How do they make any money??

[grandgeezer]

April 20, 2019 seven day Caribbean on the Equinox. $849 p.p. for an unobstructed view balcony. $170 p.p. for "Better" add on. Subtract $101.50 for gratuities and that leaves $68.50 for the drink package. Divide that by 7 and it comes to $9.97 per day. This is from their web site five minutes ago. I'm guessing there is something built into the cruise price that makes it overall profitable all though if you take into consideration what they actually pay for the drink materials, they probably make money either way. Not for us.

[mfs2k]

Do your math again.

 

$849 pp per cruise is $1,698 or $242.57 for the cabin per night including meals.

The COST of the meals is probably $10-$20 per day per guest so that's a COST of $280 for two people.  That leaves $1,419 per couple.

 

The COST of the drinks is, at most $2.00 per drink.  Ignore the selling price.  They make a lot of money on alcohol as a perk or sold individually.  Even if you have 10 grey goose martinis a day, they make a lot of money. 

 

The tips go to the staff.  in/out.  

 

There are plenty of people paying a lot more than $849 per person too.  Think of $849 as the eggs on sale in your supermarket.  Loss/Leader.    

[grandgeezer]

44 minutes ago, mfs2k said:

Do your math again.

 

$849 pp per cruise is $1,698 or $242.57 for the cabin per night including meals.

The COST of the meals is probably $10-$20 per day per guest so that's a COST of $280 for two people.  That leaves $1,419 per couple.

 

The COST of the drinks is, at most $2.00 per drink.  Ignore the selling price.  They make a lot of money on alcohol as a perk or sold individually.  Even if you have 10 grey goose martinis a day, they make a lot of money. 

 

The tips go to the staff.  in/out.  

 

There are plenty of people paying a lot more than $849 per person too.  Think of $849 as the eggs on sale in your supermarket.  Loss/Leader.    

 Check your eyes, my post says $849 PER PERSON. All other numbers are per person.

[verizon]

1 hour ago, grandgeezer said:

April 20, 2019 seven day Caribbean on the Equinox. $849 p.p. for an unobstructed view balcony. $170 p.p. for "Better" add on. Subtract $101.50 for gratuities and that leaves $68.50 for the drink package. Divide that by 7 and it comes to $9.97 per day. This is from their web site five minutes ago. I'm guessing there is something built into the cruise price that makes it overall profitable all though if you take into consideration what they actually pay for the drink materials, they probably make money either way. Not for us.

Casino play

[oneputt18]

Why would you take gratuities as a perk on a 7 day cruise, you come out ahead by taking the $150 p/p OBC. 

[rotoal]

3 hours ago, grandgeezer said:

April 20, 2019 seven day Caribbean on the Equinox. $849 p.p. for an unobstructed view balcony. $170 p.p. for "Better" add on. Subtract $101.50 for gratuities and that leaves $68.50 for the drink package. Divide that by 7 and it comes to $9.97 per day. This is from their web site five minutes ago. I'm guessing there is something built into the cruise price that makes it overall profitable all though if you take into consideration what they actually pay for the drink materials, they probably make money either way. Not for us.

I did a dummy booking, and there appears to be a lot of availability - anytime dining is available.   It's Easter/Passover so people may want to spend time with families and not take a cruise that week.   In some categories most of the bed by the balcony cabins have been taken, but there seems to be a lot of availability in the bed by the bath categories.  

[mfs2k]

2 hours ago, grandgeezer said:

 Check your eyes, my post says $849 PER PERSON. All other numbers are per person.

got it. 

[drakes2]

1 hour ago, oneputt18 said:

Why would you take gratuities as a perk on a 7 day cruise, you come out ahead by taking the $150 p/p OBC. 

Maybe because some people are just not good at Math. 

