The next time you are toot-tooted aboard a cruise ship, come prepared with more than just your swimsuit: The à la carte revenue model that has swept the airline industry may be coming to a cruise line near you.
Perhaps a topic oversimplified by the press, the practice of charging consumers for services they select (how novel! how capitalistic!) has been stigmatized as “nickel and diming.”
Apparently there’s some special rule which says once travel providers charge one all-inclusive price, they have to continue to do business that way forever more. Well, someone forgot to tell the cruise industry, because they’ve embraced the capitalist pay-for-play business model with enthusiasm.
In fact, on-board revenue today represents about one-quarter of the major cruise lines’ bottom line. Although it varies by cruise line and itinerary, cruise passengers are happily spending an average of $300 to $600 in optional on-board fees during the average seven-day cruise.
No arm-twisting involved.
Because of the success of the à la carte revenue model, practically all the cruise lines are busily building their new ships with an ever-more-extravagant selection of optional on-board amenities.
On-board selling is becoming a real art. Long gone are the days when you shelled out merely for a bottle of champagne or a drink at the bar, or perhaps dropped a few dollars at the casino. Now ships come chock full of options ranging from specialty dining and spas to “adult-only” quiet sections, art auctions — you name it.
So what’s different between airlines and cruise lines going à la carte? Unlike air passengers, cruise passengers perceive that they are getting extra value going à la carte and don’t mind paying for just those services they want. For example, a dinner at an on-board specialty restaurant might run you $25 per person, but the value might be that of a $75-$100 meal at a comparable land-based restaurant — and without the cost of parking or taxi fare.
Cruise lines are fully aware that they need to continue delivering high value to keep filling their megaships. With repeat passengers now accounting for half of all cruise bookings, rest assured that cruise lines will target and profile passengers with ever-more-sophisticated on-board revenue management systems that track spending habits and push services and promotions to every “touch point,” from the cabin TV to the dining table.
I predict that in five years cruise lines will be marketing to passengers the same way Las Vegas does, meaning freebies to high-rollers and inexpensive buffets for the first-timers. If Las Vegas can continue to be fabulously successful with that business model, why not cruise lines too?
I think they call this startling concept “choice.”
Road Warrior • Miami • www.us.amadeus.com