Cruise Lines Should Target Their Most Profitable Customers

[LHT28]

 

The gambling thing is another story. TRUE high rollers (not me) who regularly gamble over $10K per cruise, should get their free cruises, etc., just like a casino hotel.

 

JMO

If you can afford to drop 10K in the cruise line casino then you can afford to pay for your own cruise.:)

 

The casinos are not run by the cruise line they are contracted like the shops, spa , art auctions etc...

Lyn

[wripro]

Personally, I find this whole discussion very ugly.

[CintiPam]

Personally, I find this whole discussion very ugly.

 

Amen!:)

[Veronica13]

Personally, I find this whole discussion very ugly.

 

But you're reading it. :confused:

[Huddler]

Your concept is an interesting one, but I wonder what spending you would want Oceania to include in deciding the High Spender.

 

For example, would you want total dollar on shipboard account?

Or, total dollar on shipboard account + cost of cabin?

Or, total dollar on shipboard account + cost of cabin + cost of airfare booked through Oceania?

 

In other words, what charges are you considering?

 

On our last cruise we had a rather large Medical Center bill. Due to the illness, we did not have our usual bar bill and Shore Excursion bill. BUT, the bill was the highest we have ever had on any cruise.

 

Would we qualify as High Spenders for your theory?

Each line would develop its own criteria for what is included in your overall total average "spend". And it would differ from line to line depending on what pieces of their on board business was outsourced. And portions of it could be weighted. obviously, cabin type needs to be considered, but maybe not as much as other onboard spending. The bean counters would have to come up with the appropriate equation.

[Huddler]

Personally, I find this whole discussion very ugly.

Why?

[Huddler]

So what you are saying

If you have done multiple cruises but do not drink or gamble you should not get any perks compared to someone who has sailed more than once on the same line but spends wildly, drinks & gambles??;)

I didnt say that at all. Again, the cruise line should retain their existing loyalty programs. That way repeat customers continue to enjoy the benefits based on their loyalty to the line regardless of average spend. But have hosts personally reach out to the highly profitable customers to establish a personal relationship with him. The host should discover where the big spender wants to go next, and offer him comps/perks to come do that trip onboard that line. And reach out to the highly profitable guy occasionally with special deals and comps. Make him feel like a VIP whose business is really coveted by the line. This is essentially the casino model.

[LHT28]

While this whole thread is interesting (for lack of a better word)

I find it highly unlikely that any cruise line is going to implement anything on your wish list!;)

[Huddler]

While this whole thread is interesting (for lack of a better word)

I find it highly unlikely that any cruise line is going to implement anything on your wish list!;)

I tend to agree with you. But we are in unchartered economic waters. Sometimes desperate times call for desperate measures. If the cruise lines want to drive bottom line profitability, they obviously must either increase revenues or decrease expenses. To increase revenue they have to either increase fares, which could be disasterous for their overall occupancy rates in this economy. Particularly when you consider the vastly increased competition with so many more ships coming online. So, they must drive more revenue by getting more non-fare dollars out of each customer while onboard. If you get more customers whose profile includes being a high profitability cruiser onboard, then you are more likely to increase that metric. How else can you get more of those type customers on your ship? Reach out to them!

[minz56]

I'm a bit late to this thread but thought I would have my say...

 

I do think cruise lines should recognise "loyalty" but they need to do it in a much better way. At the moment it seems that most just simply base the level of loyalty you qualify for based on the number of cruises you have taken with them.

 

As the original poster said this doesn't take into account onboard spend. But that isn't the only measure of "loyalty". The penny pincher who saves money but takes 2/3 cruises a year will be just as valuable as the person who takes one in a veranda cabin and spends big time on board.

 

So it seems to me that the best way to measure it is to base it on dollars spent based on the cruise fare, air, onboard spend (and allowing for incentives like onboard credit and prepaid gratuities).

 

That way the penny pinchers might score as highly as the big spenders based on their cruising pattern.

 

Most cruise lines have different levels within their loyalty programmes (do Oceania?) and the top tier really does nees to be exclusive and they really do need to look after these people. All to often it seems that a platinum card means nothing more than a free wine tasting or extra time on the internet.

 

Loyalty programmes can work but the way they are structured at the moment there is inevitably going to be people that don't feel adequately recognised as evidenced by this thread.

[caribbeansun]

Disposable income doesn't equate to quality, your post seems to be a case in point.

 

 

For me, just RAISE THE PRICES and keep the quality. When you do that, you will naturally have people with more disposal income on board.

