On the money for Royal Caribbean International

Michael Goldner explains how he approaches the complex task of managing cruise revenues for Royal Caribbean International to Sam Ballard

On the money for Royal Caribbean International
The multiple attractions at Perfect Day at CocoCay have helped to turn the private island into and important source of revenue

The world of cruise revenue management is a complex, yet fascinating, area. After all, cruise lines are multibillion-dollar businesses that have consistently managed to find new and innovative ways of generating revenue – both pre-cruise and onboard.

Royal Caribbean International defines revenue management as the side of the business that manages ticket sales and ancillary revenue, such as cruise insurance and air travel. Anything that passengers spend onboard the ships – such as onshore excursions or beverage packages – is managed by the onboard revenue team. The former is the domain of Michael Goldner, vice president of revenue management. “There are a lot more opportunities to drive revenue than challenges,” explains Goldner, when asked to define the state of the sector. “The key is to find the items that our guests value and are willing to pay for, then provide them with opportunities to purchase them.”

That is sometimes easier said than done – few people are willing to accept a hike in prices that solely benefits the cruise line, for example. However, Royal Caribbean’s Royal Up initiative provides a good example to show how revenue can be increased to the benefit of both corporation and customer.

“Our optional Royal Up programme allows booked guests to bid for an upgrade to a nicer stateroom,” says Goldner. “It’s a win-win situation as it allows our company to generate money for staterooms that may have otherwise gone unsold, meanwhile our guests are more satisfied with their rooms. The programme has been a huge success. We find that many of our guests who try a nicer stateroom will buy the same type of the room on their next cruise.”

Royal Up is that perfect blend of opportunity and reward. To make every revenue generation initiative be successful, however, the revenue management team must collaborate with other departments within the business. The Spa Staterooms, for instance, which are available from 2021-2022, are the result of a partnership between the revenue management and hotel operations teams. The category will include priority spa reservations, 50% discounts on one spa treatment, daily hot beverage delivery, Bluetooth speaker and “calming” in-room amenities.

“Revenue management touches so many areas of the company so we really get to work across the organisation,” says Goldner. “However, we look at ourselves as part of the larger commercial team and work most closely with our sales and marketing teams. While we are finance people, we’re probably the most commercially oriented finance team you’ll find. We see ourselves as a three-legged stool, where sales, marketing and revenue come together to focus on addressing the challenges and opportunities in the business. We align on the priorities and determine how to activate all of our sales channels.”

Royal Caribbean has more opportunity do this than most other cruise lines because it has a broad product offering. The company, which currently has a fleet of 26 vessels sailing around the world, works hard to place the right ships in the right markets and ensure itineraries include calls at Royal Caribbean’s unique destinations.

“Some destinations are incredibly popular,” says Goldner. “The Caribbean is the biggest piece of our portfolio and the sailings that include calls to our private island, Perfect Day at CocoCay, are extremely popular. It has become our number one destination in the Caribbean thanks to all the amenities we offer, including Thrill Waterpark with the tallest waterslide in North America, the largest wave pool in the Caribbean and ‘Up, Up and Away’, a helium balloon experience that takes guests 450 feet into the air and give them the tallest vantage point in The Bahamas.”

Goldner adds: “We’re seeing that guests are willing to pay for the experience they get on Perfect Day at CocoCay, and as recently mentioned in our quarterly earnings, we’re looking to send 2.4 million guests there in 2020. We’re delivering an incredible experience on the island, so our guests are giving it the highest ratings and they see the value in paying for it.”

This article was first published in the Spring/Summer 2020 issue of Cruise & Ferry Review. All information was correct at the time of printing, but may since have changed.

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By Sam Ballard
29 July 2020

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