A Sea of Change
Is traditional cruise pricing gone for good?

PHOTO: Rick Sasso, MSC Cruises USA
Is there a sea change taking place in how cruises are priced and sold? Is there a new level of inclusiveness that lets your clients choose what they want included in their vacation — and pays your commission on top of all the extras?
Over the past year or two, several cruise lines have introduced limited-time promotions that dangled value-added extras — drinks, gratuities, shipboard credits and the like — to those who meet a booking deadline. This type of deal resonated with consumers, and cruise lines extended deadlines and offered them time and again.
Examples are Celebrity Cruises’ “1-2-3 Go!” promotion, which let consumers pick a value-added extra such as a beverage package, prepaid gratuities or shipboard credit, and Norwegian Cruise Line’s “All Inclusive” package, which bundled in alcohol, specialty dining, a shore excursion credit, photos and more.
Then came news that MSC Cruises had thrown traditional cruise pricing out the porthole. Instead, the Italian line now offers what it calls “Inclusive Experiences” — four pricing levels ranging from à la carte to all-inclusive.
To give you an idea of how the pricing works out, MSC Cruises provided some sample fares for a seven-night voyage on the MSC Divina, which is based in Miami this winter. (Of course, prices fluctuate with departure dates, promotions and other considerations.)
For the basic Bella level, the fare is $599 for an inside cabin, and the passengers pay separately for drinks, spa treatments and so on. The next level up, Fantastica, is $30 more and includes the ability to choose the inside stateroom location, priority dining time, half-price fitness classes and personal training, free room-service delivery and enhanced activities for children such as cooking and foreign language classes and more.
At the Aurea level, the fare is $1,319 for a balcony stateroom and $1,719 for a suite. But that price also includes all alcoholic and soft beverages, stateroom location choice, flexible dining, priority boarding, unlimited alcoholic and non-alcoholic drinks, a massage and access to the adults-only sun deck. At $1,999, the most inclusive level is MSC Yacht Club, which the line already offers on the MSC Divina. The Yacht Club is an area on the ship that is accessed with a keycard and includes a private lounge, priority check-in and check-out, butler service, 24-hour concierge, 24/7 complimentary alcoholic and non-alcoholic beverages in the Yacht Club area, and an exclusive restaurant. MSC Cruises pays commission on the entire package.
Vicky Garcia, COO and co-owner of Cruise Planners, an American Express Travel Representative, likes the MSC Cruises pricing structure. She studied it closely in advance because she also sits on the MSC Cruises U.S. advisory board.
“MSC Cruises USA’s recent industry-first announcement of four all-inclusive offers is great to help grow agent profitability,” Garcia says. “MSC’s simplified categories will offer agents the opportunity to earn more commission by upselling prepaid services.”
Garcia noted that it is part of a growing trend to add value rather than to slash prices. “We have seen this with Celebrity’s ‘1-2-3 Go!’ promo, Royal Caribbean International’s ‘Buy-One-Get-One-Half-Off’ promo and Norwegian Cruise Line’s ‘All Inclusive’ package. MSC’s all-inclusive packages offer added value rather than discounts, which benefits travel agents since the agent can earn more commission.”
Rick Sasso, president and CEO of MSC Cruises USA, says the company has offered similar pricing strategies in Europe, found it successful, and now is trying it here. The pricing structure now is simpler, with fewer stateroom categories. He prefers to refer to the pricing options as having “added value” rather than terming them “inclusive.”
“The term ‘all-inclusive’ tips you a little too far sometimes,” Sasso says. “Cruises are already 90 percent all-inclusive with entertainment, meals, ports of call, accommodations, in-cabin movies — there’s a lot of stuff on a normal cruise that’s included.”
Plus, several of the MSC Cruises pricing levels include features that don’t carry a set cost but have value to certain travelers, such as priority boarding or the ability to choose their own stateroom location.
“The goal is to show as much added value to the guest against what he pays for his cruise,” Sasso says. “It’s been great. People do still need a little bit of education.”
Garcia agrees with that wholeheartedly. When the Norwegian “All Inclusive” package came out, Cruise Planners emphasized the value of the options in marketing channels, and provided technology tools and business development training for franchisees to help present the promotion to their clients and close sales.
“We knew enough to really push it, so we put the wheels in motion; it had legs to it, and we blew it out of the water,” Garcia says.
The result? Cruise Planners grew sales by more than 300 percent in August and September over those two months in the previous year.
“We found that the ‘All-Inclusive’ offer really resonated with both frequent cruisers and guests who are new to cruising,” says Camille Olivere, Norwegian’s senior vice president of sales.
But it did require educating the travel agents so they could clearly explain the program to consumers.
“I love the offers,” Garcia says. “Our sales have taken off in part because of them. The offers are more inclusive, so to me the sale becomes easier to agents who accept it and understand it.”
Norwegian’s “All-Inclusive” package, available through most of August, was priced at $899 for a seven-day cruise on top of the cruise fare. But that $899 package included specialty dining every night, the Ultimate Beverage package, a $200 shore excursion credit, prepaid service charges, a 250-minute Internet package, 20 photos, chocolate-covered strawberries, a bottle of wine, one bingo session and six bottles of water.
“Some thought it was too expensive for the week, but we taught them that, when you are selling the inclusive experience, your job becomes easier,” Garcia says.
These packages work for the cruise lines too. Celebrity Cruises’ “1-2-3 Go!” and “Pick Your Perk” limited-time promotions have resurfaced on several occasions over the past year-and-a-half. Dondra Ritzenthaler, Celebrity’s senior vice president of sales, says the company looks for simple and easy promotions that travel agents can quickly understand and communicate.
It also was important to protect travel agent commissions and establish some pricing integrity. “If you discount the cruise price, the commission goes down for the travel partner,” she says.
So is this just the tip of the iceberg for innovative and more inclusive pricing policies or promotions? Or will more lines adopt permanent new pricing levels similar to what MSC Cruises has done?
At least one company is offering more customizable packages. Starting in November 2015, Voyages of Discovery will let cruisers customize their holiday by adding on packages of soft drinks, alcoholic beverages, spa services — and even butler service — at extra cost.
“It was made very clear from our extensive customer research that passengers wanted a simpler, easier approach to their cruise booking,” says Steve Tucker, the president of the company’s North America office. “Today’s cruiser wants to be able to choose the level of inclusiveness on their holiday. And we are very pleased to offer 10 percent commission to our travel partners on these fantastic new packages.”
Norwegian’s Olivere says stay tuned. “I believe we are on to something with the ‘All-Inclusive’ package,” she says. “We are making some tweaks to broaden the appeal of the promotion and make the price more attractive. Travel partners and guests should be on the lookout for similar enticing promotional offers in the future.”
For more Cruise Line & Cruise Ship News
More by Theresa Norton
Comments
You may use your Facebook account to add a comment, subject to Facebook's Terms of Service and Privacy Policy. Your Facebook information, including your name, photo & any other personal data you make public on Facebook will appear with your comment, and may be used on TravelPulse.com. Click here to learn more.
LOAD FACEBOOK COMMENTS