[Hlitner]

So here is a shocker for the OP.  We have cruised on Celebrity (and some other lines) for far less money per passenger day.  Our lowest cost for a balcony cabin happened on a 10 day Regal Princess repositioning cruise from NYC to Ft Lauderdale  with a couple of stops in the Caribbean.  Our total price for 2, including taxes and fees, was exactly $1200 (this was a quietly offered last minute deal sold by a few cruise agencies) .  In addition, we got $100 OBC for being stockholders, another $100 OBC because I qualify for their veterans benefit, and an additional $100 from our cruise agency.  So our total price was $900 or $45 per passenger day (plus tips).  On Celebrity we have cruised in balcony cabins for about $60 per passenger day on a couple of Transatlantic repo cruises.   What makes those Celebrity cruises even more interesting is that because we are Elite Plus we took advantage of the daily Elite Happy hours.  DW teased that it was almost like Celebrity paid us to take those repo cruises once you factored in the free drinks and some other Elite benefits.

 

How do they make money?  The issue is about what economists like to call "opportunity lost revenue."  In simple terms it means that an empty berth on a ship is lost revenue that can never be recovered.  As long as they can sell that empty berth at a price that covers the extra costs associated with the passenger (primarily food), the cruise line makes a small profit.  The passenger also contributes to the tipping pool and the cruise expects to get additional onboard revenue from the passenger.

 

A real big problem for any cruise line is if they overprice a cruise and find themselves with too many empty berths as they near the cruise date.  Lately we are seeing an awful lot of promotions for the new Edge and suspect that the high prices may have not resulted in the expected sales.  

 

As to the fantastic deals, they certainly exist for those who have some flexibility (in terms of cruise line, dates, and the ability to do last minute cruises).

 

Hank

[villauk]

40 minutes ago, Hlitner said:

 

 

How do they make money?  The issue is about what economists like to call "opportunity lost revenue."  In simple terms it means that an empty berth on a ship is lost revenue that can never be recovered.  As long as they can sell that empty berth at a price that covers the extra costs associated with the passenger (primarily food), the cruise line makes a small profit.  The passenger also contributes to the tipping pool and the cruise expects to get additional onboard revenue from the passenger.

 

A real big problem for any cruise line is if they overprice a cruise and find themselves with too many empty berths as they near the cruise date.  Lately we are seeing an awful lot of promotions for the new Edge and suspect that the high prices may have not resulted in the expected sales.  

 

As to the fantastic deals, they certainly exist for those who have some flexibility (in terms of cruise line, dates, and the ability to do last minute cruises).

 

Hank

 

 

Flexibilty is the name of the game; unfortunately for us, it’s not possible. I’m sure there will come a time 🤞.

 

Agree about the Edge, the latest offer is kids sail free (plus all the other perks they have been offering ).

Edited March 1, 2019 by villauk

[Hlitner]

1 hour ago, villauk said:

 

 

Flexibilty is the name of the game; unfortunately for us, it’s not possible. I’m sure there will come a time 🤞.

 

Agree about the Edge, the latest offer is kids sail free (plus all the other perks they have been offering ).

The cruise lines (and travel industry) are well aware that a majority of travelers do not have a lot of flexibility because of jobs, family, pets, etc.  They do target this market by encouraging early bookings and lately pushing non-refundable deposits.  Of the folks who do have flexibility, many will not use that ability because of various personal "hang ups" such as being "loyal" to a particular cruise line, being "loyal" to a particular travel agent, etc.  But there is a group of folks who have flexibility and take advantage of the benefits.   What is interesting is that we often meet many of these same folks on various cruises because we are taking advantage of the same deals :).   We talk with others when we cruise who tell us that they have too many fears/issues to do new things on their own, try new cruise lines, etc.   But the travel industry does try to accommodate nearly anyone.  And when they cannot sell out all their slots, they try to attract those of us with the ability and desire to help them out by filling those unsold slots....albeit at a bargain price :).

 

We think the good news for us is that the cruise industry is now undergoing a big expansion :).  MSC is adding about 2 ships a year for the next decade, Virgin is entering the market with deep pockets, and Viking has become a quick success with their own business model which is quite a bit different then other lines.  And add to this all the additional ships being built for the more traditional lines and it means there are an awful lot of new berths to be sold.  The economy is now in a pretty decent up cycle, but history tells us that at some point there will be a downturn and this always has a huge impact on the cruise industry.  In simple terms there are going to be lots of opportunities for flexible folks to find some amazing deals on both sea and land.

