voyage variations

[meow!]

Some voyages, including the one we will be on are just about full, and we heard some categories have been overbooked. However, some other voyages, notably the Istanbul to Rome Nautica on this coming 6th November, and the Barcelona to Rome Insignia on this coming 19th November are still half empty, and now is only a month to a month and a half from sailing date.

 

These two will be good test cases on whether Oceania will offer discounts deeper than the initial "2 for 1", or sail half empty. Perhaps they will give large shipboard credits. Alternatively, they can use those opportunities to invite large numbers of travel agents to experience their product? Any comments? And do you know why some voyages don't sell?

[brian_uk]

I guess the real reason is that November Weather in the Med can be really poor.

 

Last week in Marbella it was raining and a lot of the Med was suffering.

 

Brian

[Jancruz]

Some voyages, including the one we will be on are just about full, and we heard some categories have been overbooked. However, some other voyages, notably the Istanbul to Rome Nautica on this coming 6th November, and the Barcelona to Rome Insignia on this coming 19th November are still half empty, and now is only a month to a month and a half from sailing date.

 

These two will be good test cases on whether Oceania will offer discounts deeper than the initial "2 for 1", or sail half empty. Perhaps they will give large shipboard credits. Alternatively, they can use those opportunities to invite large numbers of travel agents to experience their product? Any comments? And do you know why some voyages don't sell?

 

Meow..no way will they change the pricing..and I bet they will sell out or close to it by sailing time..

Jancruz1

[ClaudiaF]

I guess the real reason is that November Weather in the Med can be really poor.

 

Last week in Marbella it was raining and a lot of the Med was suffering.

 

Brian

 

So Brian would that be "The rain in Spain" theory to ship discounts?:rolleyes:

[tiny_traveler_15]

Jan,

I am curious why you think O would still sell out or almost sell out by the time they sail. Is it really possible they could sell out half a ship in a month without dropping their prices and in fact, even increasing their prices as they get closer to sail date? I just don't understand the forces at work that helps that happen - not trying to be smart a**, I truly don't get it. :confused:

BTW, if we missed 5/11 ports on our Aug Medit cruise with O, I would never book a cruise for the fall when the weather is even worse - the whole cruise would end up being 'at sea' days!

TT15

[hondorner]

Let's say it gets as bad as some fear. Let's see -- sail with a full contingent of passengers at half price, all eating and using facilities and filling the laundry with linens and using a full contingent of crew, or sail half empty? Hmm -- does one really have to think about it?

[billie5]

Hondorner,

I am not sure if I understood which answer you were implying. I suspect the size of the crew changes only marginally with a half empty ship -- contracts are long term, although I suppose a few vacations might be arranged. However, what is certain is that bar tabs are a big profit item, as are excursions. I also suspect that Oceania prices are higher in part because as a smaller line, the percentage of the fare devoted to amortization and administrative costs is high, giving Oceania a even larger margin to reduce fares without a passenger representing a loss. So expend more on the wholesale cost of food, versus bar and excursion tabs -- I would surmise that a full ship is more profitable than a half full ship even after a hefty price discount. Otherwise why do all the mainstream lines discount so heavily to sail full?

 

Bill

[hondorner]

Hondorner,

I am not sure if I understood which answer you were implying. I suspect the size of the crew changes only marginally with a half empty ship -- contracts are long term, although I suppose a few vacations might be arranged. However, what is certain is that bar tabs are a big profit item, as are excursions. I also suspect that Oceania prices are higher in part because as a smaller line, the percentage of the fare devoted to amortization and administrative costs is high, giving Oceania a even larger margin to reduce fares without a passenger representing a loss. So expend more on the wholesale cost of food, versus bar and excursion tabs -- I would surmise that a full ship is more profitable than a half full ship even after a hefty price discount. Otherwise why do all the mainstream lines discount so heavily to sail full?

 

Bill

 

I think you're theory works when you have 3,000 people paying a pittance for the fare and a small fortune for all the extras. Cut the fare in half, and you haven't cut much in the total scheme of things -- but it does seem attractive to the masses. It's sort of like the old economics of the Gillette company -- you can give away the razor as long as you can sell the blades.

 

When you have fewer than 700 people in the first place, paying a premium for the fare but not being pushed to buy drinks and having no photographers on board, just for a couple of quick examples, you can't even discount the fare by 10% before you are in the red. My guess is they will cancel sailings, like Azamara, before they discount the fares.

[Wendy The Wanderer]

It puzzles me why they stay in the Med so late--probably they don't want to get to the Caribbean while there is still a chance of hurricanes. November is shoulder season in both cases, so they're playing the numbers I guess.

[lovecruisingtoo]

 

When you have fewer than 700 people in the first place, paying a premium for the fare but not being pushed to buy drinks and having no photographers on board, just for a couple of quick examples, you can't even discount the fare by 10% before you are in the red. My guess is they will cancel sailings, like Azamara, before they discount the fares.

