1

Abstract

Although cruise ships are frequently depicted as floating hotels, the challenges, methods and
strategies of cruise line pricing vary dramatically from hotels and other segments of the travel
industry. Remember, for instance, that hotels reporting over 70% annual occupancy rates are
financial achievements. The same is true for most airlines (although for airlines, it would be
their usage or load factor). These companies' earnings are also enviable because they have
sustained 80-90 per cent occupancy rates.

Productive cruise lines typically report utilisation rates of at least 95 percent and the most
financially efficient cruise lines record utilisation rates higher than 100 percent. Not only due
to the potential loss of revenue, empty cabins are problematic for the cruise ship, but also for
operational reasons. In this market, competitive pricing plays a large and lucrative role.

Many cruise ship workers rely on passenger gratuities for the bulk of their salaries; too many
empty cabins can make it difficult for a cruise line to retain experienced employees and maybe
more importantly, it is also likely to have a negative effect on employee morale and thus make
the cruise a less enjoyable passenger holiday. Due to the importance of filling every cabin,
pricing strategies and methods are especially relevant for cruise lines. Today, cruise lines
initially set base rates that act as initial selling rates. At the booking horizon, stateroom or cabin
type, prices are then changed for each cruise.

The goal of this paper is to highlight the key factors influencing the pricing strategy, the current
price models that lead to the creation of the pricing strategy and a new dynamic cruise line
pricing application model that can further increase revenue.

2
 Acknowledgement

I would like to take this opportunity to thank all those who supported me during this project.
I am pleased to express my gratitude and indebtedness to my faculty guide and Professor Dr.
Totakura Bangar Raju for his continued support and above all, his overwhelming attitude
towards enlightenment and for giving me the opportunity to do this revenue management and
dynamic pricing project. This would not have been possible without his guidance, and it is just
a small portion of all the pragmatic and fruitful learning that I have absorbed in this post
graduation course. I extend my gratitude to the Petroleum and Energy Studies University for
providing me with this opportunity. I also acknowledge my gratitude to my parents and
members of my family who have

With a deep feeling of love, it constantly supported me ethically and monetarily. Anyone who
is omitted from this does not indicate lack of consideration.

Sagar Bisht Singh

MBA Marketing

500073700

Apoorva Chanana

MBA Business Analytics

500078431

3
 Table Of Contents
S.No. Topic Page
No.

1 01 Introduction to Revenue Management & Dynamic Pricing 12

2 1.1 Revenue Management 12

3 1.2 Definition Revenue Management 12

4 1.3 Why does Revenue Management Matter 12

5 1.4 Three Specific Types of Demand Management Decisions 13

6 1.5 What do you understand by Dynamic Pricing? 13

7 1.6 Why RMDP? 14

8 02 Research Methodology 16

9 2.1 Research Design 16

10 2.2 Research Method 17

11 2.3 Secondary Data 17

12 2.4 Choice Literature 17

13 2. 5 Tools 17

14 03 Literature Review 18

15 04 Introduction to Cruise Industry 23

16 4.1 Development of the Cruise Industry 23

17 4.2 Cruise Consolidation Industry 24

18 4.3 The Market for the cruise industry 26

4
19 4.4 Revenue in Cruise Industry 27

20 05 Cruises Pricing Strategies 31

21 5.1 The Cruise Liner Sector 31

22 5.2 Air-Sea Pricing-Model 31

23 5.3 Discount Strategy for Gateway 33

24 5.4 Cruise Dynamic Pricing 33

25 5.5 When to book Caribbean cruises for the lowest deal? 35

26 5.6 How can long-term planning pick the right regions? 36

27 06 Introduction Carnival Corporation & PLC 37

28 6.1 Brands under Carnival Corporation & PPL 38

29 6.2 Market Share of Cruise Industry 45

30 07 Dynamic Pricing in Carnival Cruises 47

31 7.1 Holland America Lines - “A signature of Excellence ”: Pricing 48

Strategy

32 7.2 Pricing processes within- HAL 49

33 7.3 Dynamic-Pricing(DP) & Revenue-Model(RM) in HAL 50

34 08 Recommendation 53

35 8.1 List of onboard services that are available on Holland America 53

Line:

