Fuel Surcharge or Increased Fees for Onboard Services: Which Would You Prefer?

[CCAubs]

Citing the impact of rising costs, Carnival will be raising prices of drinks packages, specialty dining and Wi-Fi -- in addition to gratuities (more on those price increases here: https://www.cruisecritic.com/news/6880/?preview=1).

 

If cruise lines were to implement increased fees, would you prefer fuel surcharges or increased fees for onboard services (beverage packages, Wi-Fi, etc.)?

Edited April 7, 2022 by CCAubs

[Flatbush Flyer]

4 hours ago, CCAubs said:

Citing the impact of rising costs, Carnival will be raising prices of drinks packages, specialty dining and Wi-Fi -- in addition to gratuities (more on those price increases here: https://www.cruisecritic.com/news/6880/?preview=1).

 

If cruise lines were to implement increased fees, would prefer fuel surcharges or increased fees for onboard services (beverage packages, Wi-Fi, etc.)?

You’re assuming that all cruise lines nickel/dime folks for beverages, WiFi, specialty restaurants, etc. 

In any case, it doesn’t matter. In the frans scheme of a cruise bill, you’re talking about “chump change.”

[navybankerteacher]

Anyone who thinks that the cost of cruising is not going to increase - probably by raising charges for on board services AND by fuel surcharges AND by increases in basic fares (once COVID-related matters fade) is bound to be disappointed.  
 

The cruise lines will be receiving dollars which have lost value due to serious inflation AND they will be trying to make up for more than two years’ worth of lost revenue.  That is a double whammy:  they will want more dollars to make up for years of losses AND the dollars they do get will be worth about 80% to 90%  of what those dollars were worth in 2019.

 

It’s not going to be either/or, it’s going to be both - plus something else.

[Flatbush Flyer]

39 minutes ago, navybankerteacher said:

Anyone who thinks that the cost of cruising is not going to increase - probably by raising charges for on board services AND by fuel surcharges AND by increases in basic fares (once COVID-related matters fade) is bound to be disappointed.  
 

The cruise lines will be receiving dollars which have lost value due to serious inflation AND they will be trying to make up for more than two years’ worth of lost revenue.  That is a double whammy:  they will want more dollars to make up for years of losses AND the dollars they do get will be worth about 80% to 90%  of what those dollars were worth in 2019.

 

It’s not going to be either/or, it’s going to be both - plus something else.

And there may be a silver lining on that cloud.

[ontheweb]

8 hours ago, navybankerteacher said:

Anyone who thinks that the cost of cruising is not going to increase - probably by raising charges for on board services AND by fuel surcharges AND by increases in basic fares (once COVID-related matters fade) is bound to be disappointed.  
 

The cruise lines will be receiving dollars which have lost value due to serious inflation AND they will be trying to make up for more than two years’ worth of lost revenue.  That is a double whammy:  they will want more dollars to make up for years of losses AND the dollars they do get will be worth about 80% to 90%  of what those dollars were worth in 2019.

 

It’s not going to be either/or, it’s going to be both - plus something else.

But, there is also the law of supply and demand as they compete with each other and other vacation alternatives.

[Joebucks]

Of course many people are going to gravitate towards the option that they feel impacts them less. When in reality, it's looking like the price of everything, across the board is going to need to increase. Had it not been for the fear of COVID, they would have had no issue raising the fare. 

 

I can't imagine a model working where fares stay low, but drink packages cost more than the entire fare now. 

[navybankerteacher]

3 hours ago, ontheweb said:

But, there is also the law of supply and demand as they compete with each other and other vacation alternatives.

But they are only in the game to make a profit (which they have not seen for over two years) - and the “supply” of US dollars has grown so rapidly that more must be spent on everything: gas, groceries, housing, you name it.
 

  The only reason cruise prices have not already jumped up is because of significant COVID-related reduction of demand — once that demand returns, the current artificial low pricing will end.

[Joebucks]

3 hours ago, ontheweb said:

But, there is also the law of supply and demand as they compete with each other and other vacation alternatives.

 

From what I have seen, the price of cruising hasn't increased nearly as much as resort hotels

[navybankerteacher]

48 minutes ago, Joebucks said:

 

From what I have seen, the price of cruising hasn't increased nearly as much as resort hotels

Of course - very few ships are sailing full - they can hardly increase passenger load by raising fares at this point. 

[ontheweb]

1 hour ago, navybankerteacher said:

But they are only in the game to make a profit (which they have not seen for over two years) - and the “supply” of US dollars has grown so rapidly that more must be spent on everything: gas, groceries, housing, you name it.
 

  The only reason cruise prices have not already jumped up is because of significant COVID-related reduction of demand — once that demand returns, the current artificial low pricing will end.

And the Covid factor cannot be disregarded when computing future demand. There are still people who are very paranoid about Covid. (I know my DW is one.) And there is always the possibility of a new variant or a real breakout of Covid on cruise ships. There are already stories in these boards of cruisers who came down with Covid on ships and had a miserable time and/or felt abandoned after their cruises.

[leaveitallbehind]

OP, IMO you are referring to two different pricing adjustments that would have two different goals. Specifically, IMO on board fees would not be a recovery vehicle for fuel increases.

 

Fuel costs are a primary direct operating cost with the cruise lines.  A fuel surcharge would be a vehicle to directly offset those costs as they increase. It is also variable and adjustable to reflect actual cost increases and can be removed if no longer necessary.  The goal would be to cover those increased direct costs and maintain the same fuel cost ratio in the company's operating model relative to revenue.  

