Royal Caribbean using dynamic pricing as demand surges

[Sigyn]

Interesting article in The Wall Street Journal this morning: https://www.wsj.com/articles/surge-pricing-creeps-into-restaurants-movies-gym-class-bowling-e9c4a395?mod=hp_featst_pos5

 

It references several companies that use surge, or dynamic, pricing, which means raising prices up and down as demand increases even hour by hour. All sorts of businesses are getting in on this trend, from bowling alleys to movie theaters, gyms and yes, even cruise lines. 

 

Here's the excerpt on Royal Caribbean:
 

Cruise fan Patrick Jandorf, a software consultant in Orange County, Calif., has taken five in the past year or so. But even he was thrown when he went to book excursions for his family’s recent seven-day cruise to the Bahamas with the Royal Caribbean Group. He was eyeing an offered outing to a water park on the cruise company’s private island. 

 

But instead of the $62 to $70 per entrance ticket he was expecting from researching online reviews and message boards, “when you go to book they raise the price to $120.” He said the message boards explained it depends on the cruise, and that different boats at different times charged different amounts.

 

“It’s all a mystery, it’s not clear at all to the consumer what causes the price to go up or down,” he said. 

 

He and his family didn’t go to the water park when the ship docked for the day, they just wandered around the island and then went back to the ship. His verdict? “It turned me off.”

 

Royal Caribbean didn’t respond to a request for comment.

[smokeybandit]

That anecdote is hardly evidence RC uses any dynamic pricing, at least as defined by the article.

[orville99]

I would not describe RCL's pricing as either "surge" or "dynamic" as both of those are defined by near-real-time adjustments in price based on the level of purchase activity for a given product at a given moment in time. 

 

IMO, RCL's pricing model is more closely what we used to refer to as a "price-to-pain" model - The company gradually increases price until they reach the point where demand starts to soften (purchasers start feeling the pain in their wallets), and then back off just enough to stabilize demand. The problem with this model for consumers is that this also easily morphs into a  "rinse and repeat" model, so that as consumers become numb to the cost, the supplier can just restart raising prices until a new pain point occurs.

 

For example, the first time we purchased a day pass to the Coco Beach club it was ~$60/pp. The next time we looked to purchase, it was $99/pp (and it was still selling out even though some people were questioning  whether it was worth the price - a looming pain point); fast forward to today, and it is now it is running ~$200-$250/pp depending on the cruise - and people are back questioning whether it is worth the price. 

[Sigyn]

5 hours ago, smokeybandit said:

That anecdote is hardly evidence RC uses any dynamic pricing, at least as defined by the article.

I saw evidence of surge pricing just two days ago on Friday when, for my cruise on April 1 on Harmony of the Seas, RCCL opened up half-day options for the water park at CocoCay. When it first opened up, the tickets were about $77 each. Then they went up to $80-something. Then they were in the $90-range. Finally, as they got closer to selling out, they were full price at $104. All within a few hours. As demand increased, the price went up. 

Edited March 12, 2023 by njsmom

[JOVERNITE]

As of today our Feb 2024 cruise has the water park at $133 pp.  So far I don't see any half-day option. I'll keep checking.

[Sigyn]

2 hours ago, JOVERNITE said:

As of today our Feb 2024 cruise has the water park at $133 pp.  So far I don't see any half-day option. I'll keep checking.

It only appeared 21 days before our cruise. 

[Starry Eyes]

LOL, a software consultant reads old social media posts.  He then acts surprised that water park prices have risen during a period of general inflation and as cruise ships have become more crowded causing increased demand for tickets.

 

I bet that consultant had no problem charging more for his services when he was in demand.

[JOVERNITE]

Thanks for the info njsmom.

[twangster]

Royal has had dynamic pricing since like forever.  

[Husky1987]

16 minutes ago, twangster said:

Royal has had dynamic pricing since like forever.  

Yep, it's not like "supply and demand" is a new economic thing.

[Boz575]

11 hours ago, Starry Eyes said:

I bet that consultant had no problem charging more for his services when he was in demand.

I bet that consultant also had competition in their area keeping his fees in check. Not the case with CoCo Cay. It is either buy it or don’t. 

