Another Cruise Line Raising Prices -- End of Last-Minute Deals?

March 8, 2010
(5:20 p.m. EST) -- A week after Carnival announced a 5 percent fare hike on summer cruises beginning March 22, NCL has followed suit with its own announcement of a rate increase of up to 7 percent fleetwide, beginning April 2. The line's press release says that an "unprecedented year-to-date increase in booking volume during its 'Year of the Freestyle Vacation' wave season promotion" is behind the move. While fare increases will, of course, have some negative impacts on consumers -- say goodbye to those $25 a night deals -- and may trigger similar rate hikes by other cruise lines, there's still some good news out there for people planning to book cruises in 2010.

We spoke with NCL's CEO Kevin Sheehan, who told us not to think of this as a fare increase, but a move to get pricing back to normal, business-sustaining levels. "The industry is so severely underpriced," he says. "We lost pricing at the end of 2008 and 2009, so when the stars start to align again, we're going to try and get that pricing back." He notes that NCL's cruise prices dropped by double-digit percentages over the past few years, so that even with a 7 percent increase, fares will not be as high as they were two years ago.

NCL could have simply raised fares without telling consumers ("we do that all the time," joked Sheehan, referring to the constant fluctuation of fares based on cruise lines' complicated revenue management systems). But the cruise line thought that an announcement would be a fair way to alert people on the fence about booking a cruise that they need to get in touch with a travel agent or the cruise line sooner rather than later to solidify their vacation plans.

So what do consumers really need to know about these upcoming fare hikes from two major cruise lines? Here's the deal:

First, the good news: You probably won't notice a dramatic increase in fares. Five and seven percent are very small numbers -- it's an increase of $50 or $70 per $1,000 cruise fare. So cruises selling at $499 now, would sell for $524 or $534 after the deadline. And not every sailing will increase the full amount. Sheehan says that NCL will go ship by ship and itinerary by itinerary to determine that cruise prices match the demand. For example, he says that "we are ridiculously booked in Hawaii" [on Pride of America] and that "Norwegian Epic's spa cabins sold out like hot cakes," so fares for those products will likely go up by a lot. On the other hand, destinations or cabin categories that aren't selling as quickly will experience little or no change in fares.

Now, the bad news: Industry insiders believe that Carnival and NCL are trying to send a message that not only is the industry rebounding from the recession, but also that the booking window (the time between booking a cruise and sailing) for cruises is expanding back to normal. "Over the last 18 months, the booking curve has contracted so much, and no one likes that -- not the cruise lines, not travel agents," explains Johanna Jainchill, Cruise Editor at Travel Weekly, an industry publication. "Now they're saying that the price game is coming to an end, and that they will be rewarding people who book early, not late." By telling consumers that pricing is going up, the cruise lines are creating a sense of urgency and encouraging people to book earlier than they might otherwise. The intended end result? Fewer last-minute bargains will be available in 2010.

And the worse news: Fares have already started going up. Jainchill tells us that cruise line revenues are already way up this year, which means that prices have been climbing. Here at Cruise Critic, our Deals team has noticed that the $50-a-night deals are drying up, to be replaced with more $100-a-night fares. So even if you book prior to the announced rate increases, you're likely to be paying more than you would have last year for the same cruise.

But there's hope -- you can still find deals: Marcy Hamed, owner of American Discount Cruises & Travel, says that Europe cruises are among the top sellers at her agency. You'll want to book soon for these sailings, as availability is rapidly disappearing -- which means that fares are going up. However, she says that deals can be found on shoulder-season Alaska cruises (May and September) and throughout the Caribbean. Caribbean deals, she tell us, are still very easy to find, especially at the last minute.

Even with fare increases, cruising is still a good deal: Hamed is also quick to remind us that even with fares jumping from $50 a night to $100 a night per person, cruising is still a great value vacation. You get accommodations, transportation between ports, entertainment, all-you-can-eat food and the ease of packing and re-packing once for less than you'd pay for all of those things together on a land vacation. And with many lines now offering best price guarantees, if you book early and the fare does drop, you won't lose out on the cheaper rate.

Ultimately, cruise lines are trying to find that balance where their businesses can be profitable, but as many people as possible will be able to afford to cruise. "Cruising is such a phenomenal value," says Sheehan. "Our goal is to keep existing cruisers happy and attract new cruisers." And while rate increases may not cause many cruise travelers to do the dance of joy, there's at least some satisfaction in knowing that your favorite cruise line is now less likely to suffer for want of cash.

--by Erica Silverstein, Senior Editor