WITH DEMAND FOR EUROPEAN CRUISES MOUNTING, this summer, Mediterranean waters could look like the Capital Beltway at rush hour. Many ships have abandoned the Caribbean to focus on more lucrative international business. Take, for instance, Royal Caribbean. This summer, it will deploy a record seven ships to the Mediterranean, which has "shown tremendous growth in recent years," according to Adam Goldstein, Royal Caribbean International president and CEO.
The growth spurt has shaken up pricing in both the Caribbean and Europe. With fewer ships sailing the former, finding discounts has become more difficult. Conversely, a jolt of supply in Europe is forcing many lines to sell their inventory at lower-than-usual rates and prompted one travel agency group to refer to the situation as a "pricing bloodbath."
This is particularly true of the luxury lines, which have had to offer discounts and incentives to fill their ships—something they normally do not and would not want to do—because of crowding on cruises in the premium and contemporary markets.
"Discounts are rampant," says Sherry Laskin Kennedy of AAA Travel in Melbourne, FL. "It seems like every cruise line is offering something to fill the berths on their ships in the Mediterranean, from outrageous onboard credits to free air—anything to generate revenue."
Crystal Cruises has taken steps to ensure that its two ships are filled this summer, announcing promotions back in January aimed to help agents sell Mediterranean and Baltic cruises. First, Crystal is offering agents who book three staterooms for their clients a free Mediterranean cruise of their own. "That's unusual for us," says Mimi Weisband, Crystal's vice president of public relations. Other initiatives include 10 percent off most stateroom categories and an incentive for families of a free berth for every paid 10 berths.
"The initiatives we've put in place have generated a lot of bookings," Weisband says. "The impetus came when we saw that the business wasn't where we wanted it to be."
However, Weisband is slow to attribute all discounting and promotions to increased capacity in the region, though she admits it does play a quantifiable role. The skittish economy, too, is a major force behind underselling. "It's a combination of things," she says, including the weak U.S. dollar and fewer people taking vacations due to economic concerns. "[It would be] tough to fill ships if not for the deals. We have a great product and price it based on what we feel it's worth. Would we all love to have that initial pricing? Yes. Some sell out so quickly that maybe we priced it too low. We make sure we're getting the numbers we want with good pricing."
Tipping the Scale
On the other hand, when one side of a scale is tipped one way, the other side moves accordingly. In this case, it's the Caribbean, which has historically been a region where discounting is omnipresent. But, as one ESPN college football analyst is apt to say: "Not so fast, my friend."
This summer, expect to find fewer deals in the Caribbean. Why? Because there will be fewer ships there, which throws pricing power back into the hands of the cruise lines. "Summer rates in the Caribbean are not dropping until well into hurricane season," Laskin Kennedy says. "The prices seem to plateau in early June and are running consistently high through August. In the past, there were always travel agent rates available throughout the summer, but this year, it's almost bare. Except, of course, for Europe!"