 

Adjusting on board fees for various services and offerings is a vehicle to increase revenue.  As the cruise lines have lost millions over the past couple of years, increasing revenue would be obviously desirable in order to help with their recovery.  Raising stateroom fares, gratuities, specialty restaurants surcharges, etc., while tagged to specific areas of operation, are all collectively a vehicle to increase revenue.  In other words the customer would have to spend more for those same specific services.

 

As mentioned by others, IMO what we will likely eventually see is a combination of both - one which would cover an increased operating cost, and the other to increase operating revenue.  While both methods ultimately would have an impact on operating bottom line, they address two different things.  IMO none of raised on board fees would go to directly offset fuel costs, but would go to increased operating revenue, and visa versa with a fuel surcharge.

 

Certainly a fuel surcharge would be understandable and probably expected to offset those rising costs.  And until the market will support base fare increases, raised fees may be a likely way to increase revenue on board.  Thus why we may see both - not just one or the other and for their separate purposes.

 

Again, this is all just my opinion and is only the way I see things - not challenging or arguing.   I am not an accountant nor did I stay at a Holiday Inn last night.

Edited April 7, 2022 by leaveitallbehind

[Joebucks]

20 hours ago, Flatbush Flyer said:

You’re assuming that all cruise lines nickel/dime folks for beverages, WiFi, specialty restaurants, etc. 

In any case, it doesn’t matter. In the frans scheme of a cruise bill, you’re talking about “chump change.”

 

You're also assuming that the same costs that would be raised on "nickle and dime" lines wouldn't also be raised on the big O

[Flatbush Flyer]

1 minute ago, Joebucks said:

 

You're also assuming that the same costs that would be raised on "nickle and dime" lines wouldn't also be raised on the big O

No, I fully expect continuing cost increases on every line and, within reason (i.e., to maintain a good balance of quality received for profit earned), I welcome it.

 

Crusing has become an industry of uncontrolled growth that negatively impacts our environment - so much so that desirable locations for tourism are restricting cruise ship access (e.g., Venice)

In a lust for more profit, bigger and bigger ships are being built and quality is going down the tubes just to lure in more new cruisers with seemingly “bargain prices.”

 

Cruising used to be a “luxury” that many of us worked (and still work) very very hard to be able to afford. But, like anything else that is non-essential, broadening access comes at a cost - to the environment, to quality of goods and services and so on.

I expect that more locations will eventually ban behemoth cruise ships and, along with the fall out from the Covid pandemic and introduction of fuel surcharges and other operating cost increases, the industry will have to right size with the pendulum swinging back toward it being more of a premium pursuit with more limited access and a better outcome for the environment (among other things). 

Sometimes driving in reverse is a necessary choice to rebalance. So, I’m fine with reasonable fuel surcharges even if the only result would be to help downsize the industry.

[Joebucks]

41 minutes ago, Flatbush Flyer said:

Crusing has become an industry of uncontrolled growth that negatively impacts our environment - so much so that desirable locations for tourism are restricting cruise ship access (e.g., Venice)

In a lust for more profit, bigger and bigger ships are being built and quality is going down the tubes just to lure in more new cruisers with seemingly “bargain prices.”

 

Cruising used to be a “luxury” that many of us worked (and still work) very very hard to be able to afford. But, like anything else that is non-essential, broadening access comes at a cost - to the environment, to quality of goods and services and so on.

 

While I don't completely disagree with these points, you have to look at how the world has changed too. In 1960s, the world had 3 billion people. Today, we are almost at 8 billion. The top destinations can't grow like the population has. Unfortunately, it's only going to get worse. 

 

41 minutes ago, Flatbush Flyer said:

I expect that more locations will eventually ban behemoth cruise ships and, along with the fall out from the Covid pandemic and introduction of fuel surcharges and other operating cost increases, the industry will have to right size with the pendulum swinging back toward it being more of a premium pursuit with more limited access and a better outcome for the environment (among other things). 

Sometimes driving in reverse is a necessary choice to rebalance. So, I’m fine with reasonable fuel surcharges even if the only result would be to help downsize the industry.

 

US embarkation ports continue to welcome bigger and better ports with open arms as it stimulates the economy. Same with many other islands expanding their ports, capabilities, and selling land to the cruise lines to bring economies to places that would otherwise be 3rd world. Key West has tried that stance, but was met with opposition by the governor.

 

I presume you are referring primarily to the Mediterranean, which I wouldn't completely disagree. Although, I find it hard to believe that would want to let go of all of those taxes and port fees. In favor of who? Backpackers? Locals? As you said, as the fight for limited space continues, those with the most money will win.

 

Let's not kid ourselves on any of these calls being done on "environmental concerns". Fuel surcharges and other cost increases are not cruise-specific. People use planes, busses, and vehicles to travel to these spots, and that will be no cheaper either (or better on the environment). 

Edited April 7, 2022 by Joebucks

[iancal]

Makes no difference to us.

 

The only number we care about is the bottom number.  

 

When we compare our shortlisted ships/itineraries we base price on that bottom line fare.  All in ...... inclusive of gratuities, surcharges, or anything else that we have to pay.

 

Given a choice we do not really want fuel surcharges or pay increased fees for onboard services. 

 

 It is a mute point for us because we do not control pricing.  We either pay the freight,  choose a different cruise line,  do something else, or stay home.

 

We see far larger price differences based on the on board currency.   A few years ago we got off a Princess ship in Sydney  that used AUD for on board and two weeks later were back in Sydney boarding  an RCI ship that used USD as the onboard currency.  The difference, in real terms, for bar services and other services ranged from 30 to 50 percent higher on RCI.

Edited April 9, 2022 by iancal