What the current Wave Season pricing reveals about the cruise industry in general
"Wave Season" has become the "Black Friday" of the cruise industry. For years I have seen headlines claim that "Wave Season is the best time to buy a cruise," solely on the premise that January is the peak buying season due to the cold winter months ahead.
I think some people who write these "Wave Season" stories are too gullible, because everyone knows real bargains come on anything when demand is at its lowest. Still, the cruise lines play their part in touting "wave season" as a bargain opportunity, and it follows that many travel writers will go along with whatever the cruise lines say.
But is Wave Season really the best, or even a good time of year to get a cruise bargain? The answer is that it depends - on what cruise line and itinerary you want to buy.
I just read an article about Wave Season published by NBC news today. It was written by Rob Lovitt, whom I have met and liked. NBC seems to publish cruise articles only somewhat sporadically these days and Lovitt is usually the author.
Rob quotes another well-known cruise industry commentator, Stewart Chiron, (known as "the Cruise Guy") as saying this about Wave Season;
"The cruise lines are coming out with sales but there are no fire sales. What they're doing is using shipboard credits, upgrades and other perks to mask significantly higher cruise fares."
Higher cruise fares? Is that true? I credit Rob for his candor but I want to look at the situation more closely. Are cruise fares significantly higher, and are the cruise lines only using "perks" to masquerade them, essentially making "Wave Season" cruise buyers into suckers? In some cases prices are higher, but does that mean wave season offers have no value?
Are Wave Season Offers Worthwhile?
Here is a case in point. Celebrity Cruises has been struggling in ways it doesn't deserve for a few years now. It has stunning and accommodating ships, which just do not command the cruise fares they deserve. The reason is bad planning in deployment. The former CEO (Dan Hanrahan), who resigned just a few days before the company reported a bad quarter largely due to over-deployment in Europe, was largely responsible. Dan has now been replaced with Michael Bayley, a company insider with 30 years of cruise planning and management experience.
For the last summer, and again this coming summer (because it was too late to change what was already planned by Hanrahan), there will be four Solstice-class ships sailing in Europe along with one of the Millennium class ships. That means 80% of Solstice capacity is competing with itself in a region that will most likely be the worst performing region of 2013.
Those Celebrity Solstice-class ships deserve a higher fare. They are on par with Oceania's Marina in many ways, a ship that sells out at far higher prices. But these great Celebrity ships have been placed in a poorly performing region where (compounding the problem) they are competing with themselves.
Bayley's new goal is to differentiate Celebrity and raise prices. I already see higher prices and the ships are selling. So, at least in the case of Celebrity to imply that a cruise line is "masking" higher prices as if it is a ruse for wave season is not accurate. Now, I do not know if that is what Stewart was implying, but he is right that prices are higher.
But those higher prices for Celebrity are here to stay beyond Wave Season - if they can make them stick, but that is the biggest challenge to that strategy ahead - and in that scenario are crucial indications of the future of the cruise industry.
Are do you think of this concept? Tell us here: Cruise Forum
What about Other Cruise Lines?
Ironically, of the "big three" cruise corporations; Carnival Corp., Royal Caribbean and the newly "publicly-traded" Norwegian Cruise Line, in the last quarter Norwegian did the best year over year.
But NCL is offering amazing bargains right now, especially in Europe. I can hardly believe a 10-day Mediterranean cruise for $399 per person, even if it is in February. In the Caribbean, Carnival has the lowest fares in the industry, but they are not historically low.
But are cruise prices "significantly higher" across the board as Stewart suggests? Not really. They have merely returned to normal prices.
But why has that happened right now? Last quarter was the worst in Carnival's history. One would expect lower prices, not higher. But many people believe the economy is improving and are therefore willing to spend more. Since the cruise lines need that revenue - they are charging more.
But more importantly, I see it as long term strategy. The new capacity coming online includes the Breakaway-class (NCL), the Sunshine Project (Royal Caribbean) Royal Princess (Princess), and new ships for both Carnival and Holland America; all ships that Mr. Lovitt correctly notes will have more staterooms in less space.
I see the new ships as aesthetically less attractive to buyers than the current generation of ships. So the biggest challenge confronting to this brand new generation is the pricing of the older but aesthetically more attractive ships.
Rob notes that somebody always predicts the cruise industry is overbuilt whenever new capacity comes online but that the cruise lines seem to fill it without decreasing prices. But this time is different, and while he sees cruise prices are "significantly higher" he doesn't explain why.
As I said, Carnival just had its worst quarter ever. It's a gutsy move to raise prices, but here is the nuance Rob missed. By the time Carnival has five ships in the 130,000-ton range for 5000 passengers, Royal Caribbean has the Sunshine Project and Norwegian has Epic, Breakaway, Getaway and Breakaway-plus there are going to be a LOT of new ships that are more crowded than the industry average now. Those ships should logically be a harder sell compared to what is already available now - unless they raise the prices on the older ships like the Solstice-class, Holland America's Eurodam, Carnival Miracle, Royal Caribbean's Brilliance of the Seas and all other "older but better" ships.
After a few times sailing on ships in the 130,000 to 145,000-gross ton range with as many as 5000 guests, many cruisers will be more than happy to pay a little extra for a ship with far more space per person. For the first time ever - older cruise ships should command a higher price than brand new ones, and the brand new ships will be the bargain leaders.
Are do you think about this idea? Tell us here: Cruise Forum