Norwegian Builds Global Sourcing Strategy

Double Norwegian Call in the Azores (Photo: Antonio Simas)

Norwegian Cruise Line Holdings (NCLH) is pursuing a global passenger sourcing strategy for its European cruises.

Said Frank Del Rio, President and CEO, on NCLH’s Q3 earnings call: “Our sailings in Europe has benefited from our global sourcing model and the go-to-market strategy that allows us to source the best or highest yielding guests regardless of where they come from.

“North American guests comprise the majority of the guests for our European sailings, and the second-largest contingent of passengers on these cruises come from Asia, Australia and South America.

“We know that guests that fly a long way to cruise are higher-yielding guests than those that drive their car or take a bus or a train to the port.”

“But not withstanding issues in Europe, booked ticket revenue for passengers sourced there were up 43 per cent year-over-year,” Del Rio added, who cited the company’s Free at Sea promotion introduced seven months ago. Guests can choose up to five “free” offers, including beverage packages and speciality dining.

For Q3 2019, NCLH’s European capacity was up 13 per cent over the same period last year.

Royal’s Onboard Revenue Spike Driven by Experiences

Independence of the Seas

Onboard revenue for Royal Caribbean Cruises was up significantly in the company’s first quarter, going from $602 million in 2018 to $729 million in 2019.

“Guests spend for onboard activities has continued to shift towards areas that involve experiences over buying things and this quarter was no different,” said Jason T. Liberty, CFO, Royal Caribbean Cruises.

Passengers spent an average of $69.10 (gross) per day in the first quarter compared to $62.55 a year prior.

Liberty said shore excursions and various types of packages were key in driving the onboard revenue performance.

“We saw an over the index of spend on shore excursions and products like beverage packages, internet packages and again it is more focused on the experiential stuff versus seeing more spend occur within the retail shops,” he said.

Celebrity Cruises to go mainly with bundle pricing

Celebrity Cruises is set to roll out a permanent change to its pricing structure, starting July 6.

The new system builds on Celebrity’s 123Go! promotion, which offers a menu of perquisites, such as free gratuities, beverage packages or an onboard spending credit.

The pricing structure, to be called Go!Big, Go!Better, Go!Best, adopts the rhythm and language of the 123Go! promotion, but Celebrity is emphasizing that it is not a temporary campaign.

The structure will be applied to nearly all inventory from Oct. 1, 2015, through April 2017, the most distant announced deployments.

Celebrity began describing the new structure to agents in a series of webinars that started on June 27.

Guests can choose among four perquisites: a Classic beverage package, free gratuities, unlimited internet or a $150-per-person spending credit.  All oceanview, balcony and suite accommodations will be priced at minimum with the choice of one perquisite built in.

In effect, cruise-only pricing at Celebrity will be eliminated, except for inside cabins.

A Go!Big price includes a choice of one option, while Go!Better includes a choice of two. Go!Best provides all four, and substitutes a Premium beverage package for the Classic package.

Celebrity said that the Go!Best option makes it the first premium segment cruise line to provide all-inclusive pricing. Although a shore excursion is not included, as it is with some all-inclusive luxury cruise products, the onboard credit can be applied to excursions, Celebrity said.

As with 123Go!, a buyer of a bundled fare that has a third or fourth guest in their cabin will receive nonalcoholic drink packages and 90 minutes of free Internet for those guests, Celebrity said.

The new pricing will not apply to Celebrity’s Xpedition ship or to transatlantic and transpacific crossings.

By bundling the noncommissionable items into the standard fare, Celebrity is effectively raising the commissions that travel agents can earn selling most Celebrity cabin categories.

It said the structure is also good for consumers because buying the perquisites separately would cost more than the bundle.

Celebrity said that with the introduction of the Go!Big, Go!Better, Go!Best pricing structure, the 123Go! promotion launched in 2013 will be retired.

Donra Ritzenthaler, Celebrity’s senior vice president for sales, trade sales and service, said the new pricing was more than two years in the making. Among the internal debates was whether it should be rolled out as a promotion or brand strategy.

In the end, the line’s CEO, Lisa Lutoff-Perlo, said “the team was aligned” on a pricing strategy. “We wanted to raise the bar.”

Ritzenthaler and Lutoff-Perlo tested the waters with the concept by giving a sneak peak of the strategy to large accounts early last month.

Upon hearing the plan, World Travel Holdings co-president Brad Tolkin said he liked the “crisp and clean” simplicity of it.

“Are specialty restaurants over and above [the price of the cruise]?” he asked.

“Yes,” Lutoff-Perlo responded. “But the onboard credits would get that covered.”

“We needed to completely change what’s going on,” Ritzethaler told Tolkin. “Our guiding principles were to give consumers ultimate choice, raise APDs (average per diems) and make it easy.”

When the strategy was outlined to him, Vacations To Go president Emerson Hankamer said he felt it was “a very strong, proactive thing for the trade.”

Although his company focuses on attracting consumers with the prospect of low prices, he understands the attraction of value-adds, even when they represent an alternative to lowering prices.

“If you load up with amenities but the price is high, you’ll get a higher-quality customer who spends more,” he said.