Tag Archives: Travel agents

RCCL execs pleased with pricing-discipline policy

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Royal Caribbean’s campaign to curb last-minute deep discounts is off to a good start.

So say top execs at Royal Caribbean Cruises Ltd., who had several things to say about what they’re calling Royal’s “price integrity policy,” in talking to Wall Street analysts last week.

Starting in March, Royal said it would stop filling its ships by offering very low prices within a month of sailing. Depending on the itinerary, Royal said it would stop discounting either 10, 20 or 30 days before the ship leaves the dock.

In an earnings call with analysts, Royal Chairman Richard Fain said the company was extending the policy in some cases to apply to bookings within 40 days of departure.

That is what is called incremental progress. If Royal sticks with it, there may be positive results for both Royal and travel agents.

Fain said that Royal is trying hard to be more consistent in its pricing, in part to keep travel agents in its corner.

“There’s probably one thing that frustrates the travel agents that we work with as much as anything else, [and it] is those late last-minute discounts,” he said. “And we can’t afford to frustrate them.”

A bit later in the call, CFO Jason Liberty raised a second reason why curbing the deep-discount cycle will benefit Royal.

“It’s really very important to the branding,” said Liberty. It lacks credibility, Liberty said, to contend that you are a brand that is high quality and has high respect in the industry — “and you can have us for half-price.”

“So the ability to maintain your image as a higher-quality product, which really has to permeate everything you do, is probably a big driver, as big a driver of our thinking as anything else,” Liberty said.

Fain said Royal recognizes that the policy is costing money in the short term. But Royal’s second-quarter earnings were up 34% from a year ago, so any losses are being offset elsewhere.

“It’s still early days, but the impact we have seen from a load factor perspective is relatively small, and it’s in line with our expectations,” Fain said.

Opportunities in the industry’s Asia expansion

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The development of China as a cruise market means new ships are going there instead of to North America, which is a mild source of anxiety for travel agents in the U.S. and Canada.

But it also serves to put the spotlight on Asia and encourage travelers to explore that part of the world.

At Expedia CruiseShipCenters, trips to Asia were up 10% in 2013, up 37% last year and up 95% so far in 2015, said Matthew Eichhorst, president of the Vancouver-based franchise.

“That’s sending people on itineraries to Asian ports,” Eichhorst said. “It’s not all China; there might be a little bit of Hong Kong, Singapore, Thailand, Japan.”

Two types of customers are likely prospects. The first is experienced cruisers who have seen other places — the Caribbean, Europe — and want to expand their horizons. North Americans of Asian heritage who are curious about their ancestral homes, or have relatives in Asia, are another active segment, Eichhorst said, adding that Vancouver in particular has a large population of Asian ancestry to draw on.

River cruises in Asia have been around for a while but are benefitting from the overall rise in river cruise interest, Eichhorst said.

Because of the long flight times involved in travel to Asia, cruise customers are often looking for pre- or post-cruise activities and lodging there, adding to the attractiveness of the sale for agents.

Asian cruise sales are up, in part, because at every age travelers are more adventurous than they were 20 years ago, Eichhorst said. But travelers want to feel secure about their provider.

“They are looking for a trusted brand when they go there,” he said. “There’s definitely a few operators that are in the Asia market that aren’t what you’d call North American brands.”

Eichhorst encourages his agents to think big and initiate the conversation with clients.

“Speak to all the places they can go, and people will put it on their bucket list and maybe they’ll do Caribbean four more times before they go there, but really tell the stories about amazing places you can go,” he said. “You sort of plant that seed as to the opportunity, because it’s probably an 18-months-out buy.”

Royal Caribbean boss vows to cut out last-minute discounting

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By Lucy Huxley


The chief executive of Royal Caribbean is stamping out last-minute discounts on his cruises in the US and says he would look to extend the new policy to other markets including the UK if it is a success.

The line currently reduces fares 30, 20 and 10 days from departure, a practice that Michael Bayley says “devalues the whole product”.

“From 2016, the price will never drop. There will be no discounts beyond 30 days from departure,” he said.

Bayley accepted the new stance could lead agents to sell other cruise lines which “continue to discount all the way to departure”, but said he would rather lose that business and improve his yields and margins.

“Last-minute discounting just devalues the product and nobody, neither us nor the travel agents, is making any money,” he told Travel Weekly during the two-day naming celebrations of Anthem of the Seas in Southampton.

“We are not doing anybody any favours by discounting. We work too hard developing these phenomenal products to then charge too little for them,” Bayley added.

“We believe we have the best vacation products in the entire industry, offering customer the best value anywhere, and we believe it’s time for our customers to pay a little more for them.”

Asked if he felt this would encourage the whole cruise sector to stop devaluing its product, Bayley replied: “This is not about cruising in general. This is purely a focus on Royal Caribbean and what we feel is right for our brand.”

Royal Caribbean launched Anthem of the Seas this week and also has Explorer of the Seas coming back from a multi-million dollar refit tomorrow (Thursday).

The line also has Harmony of the Seas launching in spring 2016 and a third Quantum-class ship, Ovation of Seas, coming into service in 2018.