Will Royal Caribbean eliminate last-minute cruise discounts?

Royal Caribbean Chairman and CEO Richard Fain spoke to analysts during last week’s earning call, “Last-minute discounting is a significant source of discontent to many of our early-booking guests.” Fain indicated that a “more consistent approach on pricing” has been reached because of reducing of cabin capacity in 2015 when Royal Caribbean will have more of its cruise ships based in Asia. This will reduce the supply of available staterooms in the Caribbean, which Royal Caribbean hopes will increase the profitability of each sailing. This may in turn lead to less passengers depending on how aggressively Royal Caribbean prices itself. Fain believes in the long term, it will work out, “we think it will raise the satisfaction level of our guests and strengthen the perception of our brand superiority.” The big question is if Royal Caribbean can actually achieve this sort of change, which Fain cites will be “a source of quite a bit of upset” for early birds. For Royal Caribbean to make this work they will need industry capacity to remain stable in any region as well as avoiding the big PR nightmares that can sour market demand.