Royal Caribbean CEO reveals key trend that’s costing cruisers
Travelers who do this one thing are sure to pay more for their cruise vacation this year.
Although economic uncertainty is impacting many businesses and consumers across the U.S., it isn’t stopping travelers from booking cruises.
In terms of bookings, Royal Caribbean Group just reported its best-ever wave season (the January-March period after the holiday season when cruise lines typically offer a wave of deals), and its bookings in April continued to outpace last year.
Related: Royal Caribbean adds new onboard WiFi option cruisers will love
With demand for cruises surging, it’s more important than ever for cruisers to book as early as possible to secure the itinerary, stateroom type, and add-on experiences they want for their vacation. But even if you’re open to anything, waiting until the last minute to book a cruise might not be a smart decision.
Royal Caribbean Group CEO Jason Liberty shed light on why that is during the company’s Q1 earnings call on April 29.
When asked about drivers of the company’s better-than-planned performance in the first quarter, Liberty explained one key trend that’s helping the company boost profits at the expense of cruisers.
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Last-minute bookings are trending and Royal Caribbean is cashing in
“Starting off in the first quarter, we have seen this kind of continuous trend that, inside of a quarter, we see kind of an uplift in demand as we get very close in. And not only do we see an uplift in demand, we’re also able to raise our pricing during that period of time,” Liberty said.
In the past, cruisers could often score deals by booking at the last minute as cruise lines lowered prices on unsold cabins as sailing dates approached. But that’s no longer the case, at least for cruises with Royal Caribbean brands.
Paying careful attention to booking trends has led Royal Caribbean to seize the opportunity to drive higher revenue by raising prices on near-departure cruises instead.
Related: Royal Caribbean and Celebrity cruiser shares 1 key warning
Royal Caribbean doesn’t expect the last-minute booking trend or cruise demand to slow down anytime soon either, despite economic uncertainty.
“The interesting thing about the trend is, of course, our revenue management tools take those things into account and then try to predict the next quarter that it’s going to be at a certain level and it keeps elevating, which I know, it’s probably counterintuitive to some of the reporting around consumer confidence and so forth that’s out there,” Liberty noted.
Liberty attributes much of that continued demand to cruiser loyalty and satisfaction, and to the company’s focus on making booking a cruise easier for passengers.
Despite rising prices, cruise vacations still offer value
Value is another factor helping cruise lines like Royal Caribbean continue to thrive during uncertain economic times. Even as cruise lines raise their prices as demand swells, many travelers still recognize that cruises often offer greater value than land-based vacations.
“I think that — one of the things that we've been trying to close — that value gap to land-based vacation — and the appreciation of so much more you get out of cruise experience than you do by land base…it does serve in times like this when there's maybe a greater level of uncertainty; it does help us navigate some of those concerns that might be out there from the consumer,” Liberty explained.
Related: Does it pay to be 'loyal to Royal' (Caribbean)?
Getting more vacation for their money can be an even greater priority to travelers in uncertain times, too.
“Because they know much value they get out of it, they have a sense on the bookends on what it will cost them and their family or friends to be able to do it, and they know they're going to get a great experience out of it,” Liberty pointed out.
(The Arena Group will earn a commission if you book a cruise.)
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