36 8.2 List of onboard Bars & Lounges offered at Holland America Line: 55

37 8.3 Bars & Lounges Packages offered at Holland America Line: 56

5
38 8.4 How will it function? 57

39 References 59

40 Appendixes 60

6
 List of Table
Page
S.No. Tables Title
No.
1 Table 01: Avlonitis & Indounas (2005) 15
2 Table 02: Table of Literature Review 18

Table 03: Table for Region Vs Saving for booking

3 34
before X no of days.
Table 04: Table Brands under Carnival Corporation
4 38
& PLC
Table 05: Table of Financial Breakdown of Cruise
5 54
Line Passenger

7
 List of Figures
Page
S.No. Figures
No.
1 Figure 01: Graph of Cruise Revenue Source (2010) 10
Figure 02: Graph of Growth of the Ocean Cruise
2 25
Line Industry.
Figure 03: Graph of Source of Region of
3 25
Passengers
Figure 04: Graph of FORECASTED No. OF
4 27
Passengers (in Millions) for Cruise brands for 2021
Figure 05: Graph of Revenue, profit per passenger
5 33
on a 7 days cruise
Figure 06: Graphs of Carnival Cruise brands by
6 38
revenue (2018)
Figure 07: Graphs of CRUISE SHIP COMPANIES
7 45
BY Market Share (2018)
Figure 08: Graphs of Cruise Ship companies by
8 46
revenue(2018)
Figure 09: Holland America Line method of price
9 49
planning.
Figure 10: Model method for pricing HAL Revenue
10 51
Management

8
 Project Objective

Because the Carnival Corporation's significant and ongoing rise in market share, it would be
important to find out how the business represents its pricing methods and strategies. It is an
overall goal to be able to attract more customers and raise sales, but the ability to build a
framework where pricing policy effectively determines whether or not a company can do it can
be anything but easy. The following questions were formulated with these considerations in
mind:

• In the cruise industry, what are the key factors influencing pricing strategies and
processes?
• What kind of price models are leading to the growth of the cruise industry's pricing
strategies?
• How will sales be improved through the modification of current pricing models?

9
 Rationale of Project

We noticed gaps in literature for the cruise industry in particular for pricing strategies for the
cruise industry, after scouring through the worldwide web and UPES Library Tools. It was also
found that the current pricing models could be modified in order to compete with other forms
of cruise hospitality companies. Where does all of the money come from? How much profit is
gained on average for each passenger by this industry from revenue? Will it not be possible to
add dynamic pricing to it if onboard services will contribute too much to the revenue to further
boost our revenue? Here is an overview of the estimated 2021 average cruise revenue and cost
per passenger per day for all cruise lines globally. The average cost of a cruise per passenger
per day is estimated at $214.25, with a ticket price of $152.12 per person per day and $62.13
per person per day on board (average cruise period 8.0 days, median duration 7.0 days).

CRUISE REVENUE SOURCE(2019)

Onboard Services & Other

Passenger ticket
Tour & Other

Figure 01: Graph of Cruise Revenue Source (2010)

10
 Limitations of the study

• Not much research has been done in this industry.

• Due to Covid19 primary data collection (interviews with industry professionals) was
difficult.
• Cruise industry bookings data for model development and testing was not available.
• It is an immense responsibility in itself to be able to build a forum for pricing all nine
products under the company.

11
 01 Introduction to Revenue Management & Dynamic Pricing

1.1 Revenue Management

In the travel & hospitality industry, revenue management is an incredibly important principle
since it enables management to predict demand and maximise supply and pricing in order to
achieve the best possible financial performance. We will discuss the issue of what is revenue
management?' in this chapter. 'and clarify the importance of implementing a plan for sales
management.

1.2 Definition Revenue-Management

We must first describe it in order to comprehend revenue management. "The widely accepted
definition within the hotel industry is: "Selling the right space, to the right consumer at the right
moment, for the right price, with the best cost efficiency, through the right distribution channel.

It includes the use of performance data and analytics to allow management to forecast demand
and other customer behaviours more accurately. This in turn, makes it possible for them to
make more rational pricing and distribution decisions in order to increase sales and thus, profit.

In the airline industry, as a practise, revenue management actually started, where businesses
found ways to predict customer demand in order to implement competitive pricing. It is
however, true in any industry in which different consumers are prepared to pay different prices
for the same commodity, in which only a certain quantity of that product is to be sold and in
which the product must be sold before a certain point in time.

