Balancing Great Value and an Array of Choices

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One strain of critical commentary about the modern cruise offering is that the cruise lines are “nickel and diming” the customers. Technically I suppose it should be “nickeling and diming” but I don’t think anyone says it that way. The basic idea is that the cruise lines are charging for products/services that they should be providing for free. Even though most if not all consumers know there is very little that is truly free in life or in cruising, many argue vigorously that one charge or another should not exist. It should not surprise the reader that we spend a lot of time thinking about what should be included in the ticket price and what should be offered for an additional charge.

Our philosophy at Royal Caribbean International is that the ticket price should include a guest’s accommodations as well as enough of the culinary options and entertainment and activity choices to enable a fulfilling cruise experience without the necessity of many additional charges. We are confident we meet this standard and we are committed to continue doing so in the future. At the same time, we are also committed to offering an ever greater variety of options and choices for our guests. Why? Because all of our research and guest feedback indicates this is the preference of the market. In essence, this is why our ships have increased in size over time.

Many of the extra costs of cruising have been well established and well accepted for a long time such as gaming, excursions, beverages, retail, spa, photo and gratuities. To the extent there is controversy, it tends to surround the introduction in recent years of features that appeal to a relatively narrow subset of our guests, e.g., yoga or spinning classes, Johnny Rockets’ hamburgers, Flow Rider, Tattoos, Ben & Jerry’s, etc. There is not a scientific answer to the question of what should or should not be included in the ticket price. The ticket price needs to reflect value for money for all of our guests. The extra charges need to reflect value for money for those accepting the charge for the particular activity. The cost of any activity that is included in the ticket price is borne by all guests as a fraction of the ticket price.

Most guests, but certainly not all, would agree there should be an extra charge for consumption of premium ice cream. We think that’s a pretty obvious call – if it were “free” a percentage of our guests would be eating a significant amount of ice cream yet all guests would be paying a share of the cost of that ice cream.

Flow Rider is not as obvious. We offer the basic opportunity to enjoy this amazing amenity for no extra charge although we incur specific costs such as sports deck staff that are necessary for the activity to function. Only a fraction of our guests use Flow Rider yet there are lines at peak times. We believe there is a fair trade-off between the experience (great) and the lines (bad). On the other hand, we now offer individual instruction in Flow Rider surfing for a charge. This is a more in depth experience the cost of which we believe should be borne by those who specifically value the opportunity. The charge also regulates demand for the opportunity.

It’s easy to imagine we have had many of these discussions surrounding the new features on Oasis of the Seas. There will be a charge in some cases and not in others. Although we clearly could (and maybe even should) charge for the zip line above Boardwalk, we will include this activity in the ticket price. The overall goal remains the same as on our existing fleet – great value for our guests and a huge array of choices during every cruise.