Agents, Analysts Pleased As RCCL Avoids Close-In Discounting

Travel Weekly

Pricing discipline has been a major soft spot for the cruise industry in recent years. But as Travel Weekly reports, Royal Caribbean Cruises Ltd. is sticking to a pledge to refrain from deeply discounting its cruises in the last few weeks before departure.

For years, the mantra for most cruise lines has been "sail full, whatever it takes." While pax may have paid less for their cruise, lines believed that onboard spend would make up for the shortfall.

But that approach has clear limitations. Deeply discounted prices mean low commissions for agents, many of whom have turned away from mass market cruise sales due to little return. And there’s always the problem of pax learning from each other of significant differences between what each paid.

For the past several months, Royal has taken a different tack, forgoing last-minute discounts in an effort to wean pax from the practice of waiting until close to the sailing date for the best deals.

Several agents interviewed say they are pleased that RCCL has been sticking to its guns and maintaining price integrity with much more vigour than in the past.

Cruise analyst Patrick Scholes confirms that a monthly survey of cruise pricing has found close-in fares for Royal to be significantly higher than they were at this time last year. In fact, they have risen each month since March, when the policy began, and are now averaging about 15% higher.

"This is the strongest near-in advertised pricing growth we have ever observed for the Royal brand," Scholes said of the July numbers, which saw a 16.9% gain.

Under its "price integrity" policy, Royal stops discounting 10, 20 or 30 days before departure, depending on itinerary and other variables. In a conference call with analysts in July, Richard Fain, Chairman & CEO of Royal's parent, Royal Caribbean Cruises Ltd., said that one sign the program is working was that Royal recently extended the no-discount period to 40 days in some cases.

"We recognize that this policy is costing us some money in the short term, but we believe that in the long term it will pay handsome dividends," he said.

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