Why do you find the fares for Norwegian Cruise Line ships higher than those of Royal Caribbean, Carnival
As we’ve written often in recent months, there are some great deals on travel this fall. Some airlines have reduced fares for trips to the Caribbean and the Bahamas to as low as $26 per day.
However, you won’t find such incredibly low prices in every brand.
In fact, as you might have noticed if you’ve been shopping for a cruise in recent months, a major mass-market cruise line stands out in the way that it’s mostly Not Reduced fares to the lowest.
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Among the largest travel operators, Norwegian Cruise Line is selling rides at starting prices significantly higher in some cases than its three biggest competitors: Royal Caribbean, MSC Cruises and Carnival Cruise Line.
As of this week, for example, Norwegian has been offering 4-night Bahamas tours out of Florida in November and December starting at $249 per person. While that may seem very low compared to the cost of most land-based holiday types, it is significantly higher than fares for similar trips at Norway’s biggest tourism rivals. .
By contrast, travel giant Carnival, this week sold similar four-night Bahamas tours in the same month starting at less than half that amount: $113 per person. Similar trips at Royal Caribbean and MSC Cruises cost $129 and $199, respectively.
In other words, you’ll pay 120% more to board a Norwegian ship for a quick, 4-night cruise to the Bahamas in the coming months than you’d pay to board a Carnival ship for a similar trip. Norwegian ships’ premiums are 93% and 25% respectively when compared to Royal Caribbean and MSC Cruises.
A very prudent strategy
Is the Norwegian pricing team just hyping it up when it comes to keeping prices competitive? You may think so, but you are wrong. There is nothing random about what the Norwegians are doing.
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Norway and its two sister brands, Oceania Cruises and Regent Seven Seas Cruises, are trying very hard to keep rates low this year even as other carriers are slashing prices at the time to fill ships — discounts are being made to bring capacity back to the fleet. to pre-pandemic levels.
It’s part of Norway’s deliberate strategy to keep pricing power high in the long run, even if it means fewer bookings in the short term.
The company has in recent years concluded that it is a better long-term business bet to sell fewer cabins at a premium than to slash prices to sell every cabin.
“We have no bones about [it] that we hold the price,” Norwegian Cruise Line Holdings President and CEO Frank Del Rio said Tuesday on a conference call with Wall Street analysts, where he explained in detail the “We lead the industry with a price band so wide it’s almost untouchable.”
Norwegian Cruise Line Holdings is the parent company of Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises.
Del Rio, a longtime veteran of the travel industry, repeats the yacht pricing mantra he has repeated for years – that once a route drops in price, it is difficult to recover. Customers are used to lower prices when fares fall and resist attempts to raise prices. He often says that’s one of the central mistakes he sees his company’s competitors make.
“We don’t care if we’re a quarter or two behind others [recovering] Del Rio told Wall Street analysts. [ships] It took years, if not decades, to recover. And we’re simply not ready to do that.”
Power is lower than current
The result of Norwegian Cruise Line Holdings’ strategy this year has been significantly lighter occupancy on vessels of different brands, as higher prices keep some customers from booking.
In total, the three brands reported occupancy rates of 82% for the quarter ended September 30. In contrast, the Royal Caribbean Group brands reported occupancy rates of 96% in the same quarter.
Royal Caribbean Group is the parent company of Royal Caribbean, Celebrity Cruises and Silversea Cruises.
On the other hand, Norwegian Cruise Line Holdings’ net tolls – the amount the company earns per passenger – rose 5% in the most recent quarter compared with the same period in 2019, the last normal year before that. Translate.
In a presentation to Wall Street analysts on Tuesday, Norwegian Cruise Line Holdings noted that net travel expenses at its main rivals fell 5% in the quarter compared with the same period in 2019 – a difference of 10 percent score.
Looking at 2022 as a whole, Norwegian Cruise Line Holdings says its prices are up 14% on average year-to-date, while prices of its main competitors are flat — a difference of 14 percentage points.
What does it mean for you?
For those of you who are thinking of booking a cruise, how much money the different routes collect doesn’t really matter. What matters is how much you’ll pay for the ride — and what you’ll get for that price.
The bottom line for consumers with Norway’s pricing strategy this year is that you’ll pay a little more to ride on one of the company’s ships, in many cases, than you’ll pay for a ride with some competitors, at least on the like-for-like journey.
It’s not a deal killer. Every line and ship is a little different, and judging a ship or cruise based on price alone is often not the best way to buy a cruise. If you’re eyeing a boat trip in Norway that you think is on the perfect ship and itinerary for you, it’s worth paying a little more to get the experience you want.
Another factor to take into account is that, even if it keeps a cap on price, Norwegian has offered customers who book this year a plethora of value-added perks to sweeten the deal – things like Free Wi-Fi, bonuses and credits included for shore excursions. It’s a way to reduce the price without the discount, as it gives the customer something of value without having to drop the base fare.
You may also find that going on a train that is a little less crowded is a bit more worthwhile. Notably, Norwegian Cruise Line Holdings on Tuesday said it expected occupancy rates for the current quarter on its ships to be in the “medium-to-high 80% range”.
This is still considerably lower than normal, as cruise lines often go well over 100% full – which can happen when more than two people sit in a cabin using pullout sofas and bunk beds. drag.
Lower occupancy is expected not to last long. On Tuesday’s call with Wall Street analysts, Norwegian executives said they expect occupancy to return to normal by the second quarter of 2023.
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