A La Carte Pricing Coming to Cruises?

Seniors on the Go
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Carnival Fantasy in Grand Turk (Photo: Erica Silverstein)
Editor's Note: This story was originally published on October 22, 2010. To see the most recent SmarterTravel articles on related topics, please click on any of the following links: Carnival, cruise, Ed Perkins, Seniors on the Go.

Last week, Carnival Cruise Line announced a "test" of adding an extra $18 to the cost of steak or lobster entrees in the regular dining rooms on three of its big cruise ships. No big deal, you say; after all, Carnival has been doing that since 2008, and several big lines already charge extra to eat in "stand alone" steak houses and other specialty venues. But to me, it's more than just another "ho, hum" story. Instead, I suspect it's a foretaste of a trend among cruise lines—at least the mass-market lines—to move broadly toward a la carte pricing in the coming months and years.

For most of their modern existence, cruise lines have touted "inclusive" pricing as a major advantage over most vacation alternatives. With the exception of tipping—and usually alcoholic beverages—once you bought into the cruise, you really didn't have to spend anything extra for the duration. Of course, you paid extra for port excursions and some specialty recreation activities, but those were strictly options. Meals, snacks, regular beverages, entertainment, and most onboard activities were "free" once you got onboard.

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That started to change a few years ago, mainly with the introduction of alternative specialty eating venues but also with some recreation facilities. Still, until recently, standard meals and snacks were included in the base price.

What's changing? Basically, the way you buy cruises is changing. An executive at some travel company was recently quoted as saying that, with the giant online travel agencies, the travel industry has created a business model "specifically designed to bring our prices down" as much as possible. Those various agencies and their search engines permit instant price comparisons among essentially all the suppliers in any given marketplace. They don't just facilitate, they emphasize searches for the "lowest" price or fare.

The big airlines recognized this new marketing reality a few years ago: That showing up as the "lowest" option in any search is a huge competitive advantage. In response, most have started to charge extra for many of the facilities and services that were once bundled into the fare, primarily so they could keep that base fare figure as low as possible. In fact, their behavior clearly shows that, absent diligent government oversight, they would engage in wholesale price-splitting: Carving out an arbitrary portion of the real fare, giving it a plausible label—think "fuel surcharge" here—and excluding it from the base fare display. This "lowest fare" focus is especially important with airlines, because you, the consumers, have shown that low fares easily trump any minor product differences.

My take is that the mass-market cruise lines are facing the same sort of problem. With the advent of modern megaships, product differentiation is decreasing. More and more, you will buy a cruise on the basis of an online search, for example, for the line and ship with the best price for a balcony cabin from South Florida to the Caribbean in March. Like the coach/economy airline seat, the mass-market cruise cabin will become a commodity.

Clearly, if I'm right, cruise lines will chip away at their total service packages by adding extra charges for food, beverages, and activities. How fast they will chip depends on market response. But the ability to come out "lowest" in any sort of price comparison is far too important for any mass-market line to ignore. If the only way to show lowest in a search is to charge extra for what used to be "free," they'll charge extra.

I normally don't cover any story where I can't offer some sort of strategy for you to avoid a gouge or take advantage of a deal. But this time, I really can't. Sure, you can avoid booking on lines with lots of extra charges, but you may not even find out in advance unless you follow the market closely. And, therefore, that's about all you can do: Keep up with SmarterTravels' sister site, Cruise Critic, cruise publications, or your travel agent, and book away when you can.

Your Turn

What are your thoughts on a la carte pricing coming to cruises? Will you continue to cruise anyway? Share your thoughts by adding a comment below!

 
 
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