Seabourn Pricing for 2010

[bldsld]

I'm looking at a 21-day Grand Voyage in 2010 on the Spirit, commencing May 29, that looks interesting, Rome to Venice. I actually prefer the port-intensive itineraries to the crossings, and this looks great. However, the pricing is much higher than in the past. As an example, an A Suite for 21 days is $21,300 for the cabin, which is 50% off the brochure rate. That computes to $1014.29 per day, which is high for a 50% off Grand Voyage, for the lowest-priced suite. Add in $12,000 minimum for business class airfare from San Francisco (the airlines are also out of control on pricing), and you have a 3-week cruise that will end up costing around $35,000.

 

I realize that the European destinations are more expensive for Seabourn to operate in. However, the dollar is now much stronger against the Euro, Seabourn has likely locked in some attractive fuel contracts, and the global economy is in the tank.

 

What is the demographic that Seabourn is looking at to fill the ship? I am perplexed, as this is a cruise I would LOVE to do.:confused:

[TLCOhio]

I realize that the European destinations are more expensive for Seabourn to operate in. However, the dollar is now much stronger against the Euro, Seabourn has likely locked in some attractive fuel contracts, and the global economy is in the tank. What is the demographic that Seabourn is looking at to fill the ship? I am perplexed, as this is a cruise I would LOVE to do.:confused:

 

Our travel agent just got back from a through the Panama Canal cruise on Seabourn. Her sense in talking with the Seabourn staff on the ship is that they are not as immediately worried or aggressive on making 2010 pricing better . . . for right now! Their focus (along with other lines) is about trying to fill up the ships for 2009. Lots of price cutting and special "incentives" right now for this summer in Europe, even with the high-end lines like Crystal, Regent, Seabourn, etc. She expects by fall that they will get more "realistic" for 2010 after they can better sense how long recovery will take. Clearly fuel costs and the dollar value has gotten much, much better than it was last summer.

 

Enjoy! Terry in Ohio

[bldsld]

It pays to wait for 2010.

[surfersgirl]

Hi, The same cruise is the same pricing for 2009.

Imagine converting the pricing from the Australian $ at the moment.

It would cost us $32,770 ($1560) per day for that cruise before we add on Business Class Air airfare of a minimum of $15,000 which means close to $48,000 for a 3 week trip. It is no wonder that we take long cruises.

[bldsld]

Same here...we won't do less than 3 weeks for that reason.

[Keith1010]

I agree with Terry.

 

At this point their focus is on filling the ships in 2009. Also, it is easier to start at a higher price, see what the demand is based on this price and then lower the price if necessary. It also adds to the psychology that folks are getting a better deal.

 

In the end, I am sure that the price will be lowered on most of the 2010 fares unless there is some unexpected lift in the economy and since things are likely to get worse before they will get better I would place my odds on prices being lowered.

 

Keith

[cruiseyguy]

Cruise lines depend on advance booking deposits to help cover current operating expenses. If advance bookings for 2010 are effectively shut down by discouragingly high itinerary prices (and if current bookings are as shallow as they appear to be) then Seabourn runs the risk of a cash shortage (which could place the company in a risky position but for the deep pockets of parent Carnival).

[Keith1010]

Cruise lines depend on advance booking deposits to help cover current operating expenses. If advance bookings for 2010 are effectively shut down by discouragingly high itinerary prices (and if current bookings are as shallow as they appear to be) then Seabourn runs the risk of a cash shortage (which could place the company in a risky position but for the deep pockets of parent Carnival).

 

With all due respect;

 

Seabourn's been around a long time and this is their area of expertise. I am sure they are fully aware as to what makes the most sense in terms of setting their iniitial pricing. I've looked at other lines such as Silversea just to get a sense of their 2010 pricing approarch and they seemed to take a similar approach. (eg., they have not discounted the cruises in 2010 as they have in 2009).

 

The focus of the Cruise lines is really on 2009. They need to fill the ships now and then in a few more months they can focus on 2010 and beyond.