 

With the current economy, many companies consider "marginal pricing". Marginal pricing is what it takes to cover the incremental costs associated with another sale. For example, fuel costs don't change with the number of passengers, salaries don't change, etc. Some costs do vary by the number of passengers but not that many. Since the "fixed" costs will be incurred anyway, you only need to worry about the variable costs (marginal pricing).

 

If you define profit as an increase in revenue over costs, then selling last minute cabins at a deeply discounted price does, in fact, increase your profit (or reduce the loss as the case may be). Why do you think airlines and hotels have last minute deals? It is more profitable to sell additional seats / rooms at a significant discount than to let them go empty.

 

As for canceling sailings, the problem you have with many cruises is the same problem that airlines have. That is getting the airplane / ship to the correct position for the following cruise. Again, you still have the fixed costs so even sailing with many empty cabins is more profitable than sailing empty.

[Paulchili]

I suspect at some point in the future (if things don't turn around) they may consider "shelving" one ship and sailing only the other 2 - much like airlines reduce the number of flights and fill the remaining ones.

This would undoubtedly cause major havoc with cruises already booked, etc but when push comes to shove, they will do what they have to in order to survive (this applies to all cruise lines, not just O).

Let's hope it will not come to that.

[debsjc]

I think end of October and November are lovely in the Med. You can actually get better weather than the summer, as lower temperatures result in less thunderstorms than in July and August and calmer seas.

[hondorner]

With the current economy, many companies consider "marginal pricing". Marginal pricing is what it takes to cover the incremental costs associated with another sale. For example, fuel costs don't change with the number of passengers, salaries don't change, etc. Some costs do vary by the number of passengers but not that many. Since the "fixed" costs will be incurred anyway, you only need to worry about the variable costs (marginal pricing).

 

If you define profit as an increase in revenue over costs, then selling last minute cabins at a deeply discounted price does, in fact, increase your profit (or reduce the loss as the case may be). Why do you think airlines and hotels have last minute deals? It is more profitable to sell additional seats / rooms at a significant discount than to let them go empty.

 

As for canceling sailings, the problem you have with many cruises is the same problem that airlines have. That is getting the airplane / ship to the correct position for the following cruise. Again, you still have the fixed costs so even sailing with many empty cabins is more profitable than sailing empty.

 

I see your point about marginal pricing, but I would think it would apply more to airlines and hotels which don't have to feed and entertain their guests for a couple of weeks or more. Fuel costs and other fixed costs are the same in either case -- reduced fares or reduced passenger load. I also wonder how flexible the staffing is -- they obviously don't need as many room stewards or waiters if the ship is half empty. If they are stuck with the full complement of staff due to contracts, that would change the equation. But, if the marginal income dropped low enough that they take a loss on food service, that changes the equation, also. I just don't know where that point lies. But, there's gotta be a reason why the lower-price lines don't have as good food as Oceania...

 

As far as cancellations, it was reported in another thread that Azamara has canceled an entire season of South America cruises, keeping the ship closer to home. I haven't checked the accuracy of that report.

[DaveFr]

As far as cancellations, it was reported in another thread that Azamara has canceled an entire season of South America cruises, keeping the ship closer to home. I haven't checked the accuracy of that report.

The report is accurate. See: http://www.azamaracruises.com/aboutUs/pressDetails.do;jsessionid=00006kulfkAlwThDuIgxlhy_5sT:12odmenr5?pagename=press_room_details&event_date=2008-01-08&event_type=press_release&sequence_code=A.

 

Dave

[lovecruisingtoo]

But, there's gotta be a reason why the lower-price lines don't have as good food as Oceania...

 

As far as cancellations, it was reported in another thread that Azamara has canceled an entire season of South America cruises, keeping the ship closer to home. I haven't checked the accuracy of that report.

 

To cancel an entire season eliminates the problem of getting the ship to the next location. So that does save money.

 

Look at the "normal" price for an O cruise vs some of the other lines and you will see one of the reasons O has better food. You have to cater to the class of people you want to attract.

[StanandJim]

You have to cater to the class of people you want to attract

 

Lovecruisingtoo

 

We agree with you, and admire your courage for making such a statement. Discussing classes of people just isn't done in todays world.

Nontheless, you are correct. The class of our fellow passengers is just as much a reason that we choose O as the food or the ambience.

 

This goes up as well as down, mind you. Have you ever been stuck in a two hour conversation about Burmese cashmere with an ex vicountess from Leeds? We were, on the Silver Cloud. :mad:

[caribbeansun]

Marginal pricing, yield management - same idea.

 

If the only variable cost is food and perhaps the cost of servicing the additional cabin assuming fuel, staffing and most other significant costs are fixed there is decidedly additional profit from selling a discounted fare provided it still exceeds the variable cost. Lets not forget those additional passengers will also likely purchase drinks and may use excursions which reduce the variable cost further.

 

I see your point about marginal pricing, but I would think it would apply more to airlines and hotels which don't have to feed and entertain their guests for a couple of weeks or more.