 

Hank

[Covepointcruiser]

There are few folks who want to cruise on Easter, therefore the low price.   Transatlantic, repositioning are cheap, or used to be, because most of us,use purchased one way airfare before or after the cruise.   When you count the airframe in addition to the cruise fare it is no longer as cheap.    We did save one time by taking the QM2 to Southampton to catch our Celebrity TA.   The QM2 fares were mush less than the airline rates.   

[grandgeezer]

On 3/1/2019 at 2:37 PM, drakes2 said:

Maybe because some people are just not good at Math. 

 This was given as a quick down and dirty example of what was available. People could massage it to whatever they feel is best for them. 

We didn't book it as we are really good at math and decided the value wasn't there. We don't want/need the drink package at any cost. Based on many past experiences on Celebrity, including the Equinox, even the base cruise cost was to high, so we passed on this.

[4774Papa]

We don't cruise the Caribbean and for the last year and a half, when I compare prices with Celebrity and Royal Caribbean, I generally find the Royal C prices are at least 40 % lower.  Royal isn't doing much price bundling.

We did snare a great price on a repo from Chile to San Diego on Eclipse that we are on 24 March.  However, even comparing Royal's TA cruises with Celebrity (unbundled prices for TA) Royal is still cheaper by 30-40%,

 

Also, I don't know when you booked.  We always book early.  Last minute cruise prices are not generally representative overall.

[teecee60]

22 minutes ago, 4774Papa said:

We did snare a great price on a repo from Chile to San Diego on Eclipse that we are on 24 March.  However, even comparing Royal's TA cruises with Celebrity (unbundled prices for TA) Royal is still cheaper by 30-40%,

 

We always book early.  Last minute cruise prices are not generally representative overall.

Just yesterday, a friend booked an ocean view cabin on your Eclipse cruise for UNDER $750pp, (plus $300pp in taxes) and is using airline miles to fly to Santiago a few days early. With free "elite drinks" every night, THAT is a fairly sweet deal for 15 nights on Celebrity!

 

As Hank indicated, the cruise industry is going through a truly massive expansion... just last year, 20,000 new beds were added to the current inventory, which will keep basic fares low... but THAT causes cutbacks in other areas like food quality and service as the cruise lines try to maintain profit margins. 

 

My goal has always been a base price of under $50pp/night and I have had very little trouble making that goal... and now, I am more able to meet that goal in an ocean view cabin instead of an inside cabin! On rare occasions you can find fantastic deals by booking early... but I have always found the best ones after final payment.

 

 

Edited March 3, 2019 by teecee60

[tomservo]

If we’re talking about cheap last minute repos, I saw one between Vancouver and Tokyo (14-16 days) that was 399pp for this April for an inside gty. 

[Oville]

On 3/1/2019 at 11:42 AM, grandgeezer said:

April 20, 2019 seven day Caribbean on the Equinox. $849 p.p. for an unobstructed view balcony. $170 p.p. for "Better" add on. Subtract $101.50 for gratuities and that leaves $68.50 for the drink package. Divide that by 7 and it comes to $9.97 per day. This is from their web site five minutes ago. I'm guessing there is something built into the cruise price that makes it overall profitable all though if you take into consideration what they actually pay for the drink materials, they probably make money either way. Not for us.

I’ve read, reread and reread this post and just do not get your point.  The basic cruise fare plus Go Better for a couple is $2,038.  Not sure what you mean by “How Do They Make Any Money?” 

 

As others have said, the $300 OBC on a 7 day cruise makes more sense than pre-paid gratuities.

 

Sorry, just confused by this thread.

[mfs2k]

19 minutes ago, Oville said:

I’ve read, reread and reread this post and just do not get your point.  The basic cruise fare plus Go Better for a couple is $2,038.  Not sure what you mean by “How Do They Make Any Money?” 

 

As others have said, the $300 OBC on a 7 day cruise makes more sense than pre-paid gratuities.

 

Sorry, just confused by this thread.

