This World Traveler

Tuesday, June 17, 2008

How did my cruise end up costing so much?

Ever wonder how that cruise at $999 a person suddenly ends up costing you closer to 1100 dollars per person? Part of the explanation has to do with taxes of course, but a growing reason is the dreaded fuel surcharge - a relatively recent appearance on most cruises' price lists. One which Royal Caribbean and its affiliated cruise lines "enhanced" today to as much as $15 per person per day.

In November, the relatively high price of oil led the major cruise lines to start charging fuel surcharges for their cruises. The surcharges were reasonable, to start. $5.00 per passenger per day for the first and second passenger was the standard across most cruise lines. Third and Fourth passengers didn't pay the additional charge. The only major exception was the cash-strapped Norwegian Cruise Lines which started at 7 dollars, and a two dollar per day charge for the third and fourth passenger.

The cruise lines are saying that it's because of high fuel prices and there's no doubt that this is a contributing factor to rising costs. But it's also a little shameless. For many cruise lines, especially from the Carnival lines, the pricing on cruises have remained roughly the same for 20 years when you adjust for inflation. Rather than actually raising rates, they've opted to raise fees for the most part instead.

There are two main reasons for a surcharge rather than a rate increase. First, most cruises are booked through Travel Agencies who get paid commission on the reservations. A surcharge is generally not something that compensates a sales agent. This means that any money the cruise line can generate from a fuel surcharge would go directly and wholly to the bottom line.

The second reason? A fuel surcharge is a surcharge to the fare. Cruise lines are now tacking on fees that range as high as 10% of the cruise fare per person without having to advertise a higher price. Yet, the pricing is higher by a significant amount.

And today, for good measure, Royal Caribbean announced that it would be increasing its fuel surcharges again effective June 30. On Royal Caribbean and Celebrity, the per day surcharge rate increases from eight to ten dollars per passenger. Third and fourth passengers will now pay a five dollar per day surcharge, up from three dollars. Their new niche cruiseline, Azamara Cruises, doesn't charge surcharges for third and fourth passengers on their sailings, but will charge a $15 per person per day, which is a doubling of their previous eight dollar a day surcharge.

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Roger, 12:56 PM | link | 0 comments |

Tuesday, April 01, 2008

Carnival Caves on Fees, Avoids Lawsuit?

Carnival Corporation caved on its plan to retroactively charge people for fuel surcharges today, according to USA Today. This move saves the company a lot of future trouble and allows them to back out gracefully of a bad faith $40 million windfall the company had basically extorted out of their consumers.

Here's the back story. On November 7, Carnival announced a $5 per passenger per day fuel surcharge to cover the rising cost of fuel. This is a common way for travel providers to hide a fare increase without having to share the increased fare with travel agents who are often paid commission. What made this particular fuel surcharge so awful, was that Carnival applied the fee retroactively. If the traveler has yet to sail, but has a cabin booked, extra charges of up to $140 per cabin applied. The only exception was for people who were already paid in full by the day before the announcement was made. Thousands of travelers lost, Carnival Corporation won to the tune of $40 million. Royal Caribbean soon followed, reaping $21 million of their own.

Other cruise lines jumped on the surcharge bandwagon, but did so for new bookings only. (Disney Cruise Line is the only major cruise provider not to charge a fuel surcharge.) The move, as you imagine, was not only highly unpopular, but also borderline illegal. After multiple complaints, both Carnival Corporation and Royal Caribbean were being investigated for unfair business practices with the Florida Attorney General.

Royal Caribbean quickly backed off as the investigations started to happen, refunding all retroactive charges. (Fuel surcharges booked after the November start date still apply.) However, Carnival hung tough until today, more confident that the terms of their Contract of Carriage would allow their surcharges to stand. Or maybe they were more confident in the large political donations given to Governor Charlie Crist's campaign in 2006, while he was Attorney General.

