Royal Caribbean Cruses Ltd. Chairman Richard Fain said the
company put a stop to "last-minute" cruise discounting in North America,
starting in March. He called the practice damaging to its brand
image.
The definition of "last-minute" could mean 10, 20, or 30 days out,
depending on the sailing.
“From that point on we will hold our price,” Fain said
during RCCL's first-quarter earnings call with analysts. “This may cost us bookings in the
short term and our guidance may reflect that, but we believe the long-term
advantage for our brands is worth the small short-term cost. Over time, we
believe this will lead to happier guests, happier agents, and better branding."
Fain said the only exception to the policy is short cruises of up to four days, sailings that typically attract close-in bookings.
Fain called prices offered in the days before a sailing, often at significant discount,
"disruptive to the system." While those sales make up a just small percentage of RCCL's total
business, the repercussions are significant, he said.
“They upset many of our most loyal customers by creating
uncertainty about the price they pay, they cause headaches for travel agent
parents that don't know what price to rely on, and they undermine our brand
image,” Fain said.
Fain said that it was too early to tell if the policy had
any measurable impact so far, but that it could have a negative short-term
impact, because ships will sail with slightly lower occupancy. He acknowledged
that it may “take a little while for travel agents and consumers to understand
just how serious we are about this” but that RCCL is committed to the policy.
“We think getting our customers out of this used-car salesman kind of mentality will be good overall for the brand, good for
their experience, and therefore lead to longer yields in the long run,” he
said.