thing.

 

OP, if you contact your ship's group event coordinator, they can help you place your order, which you will most certainly need to pay for when the order is placed.

 

Saves you TIME...but costs you MONEY!

 

:D