 

They are all discounting 2009 cruises much more than they would like. They hope to avoid that in 2010 but may have no choice but to also discount them as they have in 2009. I am sure they will take a wait and see approach as no one knows for certain what the economy will bring. It is far easier to lower the price.

 

Carnival, their owner, has gone through good and bad economic times before so I am sure that they know what makes best sense in terms of their strategy and also how to best manage their cash flow situation. Seabourn is just one of many cruise lines they operate.

 

Keith

[bldsld]

Keith, as Surfersgirl pointed out, the pricing is the same in 2009 for the cruise I mentioned. That one occurs in May, so it is baffling to see the price increase in this economic environment. I guess that explains why the website shows so much availability at this time. Perhaps prices will be lowered closer to sailing date.

[Keith1010]

bldsld, my comments were more about all of 2010 rather than specific to one sailing.

 

There is no question that some cruises on all of the luxury lines are going to have a lot of availabilty. We know someone who is sailing on one of the Regent ships right now and it sounds like it is very quiet as occupancy is quite low.

 

Keith

[cruiseyguy]

Keith1010-Yes, I know Seabourn has been around a long time; so have GM, Ford & Chrysler. Are you "sure" they know what makes best sense in terms of strategy too?

[Keith1010]

Keith1010-Yes, I know Seabourn has been around a long time; so have GM, Ford & Chrysler. Are you "sure" they know what makes best sense in terms of strategy too?

 

cruiseguy, in my humble opinion I have a lot more faith in Seabourn and their parent company than I do GM, Ford or Chrysler. Not to say they don't make mistakes too. But I do think they know what they are doing in terms of where they start the pricing.

 

Very few people predicted the severity of the economic situation so unless you have a crystal ball it is difficult to set pricing for 2010. But they will monitor sales and adjust pricing accordingly.

 

Now am I sure they know everything. The answer is no. But I know they can adjust pricing much quicker than GM, Ford or Chrysler can make physical changes to the way they build cars. :)

 

Keith

[cruiseyguy]

Keith1010-Do you have any personal expertise in the cruise industry or factual basis for your "faith" in Seabourn and Carnival? You express you views with such certainty that it would be helpful to know the basis for them.

[Keith1010]

Keith1010-Do you have any personal expertise in the cruise industry or factual basis for your "faith" in Seabourn and Carnival? You express you views with such certainty that it would be helpful to know the basis for them.

 

cruiseguy, if you are asking have I worked in the cruise or travel industry the answer is no.

 

My expertise in cruising comes from my love of cruising, our many cruises, and all of the reading I have done about the industry.

 

For better or worse the management of Carnival helped to transform the cruising industry. They understand profit and pricing. On some lines (eg., Carnival) their approach is to have low prices to fill ships and then to generate signficant revenue which they do from on board sales. My understanding is that they generate more on board sales revenue than any other cruise line.

 

They take different approaches for each of their products.

 

And they do have the benefit of size. They could sustain a loss in one of their products (eg., cruise lines) and offset it with a profit from another line in order to maintain their long term pricing objectives.

 

In my former life I had responsibilities for both short term and long term planning and implementation for a large company that has nothing to do with travel. But at the same time there are many similarities.

 

As I said if economic conditions persist it is easier for them to lower prices if need be. At the same time, their challenge is to price the product accordingly so that they can remain profitable while not impacting the integrity (eg., the quality) of the product.

 

While we would all love to pay lower prices, I think most of us want the product to remain a high quality product.

 

This is certainly not an easy task in this environment and no one or no company has the perfect Crystal ball.

 

Wasn't it just last summer when people were saying that oil would be $300.00 per barrel? Or as recently as a month ago the so called experts were saying that the Euro would reverse its trend vs. the USA dollar but look at it today. And it was not too long ago that housing was still exploding.

 

Keith

[TLCOhio]

Wasn't it just last summer when people were saying that oil would be $300.00 per barrel? Or as recently as a month ago the so called experts were saying that the Euro would reverse its trend vs. the USA dollar but look at it today. And it was not too long ago that housing was still exploding. Keith

 

Great points and truths form Keith, as usual.