1.3 Why Does Revenue Management Matter?

To management, revenue management offers the opportunity to make the most of a perishable
stock, enabling them to optimise the amount of money produced by the company. Essentially,
it helps decision-makers, rather than relying on intuition or guesswork, to make educated, data-
driven decisions.

You want the price to be right, not so high that you are turning off potential customers and not
so low that you are missing out on potential sales. You would like to know how much your

12
commodity is rated by consumers, but you just have to guess at this amount more often than
not.

Much more difficult sale choices are faced by businesses. For instance, how can a company
segment buyer profitably leverage their distinct purchasing behaviour or willingness to pay by
offering distinct terms and conditions of trade? In order to avoid cannibalization through
segments and networks, how can a company design product? When clients are segmented, what
rates can each segment charge? Should the business use the same price for each channel if it
sells on different channels? How should rates, based on seasonal factors and the observed
demand to date for each commodity, be modified over time? If an item is in short supply, which
segments and channels should the items be allocated to? How does an organisation approach
pricing and allocation decisions for items that are compatible (seats on two connecting airline
flights) or substitution (different rental car categories)?

1.4 Three specific types of demand management decisions

Structural-decisions: the format of sale to be used (such as prices posted, negotiations or

auctions); the processes of segmentation or distinction to be used if any); the terms of exchange
to be offered (including volume discounts and incentives for cancellation or refund); how to
package products; and so on.

• Price-decisions to make: how to set posted prices, prices for individual deals and
reserve prices (in auctions); how to price through product categories; how to price over
time; how to mark (discount) over the life of the product; and so on.
• Quantity-decisions to make: whether to accept or reject a sales offer; how to assign
production or ability to various categories, goods, or channels; when to withhold a
product from the market and sell it at a later time; and so on.

5 percent of total or more of revenue management systems are recorded in many industry
applications. A company must also have some way of predicting demand and customer buying
patterns in order to carry out successful sales management, so that informed changes can be
made. For example, to inform their revenue management plan, hotels may use past data, current
bookings, weather forecasts, and other industry data.

13
1.5 What do you understand by Dynamic Pricing?

Dynamic pricing, also known as real-time pricing, is an approach to setting the cost of a highly
flexible product or service. The aim of dynamic pricing is to allow an Internet-based business
that sells products or services to change prices on the fly in response to market demand.

Pricing bots, which are software agents that collect data and use algorithms to alter pricing
according to market laws, monitor changes. The market rules usually take into account such
factors as the position of the client, the time of day the day of the week the level of demand
and the pricing of competitors. Business guidelines for price changes will however be made
more granular with the emergence of big data and big data analytics. A vendor can more
reliably predict what price the consumer is willing to pay and change prices accordingly by
gathering and analysing data about a specific customer.

Dynamic pricing is legal, and when buying airline tickets or reserving hotel rooms online, the
general public has learned to embrace dynamic pricing. With online retail vendors, the
approach, which is often advertised as a personalization service, has been less successful.
Dynamic pricing, an approach to setting the purchase price for a good or service that does not
fluctuate, can be contrasted with fixed pricing.

1.6 Why RMDP?

A perishable service is one that after a certain time, cannot be used. Some examples of
perishable facilities include cruise line cabins, airline seats, hotel rooms, and rental cars.
Broadcasters and telecommunication firms are some examples of perishable service suppliers.

In order to optimise sales when demand is unpredictable, Revenue Management and Dynamic
Pricing (RMDP) is the empirical and validated method of dynamically controlling costs,
inventories, and capabilities of perishable goods and services. While each specific application
needs to carefully address the requirements of a particular sector, the basic concepts of revenue
management are broadly applicable studies by a leading consulting company have shown that
for the average S&P 1500 company, a price increase of 1% would generate an increase in
profits of 8-12%, i.e., an impact 50% greater than a 1% cut in variable costs and 300% greater
than a 1% increase in volumes.

14

Cost-based Method
• Cost-plus mechanism where a profit margin is applied to the total
cost of the service
• Target return pricing where the price is determined at the point at
which the target rate of return on investment by the business is
returned
• Break-even analysis where the price is estimated at the point
where the total income is equal to the total expense
• Contribution analysis is a break-even analysis deviation, where
only the direct costs of a good or service are taken into account.
• Marginal pricing to cover only marginal costs if the price is set
below total and variable costs

• Pricing is performed close to the rival or according to the market's

average prices
Competition-based • Pricing is set above the rivals'
Method • Pricing below rivals.
• Pricing in terms of the dominant price.

