With the recession of the last two years, much ink has been spilled on the topic of cruise pricing, but when you look beyond the current economy, there’s an interesting parallel to cruise pricing and innovation.
When people ask me if cruises are a great deal, the short answer is always “yes!” For those interested in the long reason why, I often refer to computers and cellphones as an example of how innovation and market size have come together to make better products available at prices cheaper than the last generation.
When I started in the industry in 1985, there were just a handful of ships serving the U. S. Market. In many cases, cruise ships had started their lives as ocean-going passage vessels prior to the jet-age. The overall size of those ships was comparatively a lot smaller as well so the total available inventory was a fraction of what it is today. Cruising was still very much a boutique product but was on the cusp of exploding. At the same time, computers were still making the transition from mainframe systems to the desktop, but still had a long way to go. Who can forget the Radio Shack TRS-80, the Apple II, or the Commodore 64?
Fast forward 25 years later, neither the ships nor the computers of the mid-80s bears much in common with their modern counterparts! Ditto for cellphones–you could only use them for calls, service was pricey, phones were astronomical and they didn’t even work that well. Now, a cellphone has more computing power than the rockets that landed us on the moon! Drop by your local Apple store, and marvel at the iMac and iPad. Well, cruise hardware has evolved the same way. . . it’s more elegantly designed, works better, offers a wide variety of experiences, and dollar-for-dollar is far better value than ever before.
It’s NOT just the Recession!
Make no mistake, pricing for all luxury travel has plumbed the depths in 2009 and 2010, and unlike computers, cruise inventory is “perishable” which means it sometimes gets sold at a deep discount when a voyage isn’t filling. But back out the perishable voyages, and cruise pricing is still remarkably low in historic terms. So, there must be a catch, right? Some would suggest that the overall cost of the onboard services has gone up, and it would be hard to argue against that. There are two things driving that–first, the cruise lines are in business for profit and this is the fuel that powers the innovation of the next generation of ships. Second, there is a wider variety of services available than ever before, which provides each traveler the ability to customize their own experience. By making the individual services available a la carte, only those guests that want a particular service end up paying for it. For any individual guest, I strongly urge a “total vacation cost” approach–which is to take the cruise fare, port charges and taxes, and couple that with gratuities (roughly $10 per person/per day) and then add in the cost of the experiences they want, as well as consumption costs for things like cocktails, soft drinks, etc. No matter what the cost of the onboards, the competition for the customer’s attention is driving an awful lot of innovation!
And while the extras can certainly add-up, you should never lose sight of what a great value the basic cruise represents. . . the most amazing hospitality hardware, excellent service, fine and diverse dining, several ports of call, and the ability to enjoy every moment of the vacation experience instead of packing, driving, busing, reserving, and all those other time-eaters that chip away at your downtime. And if you absolutely can’t stand plain relaxation, you can bring your smartphone and netbook and stay connected (something you couldn’t possible imagine back in the 80s)!