 

Oil today per Wall Street Journal: "Light, sweet crude for March delivery settled $2.58, or 6.9%, lower at $34.93 a barrel on the New York Mercantile Exchange."

 

Also as per WSJ later afternoon: "The euro fell to $1.2563" and "The U.K. pound was at $1.4260" Last summer getting ready to start our late July Baltics cruise, the Euro cost us $1.60 and an English Pound nearly $2.00.

 

Cruise lines are hit by what their customers are paying when in what currency, BUT, also by what they contract to pay their employees. Many of the cruise staff last year were feeling pain as the shrinking dollar value was hurting them badly on what they expected to make during these long cruises. Now, that dollar looks stronger and better! BUT, for how long?

 

THANKS! Enjoy! Terry in Ohio

[fPetrarca]

I'm not so sure these "truths" are relevant to the situation many cruise lines now find themselves in nor are prior business models particularly relevant to the current economic crisis. A number of lines, including Seabourn and parent Carnival, committed to the building of multiple new large ships over the next few years, incurring considerable debt in doing so. They did it in the belief that the cruising population would grow exponentially as well-to-do baby boomers retired. Unfortunately, many of these boomers have lost a considerable chunk of their retirements savings and likely will not be cruising as much nor as expensively as was anticipated. But the debt incurred by these lines must be serviced and normal operating expenses must be paid. How and whether cruise lines can manage their respective burdens in a period of rapidly falling demand while greatly increasing overall capacity will be one of the most interesting developments over the next year.

[bldsld]

I don't think it is fair to compare Seabourn to the auto industry.

 

When I started this thread, I was merely pointing out something that I found to be odd, in the current economic crisis: the raising of prices when many costs are actually going down, and consumers are less flush with cash. However, I would expect that Seabourn, like others, will need to adjust pricing based on falling demand. As we all watch our net worth fall, with no appreciable improvement anywhere in sight, people will be more inclined to look for value, however that may be defined. It is just strange, to me, that prices would be increased, as opposed to kept flat. It will likely reduce demand, and make capacity issues more difficult to plan for.

 

Just my humble opinion....

[fPetrarca]

I think the auto industry may have been cited in response to Keith 1010's point that Seabourn knows what it is doing because it has been around a long time. In other words, longevity does not always equal wisdom, as exemplified by the auto industry.

[Keith1010]

I think the auto industry may have been cited in response to Keith 1010's point that Seabourn knows what it is doing because it has been around a long time. In other words, longevity does not always equal wisdom, as exemplified by the auto industry.

 

In the end, Seabourn and the other cruise lines will make the necessary adjustments as they have done in the past.

 

Hopefully most will be able to ride out this storm. But some might not survive. The larger ones have the best chance of surviving a severe downturn in the economy.

 

Post 9/11 cruise lines had to make adjustments to prices and that is what they did. But, their approach was to do it for the immediate cruise year and then went back to adjust prices where needed for the cruises that were way in the future.

 

That is the same situation at this point in time.

 

The focus for many of the cruise lines is on 2009 because in the end that represents the cruises that they are trying to fill. I am sure that they will refine 2010 cruise as necessary in a few months but that is less pressing at this point in time. What is pressing is 2009.

 

It is hard enough to predict what will happen tomorrow yet figure out what will happen 10-22 months from now which is 2010.

 

Other cruise lines have taken the same approach for 2010. Silversea is one of them.

 

Will they need to adjust? Probably so. Do they have to do this now. I don't believe so in my humble opinion.

 

The good news for Seabourn is that they are owned by a strong parent company.

 

Now, does the experience of Carnival and Seabourn mean that everything they do is correct and that they do not make mistakes? The answer is no. But to say that experience is bad because certain companies that have been around for a long time have failed and that means that any company that is exerienced is lumped in with those other failures makes no sense to me.

 

Bottom line. I don't see where it is necessary in the month of Feburary of 2009 for the cruise lines to start significantly reducing their 2010 prices for all of 2010. They have time to make the decision. Yes, they need to be concerned about prices for this year but they do have time for 2010.

 

And in the end, they will make the decision in due course. I don't try to second guess those decisions.