• Perceived-value pricing in which the price is focused on the

perception of value by the customer
• Value-pricing where a reasonably low price is set for a high-
Demand-based- quality service
pricing Method • Pricing according to consumer requirements where the price is set
to meet customer needsneeds where the price is set so as to satisfy
customer’s needs

Table 01: Avlonitis & Indounas (2005)

15
 02 Research Methodology

2.1 Research Design

One of the most important things you can ever do in your academic career is to do academic
research, which is why it is really important that you correctly choose which research design
is most appropriate in your case. In order to produce a knowledgeable and qualified research
paper, it is important to choose the research design and, ultimately, the research strategy and
apply it to practise. The research design is structured to provide a study with an acceptable
context. The choice to be taken concerning the research method is a very important decision in
the research design process as it determines how relevant information can be collected for a
report. As a basis for empirical evidence, we referred to different literature. The collected
information is also provided by researching the case's website. For a theoretical viewpoint,
scientific articles and business textbooks were reviewed.

In reviewing business and management research, Bryman & Bell (2013) defined three
requirements to bear in mind. Reliability, replicability and validity are them. The attribute of
being consistent, dependable or trustworthy is reliability. It is also about being reliable, and
that the findings must stay the same if the study is to be performed all over again. That's why
it's so important to carefully select who the respondents will be because whether they can
provide accurate details about their job descriptions and primary company responsibilities or
secondary data, it can mean a knowledge of reliable sources from which we collect data.
Replicability is the property of outcomes of an operation, procedure or test that can be
duplicated at another place or time and validity, based on the basis of reality, has the quality of
being true. In my own study, both of these parameters are included in the pricing plan of the
cruising giant Carnival Corporation & PLC.

Currently, Carnival Company has 10 distinct brands, each independent from each other and
each planned to have distinct market segments: mass market/discount, luxury, and ultra-deluxe.
Details about the revenue, sales and other products of various brands worked with their pricing.
In other words, the pricing practises, pricing tactics, and eventually the pricing decisions do all
look like inside the cruise industry.

16
A researcher may help decide what approach to use in the analysis in order to be able to know
what kind of data to obtain. The first move was to obtain relevant information from the whole
Carnival Company. The bulk of this data is already accessible on the Internet. From the
information collected, we can classify brand pricing strategies and evaluate the various
approaches they use and factors that influence decision-making.

2.2 Research Method

To address the key research objectives, this research will use both qualitative and quantitative
methods and secondary sources. Mixed-method methodology attempts to combine the best of
both qualitative and quantitative methodologies to integrate perspectives and create a rich
picture.

2.3 Secondary Data

This study will use both qualitative and quantitative approaches and secondary sources in
order to achieve the primary research goals. To incorporate perspectives and create a rich
image, mixed-method approach aims to combine the best of both qualitative and quantitative
approaches.

2.4 Choice Literature

We decided to study research papers from the university library portal, as well as business
textbooks, in order to be able to undergo the research. Some of the study paper examples are
Cruise tourism: a hedonic pricing approach by Josep Maria Espinet-Rius, Modest Fluvià-
Font, Ricard Rigall-Torrent and Anna Oliveras-Corominas (2017), Empirical Evidence of
Revenue Management in the Cruise Line Industry by Nur Ayvaz-Cavdaroglu, Dinesh K.
Gauri , and Scott Webster (2019), and Expanding the revenue management frontier: Optimal
air planning in the cruise industry by Warren H Lieberman & Tamara Dieck (2002). For the
theoretical part of the analysis, these sources of knowledge are used. Keywords such as
pricing strategy, pricing methods, Carnival Corporation, revenue management, dynamic
pricing and cruise industry were mainly used.

