Is Royal Caribbean Trying to Swim Upstream?
Written by: Kuki
I’ve witnessed Salmon swimming upstream during spawning season in Alaska, and watched the bears “fishing” for dinner, swatting at the Salmon as they tried to get upstream. I’m wondering now if Royal Caribbean Cruise Line is also attempting to swim upstream.
Economists throughout the planet have pretty much agreed the world economy is fragile at best. Consumer spending is lagging, unemployment rates are climbing, and the cruise industry is trying to react, to make certain they survive, and hopefully even flourish. Travelers are sitting on the sidelines needing to be lured with great deals.
The last two months my email inbox has been flooded with all variety of sale and discount offers from the cruise lines, including the premium brands. Even the luxury brands are offering all forms of incentives from 50% discounts including free airfare to $2000 shipboard credits.
Yet, frankly, in the past several months it seems to me that Royal Caribbean Cruise Line is acting as though this battle doesn’t exist for them. They have at the very least taken a different tact.
On January 6th of this year I wrote a block entitled “The Nation of Why Not.. Charge More”.
It discussed the fact that RCI seemed to be out of touch with the economic times, and the competition going on in the industry, with other lines steeply discounting their pricing to attract business, while they were introducing additional fees.
RCI’s reaction to address the issue of competition and discounting in the industry was an announcement by CEO Richard Fain stating that he’d rather RCI sail with empty cabins than discount the prices.
Since that proclamation it seems Royal Caribbean has taken a series of steps which to this admittedly feeble mind seem contrary to the marketing required to attract more business in today‘s world. Some of them may seem insignificant, and some may be viewed as understandable steps to attempt to increase onboard revenue, but when viewed as “a package” or over-all strategy, they may illicit the opposite reaction by the cruising consumers than what Royal Caribbean envisioned.
Not necessarily in chronological order, but here’s the basics of the changes I’ve been referring to.
-Richard Fain’s proclamation of no deep discounting
– the cessation of dividends paid to shareholders.
– Reducing shareholder benefits- When those owning a minimum of 100 shares were able to receive a shipboard credit, they are still able to, but it is no longer combinable with other onboard credit offers, general loyalty offers, “dollars off” promotions and savings certificates. Guests have the option to choose between the shareholder benefit or the other offer.
– $3.95 Room service fees for room service orders after Midnight.
– a price increase for Johnny Rockets Diners onboard – to $4.95 per guest
– $14.95 for a “better quality” steak in the Dining Room
– no longer offering complimentary cocktails at the Crown & Anchor repeaters party
– Reserved sun-loungers by the main pool for Suite guests only, as well as reserved seats in the theatres and Studio B for ice shows (where applicable)- which naturally means restricting access for those who are not Suite guests.
– A $7.95 charge for a children’s lunch and play program for those ages 3-11.
– The reduction of benefits to the most loyal members of their “Crown & Anchor” repeat cruisers program. No longer allowing “Diamond members” of the program (those with more than 9 cruises) access to their Concierge Lounges.
As well, while instituting these policies Royal Caribbean recently took a Public Relations “hit” when it came to light they had been working with Buzz Metrics since 2007, establishing a viral marketing campaign at work on several Internet Message Boards called “The Royal Champions”; as first brought to the forefront by Anita Dunham Potter on MSNBC.com
– with follow ups other journalists covering the industry.
I am not going to comment on the problems I see in each of the above listed items individually, but the cumulative affect seems to have ignited a firestorm of backlash. At least that seems to be the immediately obvious reaction when scouring the message boards and Internet blogs for reactions.
Considering Royal Caribbean is the 2nd most successful cruise line in the world, the planning, sequencing, and implementation of these changes seems to be uncharacteristically badly thought out.
This is normally a company which is tremendously forward thinking, particularly in their ship designs; adding unique activities and amenities to each new ship as it is floated out of the shipyard, but…..
The question is – will this backlash negatively impact Royal Caribbean in real ways; real dollars going to bookings on competing lines by both customers looking for lower prices, and by their own past guests and shareholders feeling damaged by the additional new charges, and RCI having moved the goal posts to access their repeater’s program perks?
Is Royal Caribbean the fish swimming upstream, and will be they be swatted at by the hungry bears of the other cruise lines as they try and swim by?
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Posted: March 31st, 2009 under Kuki.