[nelblu]

He would be shocked into the Stratosphere if he looked at the pricing for the Coco Cay over the water and other cabanas.😜

 

Surprising no mention of the pricing of the drink packages and Specialty Restaurants.

Edited March 13, 2023 by nelblu

[Pandamonia]

So far Royals greedy pricing has pushed me to: 

 

• Try different cruise lines
• Not buy drinks packages
• not pay for excursions 
• complain more when things are not as good as promised
• be less fussy about destinations and itinerary.  
• book more inside cabin GTY

 

Royals financial results clearly show there is no growth other than price inflation and that will quickly run out of steam in the current economic environment. These kind of behaviours are the desperate attempt from CEO's to claw every point of margin to report to the stockmarket. 

 

The issue they now face is that i will never revert back to the high spending loyal cruiser that i was before these insane prices and as people are squeezed through high rates on debt and higher unemployment and inflation in cost of living there will be more people whos behaviour changes too. 

 

So royal might have dynamic pricing but people also have dynamic spending and i wont be spending more with royal ill be spending much less for a very long time. 

 

 

[Boz575]

33 minutes ago, nelblu said:

He would be shocked into the Stratosphere if he looked at the pricing for the Coco Cay over the water and other cabanas.😜

 

Surprising no mention of the pricing of the drink packages and Specialty Restaurants.

I bet if RC let you browse cruise planner options prior to booking, there would be an interesting shift in number of bookings. 

[HaveWeMetYet]

18 hours ago, njsmom said:

I saw evidence of surge pricing just two days ago on Friday when, for my cruise on April 1 on Harmony of the Seas, RCCL opened up half-day options for the water park at CocoCay. When it first opened up, the tickets were about $77 each. Then they went up to $80-something. Then they were in the $90-range. Finally, as they got closer to selling out, they were full price at $104. All within a few hours. As demand increased, the price went up. 

It is really more of a Revenue Management software then dynamic pricing. Certainly a surge in demand affects pricing but prices can also change without it. They ramp the waterpark pricing up from 77 to 104 even though there is not much or no demand. They they put a sell on it for 90 or so and people who are following the pricing purchase it thinking it will not go lower.

Sold Out doesn't not mean there is no availability. It could mean it is sold out at a particular price point.

They do this with cabins all the time. Then suddenly cabins open up and even at lower prices.

[Starry Eyes]

1 hour ago, Boz575 said:

I bet that consultant also had competition in their area keeping his fees in check. Not the case with CoCo Cay. It is either buy it or don’t. 

OK, let’s look at that.  Sure, there would be competition when you decide which consultant to hire, just as there is when you decide which cruise to book.  Let’s say you decide hire a consultant offers his own line of on going interactive educational sessions with his clients.  After you sign with the consultant, you have the option to pay and participate in some or none of those educational sessions; if you opt out, you still get the consultant’s services per the contract. 

[Boz575]

16 minutes ago, Starry Eyes said:

OK, let’s look at that.  Sure, there would be competition when you decide which consultant to hire, just as there is when you decide which cruise to book.  Let’s say you decide hire a consultant offers his own line of on going interactive educational sessions with his clients.  After you sign with the consultant, you have the option to pay and participate in some or none of those educational sessions; if you opt out, you still get the consultant’s services per the contract. 

I would expect to see pricing on options before signing a contract. In your example, if I thought the add-on services were too much, I could look for a competitor that provides similar services to consultant #1’s add-ons. This is an option for ports other than Labadee or CCC.  Not an option on CCC, it is buy or don’t buy.  RC does not let you browse add-on pricing until after you book. You can’t factor that in when choosing a cruise line. I’m not sure any of them do. Where as Airlines show baggage fees up front and I can plan accordingly or choose an airline that gives me bags included. 

Edited March 13, 2023 by Boz575

[JsMom2]

This is nothing new!

[Starry Eyes]

36 minutes ago, Boz575 said:

I would expect to see pricing on options before signing a contract. In your example, if I thought the add-on services were too much, I could look for a competitor that provides similar services to consultant #1’s add-ons. This is an option for ports other than Labadee or CCC.  Not an option on CCC, it is buy or don’t buy.  RC does not let you browse add-on pricing until after you book. You can’t factor that in when choosing a cruise line. I’m not sure any of them do. Where as Airlines show baggage fees up front and I can plan accordingly or choose an airline that gives me bags included. 