2.5 Tools
The tools used for this research are Microsoft:- Excel, Google Scholars, Prowessiq, UPES
Library (EBSCO database)

17
 03 Literature Review

Title Author Findings

Cruise tourism: a hedonic Josep Maria Espinet- The number of nights, Itinerary,
pricing approach Rius, date of departure, number of days
Modest Fluvià-Font, prior to booking, accommodation
Ricard Rigall-Torrent rate, onboard services such as
and casinos, movie theatres and
Anna Oliveras swimming pools are the key
Corominas attributes influencing prices. The
results also give the shipping
companies ranking based on price
and quality dimensions.
Cruise shipping policy Ministry of Shipping, Various policies in regard to
Government of India marketing strategy, taxation and
duty, waste disposal, timely
immigration
Empirical Evidence of Nur Ayvaz A model that incorporates two
Revenue Management in the Cavdaroglu, Dinesh new features in the revenue
Cruise Line Industry K. Gauri , and Scott management literature through
Webster dynamic price optimization: (1)
Partial substitutability between
goods (e.g., several alternatives
which be considered by a
customer making a purchasing
decision, different departure
dates, different destinations,
different types of cabin),(2)
Marketing expenses, in addition to
prices, as a lever for sales growth.
The approach is computationally
efficient, offering an optimal
advertisement level and optimal

18
 prices for 300 products over a
short period of time, and
generating higher net revenues
than the conventional pricing
model currently in use.
Pricing methods and strategies Ruby Bengtsson The cruise industry tends to
in the cruise line industry A concentrate primarily on money.
case study on Carnival A crucial aspect of the method is
Corporation’s premium and pricing. Price decision making
luxury brands and techniques that include sales,
seasonality, and input from
customers are influenced by many
factors. It may be possible to have
the current pricing models
updated to meet with other forms
of hospitality companies.
A Brief Guide to Price Mihir Kittur Smart Dynamic Pricing includes
Intelligence and Dynamic collecting market demand signals
Pricing from feedback as well as social
media posts, valuable customer
data, and factoring them into
pricing decisions for both
personal deals and predicting
potential purchase patterns. It is
an external information layer
added to Dynamic Pricing.
Optimal Dynamic Pricing of Guillermo Gallego & In certain cases, it seems like
Inventories with Stochastic Garrettvan Ryzin using straightforward fixed-price
Demand over Finite Horizons policies works surprisingly well.
This is promising as the optimal
dynamic policies are very jittery
and entail frequent price changes,
which in realistic applications are

19
 an undesirable function. In the
discrete-price case, we showed
that it is almost optimal to have a
strategy varying the allocation of
units and time to two adjacent
values. A clear description of the
framework of current yield
management practise is offered by
the regulation.
Expanding the revenue Warren H Lieberman This paper explains how sales
management frontier: Optimal & Tamara Dieck management can be extended to
air planning in the cruise the procurement of services by an
industry. organisation as well. We focus on
the cruise-line industry, where
cruise passenger airfare
transactions can surpass 20% of
revenue. An outline is proposed
for an optimal air planning
programme, with a focus on
decision support for flight routing
and negotiation of contract fares
with airlines.
Application of modified Lu Ji and Joseph In order to maximise
nested and dynamic class Mazzarella performance, an efficient revenue
allocation models for cruise management solution can
line revenue management integrate both NCA and DCA
approaches. The creation of a
revenue management framework
that integrates both approaches
involves an additional layer of
knowledge within an
implemented environment that is
capable of understanding various

20
 forecast realisation states in order
to make protection-driven
decisions based on the optimally
performing model that is then
applicable.
The Oxford Handbook of Özalp Özer and Robert Over the last twenty-five years,
Pricing Management. Phillips the theory and practise of pricing
have progressed dramatically. In
the industry, there is a strong
demand and need for improved
pricing approaches and an
increasing number of conferences,
consultants, and software vendors
seeking to help meet the need.
Within a variety of different
university departments, pricing is
a growing area of study and
teaching.
Pricing in the Cruise Line Warren H. Lieberman From a consumer value
Industry. viewpoint, the pricing issue was
approached from an engineering
perspective by the cruise line.
Less interior cabin square footage
meant that a lower price was paid.
It was not long before the cruise
line recognised its error and
reconfigured its pricing structure
(with a little bit of support from
pricing consultants).
Unfortunately for the bottom line
of the cruise line, but fortunately
for many lucky travellers, the
cabins with balconies offered an

21
 excellent discount before the
pricing error was corrected for
those who booked sailings.

Table 02: Table of Literature Review

22
 04 Introduction to Cruise Industry

4.1 Development of the Cruise Industry

The cruise industry, which dates back to the 1970s with the growth of the North American
industry, has undergone a growing phase of popularisation, becoming a major part of the
tourism industry, and achieving a degree of tremendous importance as an economic force
worldwide.