[Paul123]

I thought this little piece below was of interest following on from the Cruise Industry Conference held a few days ago in Miami which all the big wigs from the industry attended.

 

Interesting that they expect occupancy levels to be 102% this year!! Also that they anticipate passengers levels to be 2.6% up on last year. What crisis do I hear you say?

It appears that the cruise ship industry know what to do to stay afloat and that is to reduce prices and give more OBC to keep pax numbers up. It appears to be working according to my TA who has been flat out with bookings. She said that it tends to be the shorter cruises with heavily discounted prices that are really moving.

I'm on a HAL 10 day cruise on the near 2000 pax Zuiderdam in April and it is sold out. The big test will come with the new RCCL ship 'The Oasis of the Seas' with is near 6000 pax capacity and continuous 7 day cruises are planned from December 2009 right through 2010.

Never mind getting the high rollers, the industry just want to put bodies in beds and get those cabins filled-up. Once ships are full crew get properly remunerated and overheads are covered including all those very high fixed costs that cruise ships must pay for.

 

Cruise industry says “value” will help it stay afloat during economic storm

 

Cruise executives at the annual Seatrade Cruise Shipping convention in Miami said deteriorating consumer confidence, a recoiling in discretionary spending and widespread job loss have hurt their bottom line, forcing them to slash fares and pump up onboard spending bonuses just to stay afloat.

“Things are not as rosy as we’d like them to be, but we’ve recovered from adversarial times before and we will again,” said Rick Sasso, chair of the Cruise Lines International Association (CLIA) Marketing Committee and president and CEO of MSC Cruises USA. Sasso noted that the industry continued to grow during past downturns, including the Iranian revolution and oil crisis in 1982, 9/11 and the Iraq war.

Worldwide, about 13.35 million passengers are expected to cruise in 2009, up about 2.6 percent from last year. But growth in 2009 is forecast to be the weakest in five years as the recession holds down consumer spending along with the revenues major cruise lines.

“We are facing unprecedented challenges,” said Kevin Sheehan, president of Norwegian Cruise Line.

Despite the looming economic challenges, ships are expected to sail at a 102 percent occupancy rate this year, said Sasso. Ships can exceed 100 percent of their capacity when some staterooms carry more than the standard two passengers.

This year, 14 new ships will be delivered to CLIA members for a net berth capacity increase of 6.5 percent or 18,031 beds — double the number introduced in 2008. Among the new ships debuting this year is Royal Caribbean’s 220,000-ton Oasis of the Seas, which will be the world’s largest cruise ship when it begins sailing from Fort Lauderdale in December. The massive vessel will carry 5,400 passengers and 2,165 crew and offer seven distinct ‘neighborhoods,’ including a Central Park, and an open-air area in the ship’s center with activities that include the first-ever zip-lining at sea.

Cruise value

Despite the recession, the cruise industry is holding on and executives say it will emerge as healthy as it always has during down periods because the value of cruising will get the industry through hard economic times. Executives cite recent travel agent studies that show cruises rank highest in consumer interest and perceived value compared other vacations and is the top reason consumers will be motivated book a cruise.

 

“The cruise industry is poised to get through these hard times and will come out stronger in the end,” said Sasso, stressing the value of cruising as the reason. He added that the “value component” is a more powerful message today than ever before. Still a number of executives said they have been forced to slash fares and expand onboard spending bonuses to avoid empty staterooms.

[suec12]

It is interesting (and hopefull) that the cruise industry exec's are hopefull. I have to say tho, if you get a decent base price on a cruise and are thrifty onboard, a cruise can be a great value vacation - esp. when you price hotel rooms in some destinations. Plus the cruise includes so much that could cost you big bucks on a land trip. No wonder so many families have started cruising.

 

And Huddler - I actually think your original suggestion was valid - don't TA's usually give a perk or two to their repeat clients? Even a small acknowledgement like a welcome snack basket or bottle of wine with a note, would probably be appreciated. It wouldn't have to be a large expense, just an acknowldgement that repeat business was appreciated.

[wripro]

If one really wants to know, the reason I find it ugly is that the implication of the OP is that he is requesting a "retention bonus" because without his spending the company would not do as well. Where have we heard that before? And it implies that someone who spends flagrantly is defacto more important. Come on, people go on a cruise to have a good time. Everyone is entitled to spend what he or she wants and everyone is entitled to be treated equally once they purchase a ticket.