 

And cruise lines are very different then the auto industry. The decisions that the auto industry failed to make were ones with lead times of many years. The pricing decisions that the cruise lines make are ones that don't require the length of time to make.

 

But, pricing decisions can lead to other implications which is the quality of the product. So, be aware that if the cruise lines move too rapidly to cut costs, that it can impact the quality of the product.

 

In the end, these are big decisions to make. And my point is that I do believe that many of the folks from the cruise lines who have this responsibility will do what makes the most sense to their viability. Certainly we do not have this expertise nor do we have the information in front of us, (eg., level of bookings, how this compares to years past, margin information and so forth) to know what makes the best sense.

 

But be careful what one wishes for because as I say lower prices can eventually impact the product.

 

 

Keith

[bldsld]

What one wishes for is that the economy will turn around, and we will all be in a position to pay full price. :)

 

Do I think that will happen: no. The reality is that the people who were most impacted by the economic meltdown were investors, which includes anyone with a 401(K). This is probably the exact demographic cruising the luxury lines. We will need to see some "value pricing" in order to commit to cruising, as the truth of the matter is those of us posting on this board are not likely to cruise on Carnival or NCL, regardless of the fact that they may advertise $500 sailings! Instead, we may plan a week at a Ritz-Carlton resort, instead of flying to Timbuktu to take a $35,000 hit. If we can't plan in advance because sailings are priced at $1000 or more per day, we're going to be "Puttin' on the Ritz" ! It would thus be in Seabourn's best interest to recognize the impact of this horrid economy, and price fairly, but realistically. A last-minute 60% off discount isn't going to fill the ships, when air is so difficult to get.

 

Anyway, this is just an academic discusssion. Seabourn is still the best product out there. We're just being cautious in these very difficult times.

[fPetrarca]

The current situation is not like post-911; it is unique. Keith-Your long discourse contained many generalities but failed to address some of the specific issues confronting cruise lines now--most importantly, increased capacity in the face of falling demand. I don't think anyone is suggesting that Seabourn discount 2010 prices now. Rather, they question the wisdom of setting prices so high so as to discourage future bookings. What in the current economy justifies those prices? Has Seabourn management reached too far? Soothing statements to the effect that management knows best really don't help us to understand the situation better but only serve to cut off further inquiry.

[Keith1010]

There is not much more to say on this from my end, fPetaraca.

 

I do see the comments that you made about that no one is saying that they should drop 2010 prices now yet they are setting prices too high to impact future bookings to be in contradiction.

 

Only Seabourn knows what their future bookings look like as we certainly don't have visibility to that. And they know how this compares to previous years. And they know what their fill rate needs to be. And they know what their pricing needs to be to make money but to also maximize bookings. I don't think any of us has visibility to this data. They also know what their leadtimes are for adjusting pricing. (eg., how far in advance of sailings they need to do this and what impact that has to the bookings already in place)

 

So, it is my belief that they like the other cruise lines will fine tune pricing as needed. Regardless, of what they do, they like probably many other businesses will see margins drop over this time. The challenge is to do all this while being able to make sufficient margins to get though this economic disaster.

 

All I am saying is that they are best positioned to figure this out. We can speculate all we want about pricing but it is those who run the business who likely know what makes sense rather than any of us who do not have visibility to the statistics.

 

While I certainly realize that this current situation is not the same as 9/11 there are many similaraties. Following 9/11 for the next couple of years most cruise lines had to drop prices from pre-9/11 levels to fill ships. And even with that many ships ran well below occupancy levels. Sebourn was one of those cruise lines. Back then many of the cruises were not full as they were a couple of years later. They all had to figure out how to balance this as they now find themselves having to do today.

 

And back then the cruise industry was actually adding more capacity than they are today. Not Sebourn with the addition of the new ships starting this year but other cruise lines.

 

Anyway, each cruise line will determine what they need to do as it relates to pricing. Hopefully they will all succeed and we won't see any failures but it is way too early to speculate. And, hopefully as they adjust pricing the product will not suffer Time will tell.

 

Anyway, there is nothing more to be gained by providing additional comments. All of this is my view. Some will agree, others will disagree and still others will not have an opinion.

