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Deals, Deals, Deals As Far As The Eye Can SeeJanuary 5, 2009 By: David Eisen
A four-night cruise to the Bahamas starting at $99? It's no misprint. Norwegian Cruise Line actually published that rate in November on a cruise from Florida. Other lines are also making drastic promotions to help fill ships, whether it be basement pricing, smaller deposit requirements or free shore excursions. To stay above water, in this currently crummy economy, cruise lines are being forced to make it as easy for consumers as possible to take a cruise. Even if that means basically giving vacations away.
At Carnival's fourth-quarter earnings call, Chairman and CEO Micky Arison unequivocally stated that 2009 was shaping up to be a difficult year. Carnival's occupancy levels for advance bookings for Carnival ships, he said, were running behind the year prior and with lower fares. He even hinted at the possibility of consolidation in the face of mounting revenue obstacles.
Holland America even came out with a vacation stimulus plan. To boost cruise sales, the six-point agent plan encompasses: unprecedented low fares; deposits reduced by 50 percent on cruises and cruise tours departing on or after May 1, 2009; a 25 percent savings on standard Cancellation Protection Plan on cruises and cruise tours departing on or after May 1, 2009; suspended fuel supplements for cruises departing on or after Dec. 17, 2008; exclusive cruise prizes for booking by Feb. 28, 2009; and increased tour conductor credits on select sailings in 2009. "Our message is to buy low and live high," said Rick Meadows, executive vice president, marketing, sales and guest programs for Holland America.
Interestingly, slashing prices in the cruise industry isn't seen as a death knell, as much as it is in the hotel industry where reducing room rates devalues the overall product and makes it difficult to restore to past higher levels once the market's climate favorably changes. Reason: Whereas cruise ships are chalk full of ways to recoup money (gambling, drinks, specialty restaurants, shore excursions) hotels aren't the same revenue-generating machines.
While cruise lines, even luxury cruise lines, are taking it on the chin and lowering rates, it may not be such a problem. As long as they can keep ships as full as possible and generate enough onboard spend, once the economy shifts, they should be all right.