Cruise Lines Slash Prices to Lure Consumers
Monday, 15/12/2008
Cruise lines, navigating a dreadful economy and tight-fisted consumers, are rolling out a bounty of bargain fares to fill their ships. With many deals matching the sort of deep discounting the industry resorted to in the wake of the Sept. 11 terrorist attacks, travel agents say cruising has become almost cheaper than staying home.
The fall is always a good time to shop for cruise discounts because bookings slack off during the period. But this year –amid the dramatic downturn in the U.S. economy, punctuated by a credit crisis, rising unemployment and a slump in consumer spending- the cruise deals are better and more widespread than usual.
“We always say cruise lines are resilient to the economy, but we have seen a slowdown in the number of bookings compared to the same time last year,” said Harrison Liu, a spokesman for Miami-based Royal Caribbean International. “We’re working closely with travel agents and all our partners to entice consumers.”
Behind the discounts cruise lines have high fixed costs such as fuel, crew salaries and other operating expenses. The incremental cost of carrying each passenger –a little food and drink, a few bed linens and towels- is small. That dictates that cruise ships sail full with two passengers per berth; often, they fill the third and fourth berths available in cabins.
For now, the special deals on many cruise lines extend well into 2009, and some into 2010. They run the gamut from short, budget-oriented weekend trips to long and exotic luxury voyages. Some of the industry’s hottest new ships, like the Celebrity Solstice and the Carnival Splendor, are available at a bargain.
It’s not just cruises that are selling at a discount. Shares of both Carnival Corp. and Royal Caribbean Cruises have been battered recently. Carnival announced Oct. 31 it was suspending its quarterly dividend in a conservative move to conserve capital, and on Nov. 18 Royal Caribbean followed suit.
Industry insiders will be closely watching “wave season,” which spans the first quarter and is typically the busiest booking period of the year, to see whether the cruise lines are forced to extend the cheap cruise prices. “Right now, all the cruise lines have poker faces,” Chiron said.
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