Q – I am sorry – but your industry seems to lack any ethical foundations when it comes to marketing cruises and other types of vacation offerings. We are AARP Members, belong to one of the nicer golf clubs in Ohio, and we donate our time to numerous charities. As a result, we are inundated with mail and e-mails offers the vast majority of which really insult our intelligence. Sometimes I wonder if it is deliberate. But the one that brings about my question is the offer received from two different cruise lines that indicated that if I would only call them, I could get two-for-one pricing – meaning my wife can join me for free. As a former CFO, I smell a rat. What should I be thinking when I receive a two-for-one cruise offer?
A – You should be thinking that your intelligence is being insulted. The assumption of most travel advertising is that the travel consumer is a dimwit who can be told virtually anything about pricing. The industry is built on a foundation of misinformation and manipulation. You are not supposed to understand cruise pricing.
Before a pricing brochure is finalized, cruise executives determine the actual price they need to put on each stateroom category to realize the kinds of profits they need to generate. They take that price and double it. They then advertise 2-1 pricing. The Top Ten Cruise lines, the real ones, tend to raise their pricing every 90 days while creating new offers designed to make the consumer feel good about paying more – they may raise prices and then throw in one or two free shore excursions or gratuities.
The secret for the consumer is to fully understand the real price formula every potential cruiser needs to know. We have mentioned this before in one of our responses – but here is the secret to understanding cruise pricing:
Use the same mathematical formula each time you consider a cruise: Take the minimum unobstructed outside stateroom and remove the port charges and the air from the total cost. Then, take the total cost and divide it by the number of nights you will spend on the ship.
This will give you a per diem price with the “applesauce” removed. Use this formula each time you look at a cruise to determine the real cost of your cruise. You can decide if the air is a good deal separately. We actually have a client who has used this formula for years and, based on the outcome, he decided to book a 72-Day Grand Voyage based on the low per diem costs.