Friday, August 30, 2013

Oceania Cruises Increases Cancellation Fees and Beverage Charges...Again (Twice in 10 Months)

Oceania Cruises has just announced that it is, among other things, increasing the cost to cancel a cruise long before final payment is due as well as the price of its Beverage Packages.  It is, to be sure, deja vu all over again!

And it is not lost on me that the announcement is made just as the Labor Day Holiday Weekend begins...so, as politicians know, nobody reads the headlines announcing the bad new.


On December 12, 2012 I wrote an article:  Oceania Cruises - A Little Less Consumer Friendly. Why? And What's The Good News? wherein I cautioned that Oceania has redefined "long" cruises so as to commence the penalty periods much earlier than previously. 

Increasing Penalty Period and Cancellation Fees

Having increased the penalty in December, now Oceania is increasing the penalty (more kindly called an Administrative Fee) when you cancel 120 days to 91 days prior to sailing from $100 per person to $250 per person on cruises of 14 days or less; just as it is for longer cruises.  And for Owner's, Vista and Oceania Suites the cancellation amount (a/k/a for lesser staterooms "Administrative Fee") of a whopping ten (10%) percent of the cruise fare.

At the same time, as Oceania's longer Grand Voyages are usually also sold in shorter lengths, Oceania is increasing the deposit for staterooms to $1,500, up from $750.

Increasing Beverage Package Cost...Again

Oceania Cruises has also announced that its Beverage Packages that it raised prices on in December by $5.00 per person per day are being increased again by $5.00 per person per day.  This increases the prices as follows:

  • House Select Package (Wine & Beer with lunch and dinner) - $39.95 per guest per day
  • Premium Select Package (Premium Spirits, Wine & Beer whenever you wish) - $59.95 per guest per day
If you do the math, the price increase from $29.95 to $39.95 is a whopping 33%  and from $49.99 to $59.99 is a very significant 20% in just ten months.

Are people drinking more than expected?  No.  Trust me on this, the cruise lines know...almost to the drink...what a guest will consume broken down by categories such as length, itinerary and ship.

The reason is, to me, obviously.  The Holy Grail of cruising:  Increasing Onboard Revenue.

What's This All About?

Oceania is, clearly, having a very difficult time with people booking cruises and then cancelling them very close into final payment; leaving Oceania with a good bit of inventory and very little time to sell it. 

Why is this happening?  It is either a realization that Oceania is not the great bargain they thought they was when they booked it or somehow Oceania has its marketing keyed in on people that are less committed to their travel than the other cruise lines.  (While I find some of Oceania's tactics troublesome, the onboard product - when viewed as premium - not luxury - is quite good.)

At the same time Oceania is claiming it is increasing its pricing on various cruises, but truth be told I am pretty tired of Oceania's "Let's Make a Deal" approach to bookings.  The reality is that Oceania regularly seeks move-offs (people moving off their cruise to another less popular one) with significant discounts. For example, I have a client that is booked on a 10 day January 2014 Caribbean cruise and has been offered to move to the Regatta on entirely different itineraries:   12 day New England Cruise or a 14 day November Transatlantic Cruise.  (Some offers are already being made for cruises that are in late 2014.)

Other clients are offered highly discounted cruises if they back-to-back them with their existing cruise. 

While this speaks to Oceania using some pretty creative and aggressive ways to fill its ships - for which I have no issue (other than the time it takes me to contact the client with the barrage of offers...taking up my time relaying pretty much worthless to my clients offers), it also speaks to Oceania not so truthfully telling the public that it is not discounting its prices, and is increasing them. 

But there is something more important that I see...Much more important.

Oceania has created its own monster.  It's efforts to move passengers off of cruises, give high discounts on back-to-back cruises, regularly offer upgrades at discounted prices (yes, it does that too), it has created a philosophy that nothing is certain and better deals are bound to come the passenger's way.

Honestly, if you are one of those people, you probably are not a Goldring Travel client.  You are not cruising for a particular itinerary, at a particular time, in a particular category, on a particular ship.  You are probably looking for a deal...and have set yourself up for getting that deal by plunking down your $750 deposit.  But when that deal doesn't come, or the deal isn't good enough, you simple cancel your cruise.

And now you see the problem.  Oceania has trained its marketed to clientele to bargain hunt and bail if the bargain doesn't materialize.

So, to me, what seems like sophisticated marketing strategies are actually plays that don't work in the real world.  Oceania is plagued with near sold out cruises that wind up with significant availability, mid-range stateroom categories that don't fill while the inside and oceanview staterooms sell out, and a bigger problem:  It markets hard that it does not discount...or rarely does.

So, while your cruise price might, as a result of all of this, be a "deal" Oceania has a plan to get it back through higher Administrative Fees, higher Beverage Packages, higher priced shore excursion/transfer, and more extra-cost onboard activities.

Don't get me wrong:  As I said, Oceania Cruises onboard product is quite good...as long as you know what it is going to ultimately cost you.  My job, as a travel professional, is to make sure you know.