When demand for your product or service outgrows the supply, that leads to higher prices. That's something Walt Disney (DIS) - Get Free Report has embraced at its theme parks, where it uses dynamic pricing to maximize how much it makes on admission sales.
Concert and event promoters have done the same thing for years as has the cruise industry. On a cruise, you may have paid a different price for the exact same cabin as the person in the room next to you.
Sometimes that happens when someone books early, and a cruise becomes more popular than the cruise line expected. It can also happen in the reverse direction if a cruise fails to sell well, which could force the cruise line to lower prices.
Filling cruise ships has not been a recent problem for Royal Caribbean (RCL) - Get Free Report. That's something CEO Jason Liberty talked about that during his company's first-quarter earnings call.Â
"We knew that demand for our business was strong, but what has transpired was a record-breaking extended wave season that translated into robust bookings and meaningfully better prices. In the first quarter, we delivered a record 1.9 million memorable vacations, achieved 102% load factor at higher pricing than 2019, and earned exceptional guest satisfaction scores" he shared.
That success has allowed the cruise line to raise prices not just on cruises but on many of the cruise add-ons Royal Caribbean sells. It can be a challenge to know exactly when the company has raised prices as things like its Voom internet, Deluxe Beverage Package, and Ultimate Dining packages do not have a set price, so increases are easy to hide.
Now, after the cruise line recently raised non-refundable deposits on many suites while also extending that policy to include junior suites, the company has notified travel agents of another price increase.
Most Royal Caribbean cruise ships have been sailing at (or over) 100% capacity.
Image source: Dukas/Universal Images Group via Getty Images
Royal Caribbean Raises the Price of Travel Insurance
Cruise passengers buy travel insurance in case they have to cancel their cruise given that many cruise fares cannot be cancelled. Royal Caribbean sells travel insurance and recently sent an email to travel agents letting them know that it's raising its prices on most policies. Â
From time to time, we evaluate the product offering and pricing. As you may know, the plan cost is based upon your clients’ total trip cost (referred to as Total Protected Vacation Cost). Effective June 1, 2023, the price of our Travel Protection product will increase for most guests, specifically when your clients’ Total Protected Vacation Cost is less than $8,000. For specifics, please refer to the pricing chart included below. This price change applies to both individual and group bookings.
Royal Caribbean was clear in pointing out that its insurance offerings have not changed, but its pricing has. It also made it clear that while already-purchased packages would be honored, there are some caveats.
"If your client already has our Travel Protection on their reservation, this price may change if certain events trigger a change, such as a change in ship or sailing date, the addition of a promotion, or when the booking moves from offered to booked status, among other events," according to the email.
Royal Caribbean shared a chart with the new pricing but did not include the old so people can compare it. Passengers do not have to buy travel insurance at all and if they want it they do not have to purchase it from the cruise line as a variety of third parties offer it.
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