 

I was confused too. I had to reread it multiple times also and realized he’s only referring to “how do they make money on his beverage package deal.”  He thinks they’re essentially giving it to him for $9.97 a day and he’s still not enticed. 

[Tourist1292]

When I was checking prices at the warehouse club website, they have options for no perks, classic beverage + OBC for $500/room, or all 4 perks for $1130. For the last 2 perks (internet+pre-paid gratuities), one would need to book a 9+ days cruise to make it worth $630 more.

[Oville]

1 hour ago, mfs2k said:

 

I was confused too. I had to reread it multiple times also and realized he’s only referring to “how do they make money on his beverage package deal.”  He thinks they’re essentially giving it to him for $9.97 a day and he’s still not enticed. 

That’s what I came to conclude but it was indeed not intuitive.  Thanks

[Bootman4U]

You can squeeze about 30+ shots out of a "fifth" of liquor which the cruise line undoubtedly buys at wholesale, or better, prices.  I realize there is a wide variation in what ends up being a "shot" but you get the idea.  How many passengers actually come out "ahead" on beverage packages? I suspect the majority do not.  A lot of people say they do but I am doubtful.

 

They make money on booze sales and have been doing so long before there actually were any "drinks packages."  Why do you suppose cruise lines forbid people to bring their own booze aboard?

[drakes2]

5 hours ago, Bootman4U said:

They make money on booze sales and have been doing so long before there actually were any "drinks packages.

I don't understand why people keep saying they got a free beverage package. There is no free package; its included in your fare. The drinks package makes no sense to me especially on a port intensive itinerary unless, of course, you stay onboard while others are in port. My upcoming cruise later this month has only 4 sea days out of a 12 night sailing. Most people are off the ship, therefore, missing out on consuming drinks. The ones that do not get off are people who have visited the ports numerous times or the elderly, and the latter most likely don't bother with beverage package. 

[ipeeinthepool]

I think the bigger issue will be what happens if Celebrity decides to eliminate the "free" beverage perk.  I think many of us have become addicted to this perk. I just checked my big box TA for the OP's cruise and after all of the OBC and any gift cards are factored in, the beverage package seems to cost about $70pp or $7 per day.  The math doesn't make sense for me at $50 -$60 a day to purchase the package but at $7 a day it's a no-brainer and after a few cruises I'm addicted to the Classic Beverage package.  During my last cruise on the Silhouette I hardly saw anyone signing for drinks.  Even for a couple of bottles of water and Cokes per day it's a deal.  It's going to be a sad day when I have to start paying on a drink by drink basis.

[mfs2k]

12 minutes ago, ipeeinthepool said:

  It's going to be a sad day when I have to start paying on a drink by drink basis.

 

The ship has already sailed on beverage packages. 

 

Years ago you had to pay for each drink. It sucked signing for each drink and getting your liquor bill at the end of your cruise. Sticker shock sent a lot of cruise passengers to All inclusive resorts. (Me included)

 

Cruise passengers who drink love the all inclusive model and now that many cruise lines offer the packages, it’s going to be hard to take the bottle away from the baby.  

 

I wouldn’t have booked on celebrity for my upcoming vacation if there wasn’t a reasonably priced beverage package ( the perk add on cost for me was a reasonable value. $59 per day would not be so reasonable) 

Edited March 3, 2019 by mfs2k

[Redrobo]

47 minutes ago, ipeeinthepool said:

I think the bigger issue will be what happens if Celebrity decides to eliminate the "free" beverage perk.  I think many of us have become addicted to this perk. I just checked my big box TA for the OP's cruise and after all of the OBC and any gift cards are factored in, the beverage package seems to cost about $70pp or $7 per day.  The math doesn't make sense for me at $50 -$60 a day to purchase the package but at $7 a day it's a no-brainer and after a few cruises I'm addicted to the Classic Beverage package.  During my last cruise on the Silhouette I hardly saw anyone signing for drinks.  Even for a couple of bottles of water and Cokes per day it's a deal.  It's going to be a sad day when I have to start paying on a drink by drink basis.

 

First time cruiseing with Celebrity, we have the classic package, are the wines and spirits OK as I saw there was a price limit on the package?