Travel agents responded to news that Norwegian Cruise Lines will increase fares by as much as 10% on April 1 with questions about the reason for the rate hike and worries that an additional fuel surcharge is on the horizon.
“Frankly, I hope the rate increases are Norwegian Cruise Line’s answer to fuel price hikes, and that we won’t see additional taxes and fees added in the future as a line item,” said Lynn Catalina, co-owner of a Universal City, Texas-based Cruises Inc.
Paul Parker, co-owner of two Arkansas-based Cruise Planners franchises agreed. “I would rather see a fare increase as opposed to the cruise lines initiating the unpleasant ‘fuel supplement’ charge which, in my opinion, has more of a negative impact on consumers.”
Fuel costs are not the issue, according to Norwegian. The line told Travel Market Report that increased consumer demand is the sole reason for the fare hike.
“We are increasing fares in response to high demand, and we wanted to give agents a chance to get their clients booked before the fares increase,” said a spokesperson for the line. “The price increase has nothing to do with fuel prices.”
The cruise line said it recently has seen “exceptional demand,” surpassing its all-time highest weekly booking record three times within the past eight weeks. Norwegian declined to provide Travel Market Report with specific statistics.
Ryan Ranahan, director of marketing and IT at Crown Cruise Vacations, sees the price increases as a natural progression of the line’s strategy and current positioning in the marketplace.
“I think Norwegian Cruise Line has played a really strong part in the cruise industry over the past year, especially with the introduction of the Norwegian Epic,” Ranahan told Travel Market Report. “Norwegian has been reporting increases from last year to this, so it’d only make sense for them to increase their pricing as the demand is there.”
Clients won't scare
Parker, with Cruise Planners, doesn’t believe consumers will be spooked away by the higher prices.
“A cruise isn’t like buying a gallon of milk or gasoline, which you purchase often and subsequently notice a price increase from week to week. Therefore, I think the increase in Norwegian’s fares won’t be noticed,” he said.
Sandy Zingrich, owner of Travel Leaders – South County Office in St. Louis, agrees. “I don’t think a small increase will scare clients away. They are already voicing expectations of rate increases due to the oil price increases. As long as it is not too sharp an increase, they won’t complain.”
Please, no fuel surcharges
However, if Norwegian imposes a fuel surcharge on top of the higher fares, consumers might become more skittish.
“Higher prices are always good for travel partners as they are able to receive a better profit, but today clients are very sensitive to price,” said Ranahan. “So an increase could be premature especially if the issues in the Middle East keep flaring up and a fuel supplement is imposed.”
“If Norwegian Cruise Line raises the fares and then adds a fuel supplement in the next few months, I would say they are hitting passengers with a double whammy – which would be very unfortunate,” added Catalina of Cruises Inc.
Push for bookings?
At the same time that the line announced the April fare increases, it also extended its “Free Upgrades for All” promotion through the end of March.
“I think they strategically are using April 1 since traditionally Wave Season goes from Jan. 1 to March 31,” Ranahan said. “In other words, they’d like a client who is on the fence about booking earlier to book now to save. It’s a pretty strong marketing strategy.”
At presstime no other cruise lines had followed Norwegian’s lead to implement rate increases. Costa Cruise Line and Princess Cruises both told Travel Market Report they are not planning any across-the-board fare increases in the immediate future.