 

Keith

[cruiseyguy]

Although threads like this can sometimes get a little testy I personally find them much more interesting than endless discussions about dress codes, parties and personal bons mots. There are few places on the internet where individuals can learn about cruise line business matters and CC is one (albeit limited). A better knowledge about how things may play out with the various lines can help all of us make wise decisions about our future cruise plans.

[Jaffa]

This is an interseting thread and very relevant.

 

Some points l would like to add for no other reason than they show certain trends.

 

My mom and dad have stayed in contact with several senior staff they met on there Legend cruise last year. One of these contacts is transfering to the Odyssey in June. Comments made to them make reference to a 30% cancellation rate for the full 2010 world cruise.

 

The PAII from Silversea is being taken out of service for 3.5 months from FEB to MAY 09 due to bookings at below 35%.

SS ocupancy levels being reported from those on board over quite a number of cruises being below 60%. Out of the 5 lux cruise brands SS has the steepest discounts presently. But like Seabourn have increased their 2010 inventory prices by around 25% in the majority of cases.

I agree with the above posters this is just absurd.

 

Both the Regent and Crystal boards are reporting much emptyier ships than the norm and many of the repeat cruisers from all boards are stating reluctance to book for 2010 regardless of price.

There are many threads now where cruiseline regulars are now planning land vacations close to home.

 

Keith,

 

The only point that l disagree with you about is the loss of quality if discounting occurs. The profit margins the lux lines enjoy are pretty huge, just take a look at the published finance reports and the company credit ratings. They have all been enjoying some exceptional good times. Hence all the newbuilds, and company expansions. They are all as greedy as one and other.

I know for a fact that SS is presently having lots of complaint problems re there plans for even more paid dinning venues on the new build Spirit.

 

My personal opinion:

 

The cruiselines are of the opinion that the downturn will be short lived. I think they are wrong and all evidence supports this thinking. The cruiselines seem to have there heads stuck in the sand or they are playing their loyal customers a good hand of bluff.

The cruiselines/company's are like all other industry's and will find it almost impossible to borrow and recieve credit, regardless how good there asset bases are. There is nothing unique about cruiselines that will see them have access to borrowed funds when other industry's can not. Cashflow will be king in late 2009 and through 2010.

Forward bookings are imperitive.

 

Carnival has so much new capacity builds on the books for the next 3 years capital raising costs and debt will continue to drain the company at an alarming rate. Have you been watching there shareprice lately?? Investers are drying up!

As bookings are also drying up so does cashflow and more presure is placed on borrowings that won't be found. They can only pretend for so long.

 

The lux lines are so hellbent on retaining price level profits at all costs, that by the time they do realise they will have missed the boat.

[TLCOhio]

This is an interseting thread and very relevant. Both the Regent and Crystal boards are reporting much emptyier ships than the norm and many of the repeat cruisers from all boards are stating reluctance to book for 2010 regardless of price. There are many threads now where cruiseline regulars are now planning land vacations close to home. The cruiselines are of the opinion that the downturn will be short lived. I think they are wrong and all evidence supports this thinking.

 

Great and interesting discussion flow! It's informative and helpful to understand more on how this business operates in order to make better consumer decisions. Keith brings up many important factors, including that the "MARKET PLACE" makes those ultimate decisions. Maybe they have ordered too many costly new ships. They'll have to adjust. Maybe a hedge fund paid too much to buy a cruise line. They'll have to adjust.

 

On an earlier discussion board a year or so ago, an important point was made. Cruise ships are mobile. Adjustment on locations and markets can be made. With a land-based resort, hotel or facility, it is where it is. You can't move or adjust very quickly or easily. Maybe for some period of time some ships will need to be temporary hotels at peak time in some high-demand areas. Maybe that ship will need to be temporary housing after a hurricane, etc. Those options are not always the most profitable, but there are some options in what and how smart owners and managers can do to adjust to the market demands. Consumers are smart and will help push companies to make the right decisions. Short-term, the market place can be messy, but long-term, it does force better economic decisions.

 

THANKS! Enjoy! Terry in Ohio