Cruise Lines Expand All-You-Can-Drink Packages

For years, cruise fares that cover alcoholic beverages have been a staple of luxury and river cruises. Now the largest cruise lines in the world are answering with their own inclusive pricing.

In 2012, mainstream cruise lines including Carnival, Royal Caribbean and Norwegian experimented with all-you can-drink beverage packages. The trend accelerated last week when Royal Caribbean announced that it will begin selling drinks packages on its 22 ships early in 2013.

The move followed Carnival’s expansion to six ships of a similar program that it has been testing this year. Norwegian Cruise Lines is also testing out the formula.

Not commissionable
Priced between $42 and $55 per guest, per day, depending on the cruise line (see sidebar), the plans are seen as a pitch to attract more price-conscious cruisers.

Royal Caribbean has positioned its drinks packages as one component of a fleet-wide revitalization program that includes enhanced dining and beverage options.

For the most part, drinks packages are not commissionable. One exception is a smaller line, Windstar Cruises, pays 10% commission on an all-you-can drink packages purchased in advance of sailing.

Price-sensitive shoppers
Agents deduced that the new deals are being used to stimulate demand from hesitant potential cruisers.

“Part of the problem is people are not cruising because of the economy,” said Jennifer Binish, an agent at Travelex International in Hoffman Estates, Ill.

When money is tight, consumers feel more comfortable knowing the final price tag in advance.

“Nothing’s worse than going on a cruise and knowing at the end of the day you have a $2,000 bar tab. Then everyone isn’t relaxed – they have to budget,” Binish said.

Inclusive strategy
The moves also suggest that the major cruise lines are emulating the inclusive pricing of luxury lines, but without having to increase rates.

“People have always had that image of cruising as being all-inclusive,” said Michelle Fee, CEO of Cruise Planners in Coral Springs, Fla. “The more these cruise lines can make themselves like the luxury lines, the better.”

“People don’t mind spending the money upfront. What people do mind is feeling nickeled and dimed,” she added.

Competing with land?
Nancy Yoffe, owner of Cruise Planners in Spartanburg, S.C., also sees the mainstream cruise lines attempting to position their product favorably relative to land vacations.

“They’re competing with all-inclusive product, because a lot of agents are pushing all-inclusive vacations to their clients instead of cruises,” said Yoffe.

Yoffe said she is wary of the bigger cruise lines adopting a pricing model similar to the airlines. “I don’t want to see a world where everything costs extra, like the airlines have become,” said Yoffe.

“In the end, I don’t see any advantage to me,” added Yoffe. “All this does is drive travel agents to book other products.”

Drinking up
While more upscale cruise lines like Crystal Cruises have offered drink packages or all-inclusive pricing for some time, the wide scale introduction of drinks packages by mainstream lines is a first.

“It’s not a new trend overall, but it has only been available with a group booking,” noted Binish.

Binish told Travel Market Report that in the past she had negotiated all-inclusive drink packages for groups of 50 or more. But Carnival upped the minimum group size to 100 before the introduction of their new drinks program, according to Binish.

“Cruise companies really make their money on alcohol and gambling, so it’s not advantageous for them to offer drink packages,” said Binish. “If you have any kind of drinker in your group, the cruise line will lose money on you.”

Statistics show Americans upping their alcohol consumption during a down economy.