Photograph courtesy Norwegian Cruise Line
On Royal Caribbean’s brand-new, 5,400-passenger Allure of the Seas, you can belly up to the counter of the very first Starbucks at sea and order a grande mocha latte. There are nightly performances of a Cirque du Soleil-style show on Norwegian Cruise Line’s (NCL) 4,100-passenger Epic. Disney’s 4,000-passenger Dream will have its own 765-foot-long water coaster.
But when Theresa Wells sailed on Royal Caribbean’s Oasis of the Seas recently, she noticed something else about the monster ship that was over the top. “Everywhere we went, they wanted to sell us something,” she says. “Whenever we walked to dinner, the photographers wanted to take pictures—10 to 15 at a time, like glamour shots.” The pitches were bigger than on previous cruises she had taken. The only place she could escape the aggressive offers for jewelry, spa treatments, and drinks was—apart from her own cabin—the library.
A cruise used to be “all-inclusive”—meaning you could step on board, and just about everything except drinks and shore excursions would be taken care of. But as the ships have expanded in size, the included offerings have not. Increasingly large chunks of the cruise experience are now roped off to those who won’t pay extra.
For example, that Starbucks coffee on the Allure will set you back a few bucks, same as on dry land. Performances of Cirque Dreams, which include dinner, cost between $20 and $30 per person. Disney’s water coaster, the AquaDuck, is free—for now. But if you want to dine at the adult-exclusive French restaurant Remy after splashing down, it’ll cost you $75, without drinks. Today, cruise lines make about 25 percent of their revenue from onboard sales, up from about 10 percent a decade ago.
The economic model has changed. “Cruise ships no longer make money by carrying passengers,” says Harlan Platt, a professor of finance at Northeastern University in Boston. “They make money by marketing a variety of services to them.” The bigger the ships, the more they lean on these products, which range from drinks served at the nightclub to nine holes of mini-golf.
Result: Passengers can spend as much on optional items as on the cruise fare. No kidding. Let’s say the price of a seven-day cruise is $800 per person. Have a few drinks per day, and you’ll add another $175 for the week. The average passenger takes about four shore excursions, which cost roughly $100 each. And say you decide to splurge on a $150 stone therapy massage. We haven’t figured in tips—add $77 for that. Ka-ching! The cost of your cruise just doubled.
The spending opportunities have multiplied, too. The big moneymakers on the newer ships are the premium dining options, which range from a relatively modest $5 per person for sushi on NCL’s Epic to $200 for gourmet food and wine pairings on Silversea’s high-end cruises, according to Anita Dunham-Potter, who blogs about cruising at Expertcruiser.com. “Also, as kiddie characters such as SpongeBob and Shrek make appearances [on NCL and Royal Caribbean, respectively], so, too, do the merchandising of these characters—stuffed animals, costumes, T-shirts, and toys,” she adds.
All the more reason to plan your next cruise carefully, advises industry expert Stewart Chiron. “Know what your total costs will be up front, and plan your onboard experience accordingly,” he says. Some of the extras are easy to spot even before you board. For example, the fact that shore excursions or drinks aren’t included is clearly disclosed and understood before anyone sets sail. The rest? Not necessarily.
I browsed the websites of several cruise companies and found that explanations of what is included are often vague. Some indicate there’s a fee for a product or service without clearly stating that fee. It takes multiple clicks to find the information—if it’s there at all. “The cruise lines advertise these features as if they are included,” says Elissa Fallo, who cruised on Royal Caribbean’s Adventure of the Seas recently. She poked around the website and cruise forums and found out about the $4.95 per meal upcharge at Johnny Rockets restaurant. She obtained the prices for other activities she wanted to do, like the golf simulator and artificial wave surfing, and pieced together a budget for them. Unfortunately, not enough consumers do what Fallo did.
No wonder the cruise industry is prospering, despite a weak economy. The Cruise Lines International Association said the industry saw an estimated 14 million passengers in 2010, most originating in North America. That’s up more than six percent from 2009. Cruise lines debuted 12 new vessels in 2010. In addition to the megaships the Allure of the Seas and Epic, they also added Celebrity’s Eclipse, MSC’s Magnifica, and Costa’s Deliziosa (each carrying 2,000-plus passengers).
The cruise line with the most high-profile XL-size ships, Royal Caribbean, is enjoying giant profits, too. Revenues for the third quarter of 2010 surged 17 percent to more than $2 billion, and the company projected record earnings for 2011 as well.
It’s hardly a surprise that more monster ships carrying up to 4,000 passengers have been ordered for delivery through 2014, including Carnival’s Magic and Breeze, Disney’s Dream and Fantasy, and several yet to be named vessels from NCL and Princess. “The level of competition in the cruise line industry has never been more intense globally,” says Jonathan Galaviz, a travel analyst. “And it will certainly become even more intense in the coming decade.”
On balance, that’s good news for customers. Fares will likely remain low as cruise lines try to earn more from onboard extras. And that means smart travelers can vacation on one of these floating cities without spending a fortune. The trick, say experts, is to book a discounted berth and budget carefully for the extras.
Ask yourself: Do I really need Starbucks, Johnny Rockets, or dinner theater while I’m on a ship? How much does a spa treatment or a night of slots really add to the experience of being at sea? Once you unclutter your cruise experience and focus on the truly memorable moments, such as the beautiful—and free—sunsets from the ship’s railing, the expensive options become almost unnecessary. In other words, the key to cruising the XL seas inexpensively is learning to say “no.”