It turns out, Carnival approached the then Attorney General about this proposed Fuel Surcharge and got the thumbs up from the Crist machine. Two weeks later, two Carnival subsidiaries - Princess and Holland America Line - sent a check to the Florida Republican party for $125,000 according to the Orlando Sentinel.

Once this came out, rumors had been swirling in the industry that Carnival was about to cave, and today they did - now avoiding both a class-action lawsuit from angry travelers, but also potential pursuit of some real serious action by the Florida Attorney General. But is this story over? Or will it start sticking to Florida's Governor? Stranger things have happened.

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Roger, 11:23 AM | link | 3 comments |

Thursday, February 28, 2008

NCL ship says Good Bye Hawaii, Hello Europe!

Just as NCL has started cutting back its cruise service in one market, Norwegian is expanding its profile in another lucrative market, the Mediterranean. The Norwegian Jade (one of the former Hawaii based Pride ships) will not be sailing back to the Caribbean this winter as originally planned.



Instead, they will keep the ship in the Mediterranean throughout the winter, offering longer 12 night sailing options that will explore the Eastern Mediterranean, including Turkey and Egypt. Given the cool weather that hits the Western Med in the winter time, this is the cheap way to be the only major cruise line in the US to offer year round European cruising.

The ship which was designed for warm weather cruising in the Pacific will not be refitted to make the ship more user friendly for European winters. This limits what NCL can offer in the winter time as without a dome for the main pool area, the outdoor space would likely become mostly unusable throughout the bulk of a Western Mediterranean cruise in December and January. With an average high temperature around 50 in Istanbul in January, but warmer around Egypt, it still could be a very chilly winter for the pleasure cruiser, but probably a better situation than a sailing concentrated in Italy and France where high temperatures would rarely crack the 50 degree mark.

Depending on how the Jade is marketed, this could be a very smart move for a struggling cruise line. They would have a growing Mediterranean market basically to itself for a large chunk of the year, if these cruises are marketed to American cruisers. If NCL chooses to market to a European audience, they could find themselves in a bit more trouble, as there are plenty of cruises for Europeans in the Mediterranean year round and the NCL product is likely to be very different than the European standard which could be very problematic. Although this isn't a slam dunk for anyone, much less NCL which has consistently eluded success in the Hawaii market where it holds a virtual monopoly on the market, NCL does stand a very good chance in grabbing and holding market share in the European market.

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Roger, 5:43 PM | link | 0 comments |

Saturday, February 16, 2008

Norwegian Saying Aloha to Hawaii?

More cruise news is rearing its ugly head this week, this time around from Norwegian Cruise Line with cuts to capacity to its Hawaiian market where it enjoys a near monopoly, and hints they could be pulling out altogether. They're subsidiary, NCL America, was at one point featuring sailings from Hawaii with four ships. Three of which were flagged from the United States, a requirement to be able to sail the ships on a purely Hawaii itinerary.

Last year, NCL retired the Norwegian Wind from the fleet. This year, the Pride of America was repositioned as the Norwegian Jade. Now, this week, NCL America further reduced capacity in Hawaii by announcing that it would be transferring the Pride of Aloha to its parent company, Star Cruises, and targeting the ship to serve the Asian Market. It's a sad story, really.

It makes me wish that they would just send the ship to New York City instead and then NCL could send back the horrific Norwegian Spirit which came over from Asia in 2001 and has never actually been refurbished.

But there is some good news in the offing, the remaining Pride of Hawai'i will stay in its seven day cross state operation for the foreseeable future, having had its itineraries announced through 2010. So NCL America is here to stay for the foreseeable streamlined future. Or is it?

Maybe not so much, according to the Honolulu Star Bulletin. NCL America is heavily backing proposed legislation which would create rules that essentially force other cruise lines to leave the Hawaiian market altogether (like Carnival, Princess, Holland America and others.) The proposed rule would force a ship to stay in a foreign port for 48 hours before being able to port in Hawaii. This would turn the 15 night options that other cruise lines currently offer on a semi-regular basis into 17 night cruises, something that isn't too likely to happen. NCL America seems to think that this is a requirement for their profitability.

