There are many factors that cruise lines look at to determine their onboard revenue, including the age of the guest, nationality and itinerary. There is a strong correlation between high net ticket revenue and high onboard spending. Top onboard spenders typically buy the higher priced cabin categories.
The high-end brands, which are mostly all-inclusive, include liquor and wine, speciality coffees and most restaurants, but there are still opportunities in the spa, gift shop, casino, connoisseur wine programmes and shore excursions (with the exception of Regent Seven Seas Cruises, where shore tours are included). The more the five-star brands tailor their onboard offerings to their guests’ profiles, the better their onboard revenues are.
For mass market and premium lines, the onboard revenue can be as much as almost half of the ticket revenue, so it is a vitally important component. There is typically a ceiling of what guests have in their mind and are willing to spend on the cruise outside of what they paid for their fare. Unless a product or service is so compelling that they feel it is worth it to invest more, higher onboard spend is unlikely.
Several years ago, many of the mass market lines began to charge for upgraded or unique dining experiences, higher-end ice cream and speciality coffees, while still providing plenty of inclusive food, coffee and ice cream. Consumers who value an upgraded experience gladly pay the additional charge for well-known brands like Ben & Jerry’s, Starbucks, Le Cirque restaurant or a Johnny Rockets hamburger, which are proven to have a very high consumer attraction.
There is another evolution around the corner: figuring out how to give guests wifi at a quick speed and at reasonable rates. This is where technology and onboard revenue will really come together.
It used to be that one of the selling points of going on a cruise was the ability to ‘get away from it all’. Today, people can’t (or won’t) live without being constantly in touch. They expect content, news, data, conversations and the ability to post updates on their social media profiles.
However, cellular roaming rates for both voice and data are currently too slow and costly, so guests immediately turn off their phones when they get onboard to avoid being hit with huge roaming costs. And who knows how many people do not even consider taking a cruise for their vacation because they can’t stay connected at the same cost as they can on a comparable land vacation?
We need to bridge the cost gap and speed between what guests can get every day at home and around town and what they are charged onboard. Vendors like Lufthansa Systems, Fidelio, SeaCell, WMS and a host of others are working on this now. Guests want reasonable per-cruise pricing and faster service. Per-minute pricing for internet needs to be ‘retired’. That’s so old school and PC thinking. Today, we are constantly taking a glance at our smartphones just to check recent texts or calls.
What would it mean if guests turned on their phones while cruising? It would allow the cruise lines to send them targeted, personalised offers, like a spa or gift shop special, or a last-minute bar offer depending on the crowd at the bar. The guests could also receive the ship’s newsletter and other up-to-the-minute information about the sailing, including a personal calendar to remind them about their upcoming appointments during the cruise.
If mobile phones were kept on, the photos taken on the ship would be sent to the guests right on their mobile devices. Today there is already facial recognition technology, and this would be the next step. It would allow the ships to print on order, saving huge lab and paper costs.
QSINE, a speciality restaurant on Celebrity, uses iPads to present the menu, allowing the guests to order, see visuals of the food, and have access to recipes, in a more interactive and fun way. Using this type of device, bar menus could allow guests to send recipe links to themselves or to friends. Restaurant waitlist confirmations – and offers if a restaurant is not full – could be sent to the guests’ phones on a real-time basis.
Customer profiling is critical in order to have the right merchandise assortment for itineraries and demographic in the gift shops. The ability to track the number of guests that enter the gift shop compared to how many are purchasing an item would be valuable information, all a form of crowdsourcing. Guests could also take a picture of an item they might like and send it to someone on land to get their opinion. Today, it is just too costly to do so.
In the spa, notices of distressed and perishable inventory could be sent to the guests on their mobile units. If someone had a massage earlier in the week, they may be a good candidate for another offered at a discount. The spa could also send waitlist clearance.
Mobile gaming is catching on, and guests could gamble anywhere on the ship. The ship could notify the guests that participate in the casino of last-minute tournaments if the casino is quiet.
If someone purchases a shore tour, the tour description and actual tickets can be sent to the smartphone, so no need for paper in the room. And no more need to print or deliver tickets onboard as scanners can be used to get the information from the guest’s mobile device.
Pre-selling is important in every area, from shore tours to beverage packages, spa and speciality restaurants. Research has shown that guests who pre-purchase services prior to the cruise are also the higher spenders onboard.
This article appeared in the Spring/Summer 2014 edition of International Cruise & Ferry Review. To read other articles, you can subscribe to the magazine in printed or digital formats.