Cruise lines are expanding and refining their mobile device apps, and one result is a growing stream of onboard revenue as more people book activities through the app before boarding.

A prime example is Carnival Cruise Line's app, the Hub, which in February was upgraded to enable use prior to departure.

Since then, Carnival guests have been able to purchase shore excursions, spa treatments, specialty dining reservations and WiFi packages through the app.

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Carnival guests had previously been able to make those bookings online, but pushing the functions to the Hub is likely to generate more activity because smartphone usage is growing while home computer and tablet use is in relative decline.

Vacation planning is now "in the palm of their hand, in ways that consumers have come to expect," said Ron Dillehay, vice president of booked guest e-commerce and guest experience for Carnival. 

Cruise executives like to encourage booking activities before boarding, in part because they say it gives consumers the psychological permission to spend additional money spontaneously once they board.

Norwegian Cruise Line Holdings CFO Mark Kempa referred to such behavior in a recent investor conference call as a "fresh wallet" boost. 

"As we see more of the onboard revenue getting sold prior to the consumers stepping onboard, we get a little bit more visibility on that," he said. "And again, we are able to focus more on the very fresh wallet concept."

The Cruise Norwegian app has been expanded to all 16 ships in the Norwegian Cruise Line fleet, replacing the older iConcierge format.

"We've been very, very happy with it," said Norwegian president and CEO Andy Stuart. 

"It really seamlessly connects the pre-cruise experience with the onboard experience, putting tremendous energy into pre-sales for dining, entertainment, shore excursions; and [we're] having a lot of success with that."

Stuart said the app has garnered a 4.7 rating in Apple's app store. "So guests like it, they're using it, it's effective at driving revenue" he said. 

By coincidence or not, the Royal Caribbean Cruises Ltd. entrant, Excalibur, is also pulling down a 4.7 rating, chairman and CEO Richard Fain said in a conference call with investors. 

"With one single app, our guests can now control so many more aspects of their cruise experience, that it frees them up to enjoy their vacation more, instead of spending time organizing it," Fain said.

Excalibur, a successor to an earlier iteration of an app known as Royal IQ, is on about 60% of Royal Caribbean International's 25-ship fleet and is expected to be available to guests on every ship by the end of the year.

Princess Cruises, rather than roll out a smartphone app, is focused on development of its Ocean Medallion wearable device, which offers personalization of a guest's cruise experience. It, too, can be used to pre-book fee-extra activities.

In a conference call in January, Carnival Corp. president and CEO Arnold Donald said that Carnival was still evaluating whether or not the Medallion is driving improvements in revenue. 

"It looks very, very positive, but it's new," Donald said.

Another way some cruise companies are using their apps to make money involves their ability to facilitate onboard chat, a function that can trigger expensive roaming charges if conducted through cell providers at sea.

Onboard chat is priced at $5 per person, per cruise on Carnival and $9.95 on Norwegian.

Stuart said Norwegian had seen a 26% increase in the sale of such packages since Cruise Norwegian was introduced.

Royal Caribbean attributed part of its unexpectedly strong first quarter 2019 net income to a surge of onboard revenue, in particular from shore excursions, beverage packages and internet packages.

"I think as time passes, we're becoming a lot more sophisticated with our ability to [sell] pre-cruise products, services and experiences," Royal Caribbean International president Michael Bayley said. "And I really feel like we're making good progress."


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