[Huddler]

If one really wants to know, the reason I find it ugly is that the implication of the OP is that he is requesting a "retention bonus" because without his spending the company would not do as well. Where have we heard that before? And it implies that someone who spends flagrantly is defacto more important. Come on, people go on a cruise to have a good time. Everyone is entitled to spend what he or she wants and everyone is entitled to be treated equally once they purchase a ticket.

First and foremost, the cruise industry is just that, and industry. All cruise companies are for profit concerns and are in business to make money. If they dont make money, they go out of business eventually. And, if cruise companies dont have any income streams other than cruise fares, they will not be profitable according to Peter Greenberg. They must have additional modes of revenue generation to supplement fares if they are going to have a positive bottom line. And the more people spend on these additional revenue sources, the more profit for the company. So, those who spend more onboard will affect profitability in a positive manner. Those who dont spend, might not have a negative impact, but they certainly arent what the cruise companies really covet. Since the big spender is more profitable, they are by definition more important to the company. This is undeniable fact. How this can be construed as ugly is beyond me, unless you live in fantasy land rather than a capitalistic society.

[Veronica13]

First and foremost, the cruise industry is just that, and industry. All cruise companies are for profit concerns and are in business to make money. If they dont make money, they go out of business eventually. And, if cruise companies dont have any income streams other than cruise fares, they will not be profitable according to Peter Greenberg. They must have additional modes of revenue generation to supplement fares if they are going to have a positive bottom line. And the more people spend on these additional revenue sources, the more profit for the company. So, those who spend more onboard will affect profitability in a positive manner. Those who dont spend, might not have a negative impact, but they certainly arent what the cruise companies really covet. Since the big spender is more profitable, they are by definition more important to the company. This is undeniable fact. How this can be construed as ugly is beyond me, unless you live in fantasy land rather than a capitalistic society.

 

You're tenacious Huddler!!:D

I'm not sure what's more fun to read - this thread or the one that is still going on arguing about bottled water.

[lovecruisingtoo]

If you are to give incentives based on spending, that is completely different than giving incentives based on profitability. As other posters have said, some of the areas are run by outside companies and their cash intake may, or may not, give O any increased revenue. Also, if a person spends $1,000 in the gift shop, how much of that is really PROFIT (that is the money that is left over after paying for the merchandise, clerk salary, space, etc)? Maybe 20%? This $1,000 expenditure would therefore equate to a whole $200 in increased profit. However, if someone pays an additional $100 / person in cabin fees, this is 100% profit.

 

Based on this, you can see that just looking at expenditures is not a measure of profitability. If you lower the cabin price for a "high roller" (to use a Vegas term) you are probably reducing overall profit instead of increasing it.

 

I believe that the cruise lines have done the trades and have found that rewarding loyal customers to come back is the best way to make a profit.

[Huddler]

If you are to give incentives based on spending, that is completely different than giving incentives based on profitability. As other posters have said, some of the areas are run by outside companies and their cash intake may, or may not, give O any increased revenue. Also, if a person spends $1,000 in the gift shop, how much of that is really PROFIT (that is the money that is left over after paying for the merchandise, clerk salary, space, etc)? Maybe 20%? This $1,000 expenditure would therefore equate to a whole $200 in increased profit. However, if someone pays an additional $100 / person in cabin fees, this is 100% profit.

 

Based on this, you can see that just looking at expenditures is not a measure of profitability. If you lower the cabin price for a "high roller" (to use a Vegas term) you are probably reducing overall profit instead of increasing it.

 

I believe that the cruise lines have done the trades and have found that rewarding loyal customers to come back is the best way to make a profit.

I dont disagree with much of this. The cruise line analysts would have to develop a formula that evenutally "rates" you as a customer. A dollar spent in the gift shop for example might be worth twice as much a dollar spent on an excursion. A dollar spent on alcohol might be equal to 3 dollars spent on the cruise fare. It will differ by cruise line depending on profit margin, which services are outsourced, etc. Believe me, they already know how much they make on everything you spend onboard. Its just a matter of analizing each passengers individual spending habits to come up with a score of their profitability.

[Long Reef]

Oh dear - I'm afraid I may be an "ambience changer" - I smuggle booze on, I don't gamble, I'll drink any free drink I can score - I was afraid Oceania might be too upscale for me! I'm a penny pincher - my travel is my indulgence. I'll just have to hope the other Oceania travelers can tolerate me.

 

 

I will be going on my first cruise and I too am starting to wonder whether I will be spending my time worried about how I am being judged and whether I am spending in the 'right' areas. I am really becoming nervous about it now.

[A Knitter]

I will be going on my first cruise and I too am starting to wonder whether I will be spending my time worried about how I am being judged and whether I am spending in the 'right' areas. I am really becoming nervous about it now.