The bottom line? NCL America is losing money and is losing out on the Hawaii market to its competitors despite having a huge advantage of not having to cross half the pacific ocean to reach its first port in Hawaii. Because of current Jones Act regulations, NCL America is the only cruise line able to offer purely Hawaiian itineraries and has a virtual lock on the 7 night Hawaiian cruise market. Yet, due to poor staffing, inattentive service, and frankly overpricing the market, the cruise line has struggled for years. Changing cabotage rules to benefit NCL America will not straighten out these core failures.

Reducing capacity by 75% should allow its one remaining Hawaii cruiser to become profitable. But its success could be foiled by the line's relatively poor product reputation. Will NCL America stay in place for the next two years? Probably, but don't be too shocked if in six months, the Pride of Hawai'i says Aloha for the last time.

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Roger, 4:06 PM | link | 0 comments |

Thursday, February 14, 2008

Three Ways Cruises Are Changing

As security restrictions around US travel continue to get restrictive, the way you travel on cruise ships are changing. Here's a brief summary of three ways that cruising is changing and things to be aware of for upcoming sailings.

1. Passports are Needed
Passports are needed. Or they will be soon. The US government is now requiring Passports or Passport Cards for all travelers leaving the US by plane or car at this time. Used to be able to drive across to Canada or Mexico with just a driver's license and birth certificate, but this is no longer sufficient. For some reason (to be read: Cruise Line lobbying money) cruises in the Caribbean, Bahamas, Canada and Mexico are not yet affected by this ruling, but by the end of the year, you'll need to get a passport to get on a ship.

But it's a really good idea to have one now, even if the cruise doesn't require it? If there's an emergency that requires a guest to leave the ship and fly home, it'll be a lot easier to make that trip with a passport which is now the required documentation for international flights. Obviously, the US government will work to accommodate its citizens that need to return in an emergency situation, but having the passport to begin with would make that trip home no more stressful than it already would be.

2. Get To The Ship Earlier
Most ships leave Florida around four or five in the afternoon. In order to make the ship, it was generally assumed that you would need to be there about an hour before the cruise left to make it on to the ship without a problem. Due to new federal guidelines that go into effect on Monday, most cruise lines are now requiring that you are checked in 90 minutes prior to departure time for your cruise. Even earlier for some passengers. The reason? The Federal Government is requiring the Cruise Lines to give information of all guests on the ship 60 minutes before the ship is allowed to leave. Not quite sure how the Federal Government will make traveling by ship more safe with this information so early, but that's the way Uncle Sam wants it - so that's the way the cruise lines will do it.

3. Say Hello to E-Documentation
Most cruises now encourage the use of E-Tickets rather than the traditional papers and tickets that used to be sent to passengers a month or so prior to departure. In some cases, like Carnival, Royal Caribbean and Celebrity, passengers can choose between E-Tickets and traditional documents, provided they have booked far enough in advance. Princess and Norwegian Cruise Lines no longer issue paper tickets and all of their documentation is done directly online through their cruise line websites. Holland America Line is the only major cruise line to currently not offer an e-documentation option. This is probably because of their focus on longer cruises that appeal to a mainly older audience.

However, all cruises allow you to pre-register for their sailings online, using cruise line's websites. And there is a huge incentive for doing so. Failure to complete your preregistration online can mean denied boarding for some cruise lines, especially if you are cutting it close to departure time on the day of sailing. If you haven't completed your pre-registration online, Cruise Lines that will allow you to board, require you to be there no later than two or two and a half hours prior to sailing. Again with new TSA disclosure laws that the cruise lines have to abide by, don't look for flexibility from the cruise lines regarding this new rule.

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Roger, 9:17 AM | link | 1 comments |

Thursday, January 24, 2008

Sneak Peek: Celebrity Solstice

Yesterday, I had the joy of meeting with one of my friends from Celebrity Cruises. As a result I got a sneak peek of some of the things coming up on their new ship, the Celebrity Solstice which will start sailing the Caribbean in December. Last week, the cruise line revealed its new grass technology by announcing "The Lawn Club," which simply put is a half acre of actual turf on top of the new ship. But here are some more statistics on the new ship.