The consultant says he adds sessions as goes and prices them accordingly.  That’s how he works; take it or leave it.  You can chose someone else if you wish, but then you won’t have any chance to see his sessions (note parallel to coco cay).  There is competition initially; you can select another consultant if you don’t like his terms.  Similarly, there is plenty of competition in the cruises.  You can choose another cruiseline.  

 

I would also point out that if people book a refundable fare before final payment they would gain access to the CP.  If they decide the CoCo Cay prices are too high, they could cancel the cruise.  I wouldn’t, but I don’t cruise for the coco cay water park.

 

 

 

[Boz575]

18 minutes ago, Starry Eyes said:

The consultant says he adds sessions as goes and prices them accordingly.  That’s how he works; take it or leave it.  You can chose someone else if you wish, but then you won’t have any chance to see his sessions (note parallel to coco cay).  There is competition initially; you can select another consultant if you don’t like his terms.  Similarly, there is plenty of competition in the cruises.  You can choose another cruiseline.  

 

I would also point out that if people book a refundable fare before final payment they would gain access to the CP.  If they decide the CoCo Cay prices are too high, they could cancel the cruise.  I wouldn’t, but I don’t cruise for the coco cay water park.

 

 

 

Fair enough, I see your point on the take it or leave it. I also wouldn’t cancel because of CCC prices. Now that I know the hack for seeing add-on pricing before I book, I do take peek but add-ons really doesn’t factor in whether I cruise or not. I was just playing devil’s advocate. 

[nelblu]

1 hour ago, Boz575 said:

I bet if RC let you browse cruise planner options prior to booking, there would be an interesting shift in number of bookings. 

I doubt.  If one can afford to pay $3k for an over the water cabana, they can certainly afford the add'l 18% grats.

[PhillyFan33579]

2 hours ago, Pandamonia said:

So far Royals greedy pricing has pushed me to: 

 

• Try different cruise lines
• Not buy drinks packages
• not pay for excursions 
• complain more when things are not as good as promised
• be less fussy about destinations and itinerary.  
• book more inside cabin GTY

 

Royals financial results clearly show there is no growth other than price inflation and that will quickly run out of steam in the current economic environment. These kind of behaviours are the desperate attempt from CEO's to claw every point of margin to report to the stockmarket. 

 

The issue they now face is that i will never revert back to the high spending loyal cruiser that i was before these insane prices and as people are squeezed through high rates on debt and higher unemployment and inflation in cost of living there will be more people whos behaviour changes too. 

 

So royal might have dynamic pricing but people also have dynamic spending and i wont be spending more with royal ill be spending much less for a very long time. 

 

 

You make a lot of good points in your post, but my guess is the demand for cruising on RCI will remain high in the future. I have been on 22 RCI cruises post COVID and ships keep getting more crowded. For what it’s worth, that has also been my experience on Celebrity, although I don’t cruise Celebrity as much as RCI. 

[Boz575]

10 minutes ago, nelblu said:

I doubt.  If one can afford to pay $3k for an over the water cabana, they can certainly afford the add'l 18% grats.

I was thinking more along the lines of that family with the kids set on the water park. Considering a SeaWorld/Aquatica full season pass is only $115 per person, they may decide a day at Thrill Waterpark at $133/person for 8 hrs might night be a great value and rethink their plans. Then again, maybe not. Lol. 

[chengkp75]

So, when RCI uses "dynamic pricing" and the price of something goes up, everyone is up in arms, but when you score a price reduction on the fare because of the same "dynamic pricing" (lowering the price to increase demand), all you hear is crickets, except to brag on what a good deal you got.

[Starry Eyes]

49 minutes ago, Boz575 said:

Fair enough, I see your point on the take it or leave it. I also wouldn’t cancel because of CCC prices. Now that I know the hack for seeing add-on pricing before I book, I do take peek but add-ons really doesn’t factor in whether I cruise or not. I was just playing devil’s advocate. 

I think perhaps we are both playing devil’s advocate😀

I don’t necessarily like Royal Caribbean’s pricing patterns, though I love their ships.  I do believe people have plenty of other vacation choices if RCI pricing or food or gratuities or service changes or whatever is the last straw.  Sometimes people need to move on.  Some will come back, others never will.