 

Please don't feel nervous. This November will be my third O cruise and close to my 25th cruise. I plan and budget a trip that suits me. If I chose a A or PH cabin that is what I want, not worried about what others think or judge me for the color of my cabin card. I am on a cruise to have fun. Oceania treats me like I should as they do with every passenger. I like to choose my cabin rather than a guarantee. Everyone has their thing. I spend more than wait for a upgrade but that is my decision. I don't scrimp on spending because I feel already accounted for it. The cruise is for my benefit. Oceania gets my money, I get a well deserved vacation and everyone should be happy. My loyalty incidently is to my TA who in turn rewards me for my Loyalty to her . Usually my tips are prepaid and an equal amount usually more is placed on my account. That doesn't exclude the normal benefits wine, fruit, etc. I have been in cabins on previous cruises that I shared with the fish, I was so far down. I wasn't treated any differently by the staff/crew. Please enjoy your cruise. I am sorry that this has happened. :)

[Huddler]

I will be going on my first cruise and I too am starting to wonder whether I will be spending my time worried about how I am being judged and whether I am spending in the 'right' areas. I am really becoming nervous about it now.

I can only assume you are being saracastic, because why would anyone care what perfect strangers thought about their spending habits?

[hondorner]

I can only assume you are being saracastic, because why would anyone care what perfect strangers thought about their spending habits?

Uh -- because it might affect the ambiance?

[Huddler]

Uh -- because it might affect the ambiance?

So you care about my ambiance? I am thoughtful and polite to others(its part of my southern upbringing). I dont disturb others, dont make alot of noise, but am friendly and gregarious. I talk freely with strangers, its my personality. I meet dozens and dozens of people on every cruise, many of whom I keep in contact with long after the vacation. But the last thing I care about is how much YOU spend. I dont even care how much I spend. I do like to see the casino and bar's filled with people. But if you buy 1 drink instead of 5, its not my concern.

[Veronica13]

So you care about my ambiance? I am thoughtful and polite to others(its part of my southern upbringing). I dont disturb others, dont make alot of noise, but am friendly and gregarious. I talk freely with strangers, its my personality. I meet dozens and dozens of people on every cruise, many of whom I keep in contact with long after the vacation. But the last thing I care about is how much YOU spend. I dont even care how much I spend. I do like to see the casino and bar's filled with people. But if you buy 1 drink instead of 5, its not my concern.

 

LOL, Okay. I'll chime in. I love how some people put their judgements and religious views and disguise them otherwise.

 

Bottom line, a cruise does NOT MAKE A PROFIT on your "ticket price". The cruise lines profits come from what you spend elsewhere, whether buying a bible in the gift shop, or knocking down a few scotches. Those who think "hey, I bought my ticket, I'm as valuable as you are" are being naive. It's simple profit and loss.

 

OT- I love how I predicted this day would come. Now the smoking police have no one to force their judgements on, so there is now a thread about people being horribly offended by perfumes and colognes.

 

We are an intolerant society and it's a slipperly slope when you begin to judge other's behavior because it doesn't fit your description of "proper"

 

NOW - Huddler is making a point, but no one is listening. It's not about what you spent it on, but that you SPEND.

[StanandJim]

Bottom line, a cruise does NOT MAKE A PROFIT on your "ticket price". The cruise lines profits come from what you spend elsewhere, whether buying a bible in the gift shop, or knocking down a few scotches. Those who think "hey, I bought my ticket, I'm as valuable as you are" are being naive. It's simple profit and loss.

 

OT- I love how I predicted this day would come. Now the smoking police have no one to force their judgements on, so there is now a thread about people being horribly offended by perfumes and colognes.

 

We are an intolerant society and it's a slipperly slope when you begin to judge other's behavior because it doesn't fit your description of "proper"

 

NOW - Huddler is making a point, but no one is listening. It's not about what you spent it on, but that you SPEND.

 

 

Veronica,

 

When I started reading your post, I was very inclined to disagree with you, but you are RIGHT.

 

The smokers appear to have been beaten into submission as have the Single cruisers (who were once a massive force, particularly on Cruise Critic).

 

On the Oceania board, our most recent contretemps in the money wars

occurred when the Cabanas were installed along the forward perimeter of Deck 11

 

There were outraged cries from passengers who considered the forward views sacrosanct. Dire predictions of Panama Canal Rebellions were tossed about.

 

We went through the same thing with corkage fees.

 

Perhaps, the problem is that where some of us see privelege, others see loopholes........