The Solstice will be large. 122,000 tons roughly, about 25-30% larger than the current flagships of the fleet (Millennium Class), and about 10-15% larger than the largest Carnival ships. The theme on the ship seems to be more geared towards adults than families, with a country club theme throughout.

Everything is two story, the solarium, the library, even the lido deck has a second level of deck chairs. The designs do look quite smart, and off the main pool on the lido deck, look for a waterfall ending in or near the pool.

Despite the ship's theme being very adult, there is a great new addition to their children's program which is worth mentioning. Thanks to a partnership with Leapfrog Educational Toys, they will be one of the first cruise ships to offer a children's program for kids under 3. They haven't announced a minimum age yet on that, but I'm guessing it'll be a program for 2 year old toddlers. Details of the program have yet to be announced, but it basically looks like a glorified during the day babysitting service, giving parents the option of being adults.

The other great thing with the new ship is the new class of stateroom being offered, Aqua Class. These are spa staterooms. The staterooms themselves are the same size as other balcony but offer upgraded amenities, better access to spa treatments, and in the room - an amazing five showerhead panel in the bathroom, allowing you to get an actual great shower aboard a cruise ship. Also, Aqua Class passengers get their own restaurant called Blu. The focus will be spa menu meals, but will also have traditional fare available. Access to this restaurant will be available to other passengers, but only on an availability basis, and other passengers will be charged as if they were going to be going to a specialty restaurant. No word yet on access for passengers in full suites for this restaurant.

All in all, Celebrity is putting a premium product together for the Solstice class. Their expansion plans are ambitious, putting four of these megaships out between November 2007 and the end of 2010. And for the most part, I think it captures their market well. Things like The Lawn Club, and the Glass Blowing exhibit are a bit beyond me, and I think will be beyond most guests, but the other new features are generally innovative and good. I think this ship will be a success, and hopefully the launch will go more smoothly than Celebrity had with its Azamara initiative last summer.

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Roger, 12:27 PM | link | 0 comments |

Friday, January 18, 2008

Celebrity Cruises Goes Green!

Celebrity Cruises has discovered the future of cruising, and starting with the Celebrity Solstice which will be inaugurated later this year, they'll be providing it. Amazing high tech gear will be needed to maintain and showcase this wonderful new attraction to cruisers everywhere. So the future of cruises sits just below this very sentence!



That's right, Celebrity Cruises will be introducing the grass concept to their new ship with "The Lawn Club." One of the public decks will feature about 23,000 square feet of honest to goodness grassy goodness for people to enjoy, walk on, putt golf balls and play bocce on. It's like a piece of that perfect backyard you hope to create at home, for your vacation.

Which begs the question, why would you travel thousands of miles to be reminded of your backyard? Not to be too worried though, Celebrity is making this strange thing a little weirder by offering glass blowing demonstrations and classes as well that you can take on the lawn. Seriously. Celebrity is teaming up with the Corning museum of Glass to bring this show to sea.

I don't quite know what else to say... because I don't really know how to react. Will this get a reaction? Yes. I just don't understand it to be that much of a draw. Celebrity does go for more of a country club feel, so this may work to the cruise line's advantage, but at the same time it's another one of these things I don't get. Much like an ice skating rink on the Caribbean sea, its an interesting idea but not something that would make me jump on a cruise.

I think for most people, the itinerary and service are the big draws to a cruise line like Celebrity. There's a draw to being treated well on a well appointed ship, but this kind of gimmick is more suited to Royal Caribbean or Norwegian who need to put forth these gimmicks to keep the same itineraries on otherwise ordinary ships interesting year after year.

And how interesting is this ultimately? Sail Celebrity, watch glass harden and grass grow. Sign me up!

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Roger, 6:35 PM | link | 0 comments |