What is the Luxury Cruise Appeal?

| 07.16.12

Why do some people happily pay higher cruise fares for inclusive options they may never use?

The opulent surroundings on Regent Seven Seas cruise ships

Luxury cruise lines are in a world of their own - with ships generally much smaller and quieter than the large mainstream cruise ships operated by Celebrity and Princess. It's funny, but because those more mainstream ships are so much bigger they also have a lot more diversity in entertainment and culinary offerings. But luxury cruisers still prefer the less-active "yacht-like" experience aboard smaller ships.

Of course, luxury ships provide a lot more than just a ride on ship; they have excellent gourmet cuisine, highly attentive and personalized service, and they include more in the cruise fare; such as all beverages like beer, wine, spirits and gourmet coffee, and they also do not require paying separate gratuities for the staff onboard.

Having done the math of comparing mainstream to luxury cruise prices myself, I have seen that you can get about the same value out of a luxury cruise line like Regent Seven Seas as you get on a "premium" cruise line like Celebrity, if you assume that you would opt to use and pay separately for everything on Celebrity that is included in the Regent cruise fare.

Would you consider a luxury cruise? Tell us in our forums.

For example; I took a 300 square foot suite on a new Celebrity Solstice class ship, which represents one of the top-level accommodations on that ship, and a similarly sized room on an "all suite" Regent cruise ship, which at 300 square feet represents the bottom level accommodation. On the Celebrity ship I added in the cost of the daily drink package (about $50 per person per day), gratuities for staff members at about $12 per passenger per day, and I assumed the guest would be taking fairly expensive shore tours in each port of call - in the range of $200 or more. In the end, the cost of each cruise turned out to be surprisingly close.

But the major difference is that I was assuming the guest on the mainstream cruise line would be spending money on almost everything available onboard - about as much as one can possibly find; daily beverages, non-stop shore tours, etc. Generally, everything that is included in the cruise fare on Regent Seven Seas.

However, the cost of luxury cruises includes pre-payment for many extras that many luxury cruisers openly admit they never use. Many of them do not drink much alcohol or even coffee, and they prefer days at sea when there are no tours offered. Surprisingly, although they fully understand they are paying for things they may never use it does not matter to them. It's like having a pris fixe dinner and only eating half of your meal.

On the other hand, on the Celebrity cruise a person has the opportunity to save all the money for the costs of tours or drinks they choose to skip. Obviously, the luxury cruise does not represent the best "value proposition" where consumerism is concerned, why prepay for things you would never use? In fact, one common complaint about all-inclusive pricing that I hear is "I don't want to pay for someone else's drinking habit." So, exactly what is the appeal? Most luxury cruisers cite the convenience factor of not having to worry about additional costs, whether or not they use what they paid for, to be worth the cost of the cruise.

A recent conversation I had with Mark Conroy at Regent Seven Seas Cruises showed me the opposite thought process that makes luxury all-inclusive pricing work.

"Our customers see the inclusive (I might substitute the phrase "pre-paid") aspects of our cruises as a convenience and an opportunity to try things they might have otherwise missed," he explained.

"The inclusive drinks make for a more convivial atmosphere, since there is never any awkwardness about who will be paying," he said. In fact, I have found that when the waiter is constantly filling your wine glass at dinner one has a tendency to drink more, which always makes for more lively experience - until you fall asleep, of course.

Mark Conroy continued, "And as far as tours are concerned, many times a guest will be in a port of call where they think they have nothing more to see, but they see a tour offered with an activity they never thought to try before and decide to take it. When they end up having a great experience that they would have missed otherwise it makes for a very memorable cruise. So we are very much about having experiences you never expected."

Would you consider a luxury cruise? Tell us in our forums.

Recent Changes in Luxury Cruise Sector

Interestingly, just as Regent becomes the most inclusive cruise line in the luxury sector, and hence generally the most expensive, it is having its best year yet in terms of sales (there are other small, niche players that may have cruises that cost more, but they tend to have very small vessels that focus on very long, destination-rich itineraries).

On the other hand Crystal also just made its product more inclusive, including all beverages and shipboard gratuities in the cruise fare, and they are also having their best year yet. But what is most interesting about Crystal is that before they went this route they tried a different approach of giving each guest extensive shipboard credits, up to $2000 per person, to cover anything they wanted to do onboard; whether it was shore tours, beverages, or other things which are not included on other luxury cruise lines - like spa treatments. And even though this approach makes much more sense as a value proposition somehow it didn't appeal to the luxury consumers in the same way as inclusive pricing. After two years Crystal dropped the program.

Inclusive pricing just works, although no one can explain exactly why - including the people who buy the cruises. One obvious benefit is that it is easier to manage since there is almost no need to ever check your shipboard account to see how much you have been spending. But the advantages of a la carte pricing, especially with huge shipboard credits such as Crystal was offering, are obvious. You have the opportunity to plan exactly how you budget and in the end pay for just for the things you experienced - and not for things you didn't get.

But inclusive pricing just seems to work best for one reason; simplicity. It is the most convenient way to cruise even if it is not the most value-oriented. During your cruise money is rarely if ever an issue, you never have to sign for much of anything, and for some people that is worth its weight in gold.

Would you consider a luxury cruise? Tell us in our forums.

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