Royal Caribbean Cruises Ltd.
304-019
2003.8
Demand would need to accelerate in 2003 and 2004 to keep up with the supply and the
continued growth in capacity. A contrary view was posed by some experts who anticipated steady
volume growth because of the strong value proposition of the cruise industry and the fact that
cruising's penetration of the leisure travel category was at 5% (only 12% of North Americans had
taken a cruise).
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Complicating life were risks: an uncertain geopolitical climate (war in Iraq, threatening in North
Korea), terrorism, the earlier Norwalk virus and the recent terrifying SARS, as well as higher fuel
prices. Additionally, customers tended to book much more at the last minute, a relatively new
phenomenon that greatly increased post -9/11, thus creating uncertainty. In combination with more
numerous shorter cruises, an increasing inventory, higher discounted last-minute deals, and better
informed consumers thanks to the Internet, huge pressure was placed on yield management.
Corporate Strategy
RCCL's strategy was a three-legged one aimed at (1) enhancing the customer and travel trade
experience, (2) reducing costs (management saw current pricing insufficient vis-à-vis Carnival to
cover RCCL's extra costs), and (3) increasing revenues. The core proposition was that RCCL cruise
customers paid a higher price and, in return, got a better cruising and vacation experience.
Enhancing the Guest Experience
RCCL was aggressively moving to enhance the guest experience. The Silverwhere program, for
example, allocated dinner seating of RCCL guests on a cruise ship. The program fed in several criteria
such as age, nationality, sex, language, group needs, and guest preferences and proposed a set of
table groupings as sociable as possible for the guests. Organizing table groupings on a cruise ship
was a complex process: as many as 3,200 guests, guests traveling together but who made separate
reservations and bookings at different places, guests coming from all around the world with different
language abilities. This program linked all
those criteria and proposed specific groupings, thus
providing a better level of service to guests (more likelihood of compatible companions at a meal and
a higher level of satisfaction) as well as vastly improving the ability to change a guest's dining
situation quickly.
Another recent innovation had been the popular Internet cafes, which give Internet access on the
ship to the cruise passengers so they could constantly be in touch with the outside world. A third
example related to disembarkation. The disembarkation and embarkation processes could be very
long and frustrating for passengers when clearing the ship at ports—to the extent that it could ruin
their reaction to the entire vacation (i.e., first and last experiences on the vacation were often the most
critical
in
terms
of
the
total
experience).
RCCL's
introduction
of
the
debark
card
improved
debarkation
time
by
two
hours.
The
debark
card
captured
the
information
required
by
the
Immigration and Naturalization Service and was printed the night before debarkation and delivered
to each guest room.
8
"Cruising for a Bruising?"
Fortune, May
27,2003.
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