The modern cruise industry is also one of the most outstanding examples of globalisation, with
a growing number of ports of call and destinations around the world, an international clientele
and onboard workers from all continents, and a degree of separation from societies and nations
with major economic, legal, environmental and social ramifications that have never been seen
before in history.

A crisis-resistant industry with a diversified range of airlift options and modernised port
systems that have opened up cruising as a holiday option accessible to a growing, more affluent
customer base, offering millions of passengers from all over the world each year an exciting,
eventful, relaxing and certainly enjoyable experience.

This competitive sector is steadily expanding its product and service offerings and developing
new markets, with an average annual growth rate of 8.5 percent in the last 20 years and almost
90 million passengers since 1980, 60 percent of whom have been produced in the last decade,
a trend that shows no sign of slowing down, with 13 and 13.5 million passengers in 2008 and
2009, compared to 13 and 13.5 million in 2008 and 2009, respectively.

In terms of capability, since the turn of the century, the cruise industry has also experienced
unparalleled growth. Around 40 new cruise ships were constructed and placed into service
during the 1980s, followed by another 80 vessels in the 1990s, and a 40 percent rise between
2000 and 2005 that will be completed by an additional 25 percent of new state-of-the-art units
to replace ships that are scheduled to be withdrawn in the next few years.

A multi-million investment in new, more imaginative and ever-larger vessels capable of

carrying more than 3,000 passengers, offering lower fares and shorter cruises to benefit from
economies of scale and on-board activities such as multi-story shopping malls, restaurants,

23
cafés and pubs, nightclubs, discotheques, casinos, art galleries and museums, theatres and
cinemas, libraries, personal care areas.

A fleets with several thousands cruise ships carrying millions of visitors operates in an
expanding range of more than 500 international destinations throughout all geographical areas,
with Caribbean cruises being the choice, followed by Mediterranean cruises and European
itineraries visiting numerous famous ports and cities. – Barcelona, Venice, Nice, Athens and
the Greek Islands, Palma, Istanbul, London, Amsterdam, the Scandinavian Fjords, Helsinki,
San Petersburg, etc, including the potential to enjoy areas not included in the normal deal
offered by other suppliers of travel and tourism services, such as the Arctic and Antarctic
regions.

Indeed cruise industry have grown in popularity all over the world, servicing a diverse
customer base in the Asian, European and North American markets with well-differentiated
aspirations and preferences.

The need for more efficient management, operational and planning processes to boost rising
competitiveness and cope with the many shifting factors in an emerging market that generates
more than $15 billion per year, 79 percent of which corresponds to the North American and
British markets and hundreds of thousands of direct and indirect jobs, Giving an indirect multi-
billion dollar annual profit to numerous industries around the world (manufacturing of
unsustainable and durable goods, specialist and technical services, travel services, financial
services, airlines and transport, wholesale).

4.2 Cruise Consolidation Industry

On the other hand, the development of the cruise industry has been severely affected by
numerous incidents, such as the Achille Lauro hijack in 1985, the wars in Iraq and Kosovo and
in particular, the aftermath of the attacks of 11 September, accompanied by an accentuated
process of restructuring and consolidation of the business.

On 25 September 2001, Renaissance Cruises was the first company to bankrupt, followed by
American Classic Voyages and four other companies reflecting ten well-known brands, ceasing
operations and leaving the market open to the largest cruise companies Carnival Corporation,

24
Royal Caribbean Cruise Limited and Star Cruises to consolidate in the acquisition and merger
phase.

Growth of the Ocean Cruise Line Industry

30
Passangers Carried(in Millions)

25

20

15

10

0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Year

Figure 02: Graph of Growth of the Ocean Cruise Line Industry.

Source Region of Passengers

14

12
Passengers(in Millions)

10

8 North America
Europe
6
Other

0
2017 2018 2019 2020 2021

Figure 03: Graph of Source of Region of Passengers.

25
Carnival Corporation, headquartered in Miami (Florida, USA) and London (England, UK), is
the industry's undisputed pioneer and the world's most profitable leisure business, with 12
cruise brands operating 89 cruise ships, about 65,000 shipboard employees and 170,000 guests
at any given time in North America, Europe and Australia.

Crystal (a subsidiary of Japanese NYK), Silversea and Radissons Seven Seas are among the
companies with more modest sizes on the market.

On the other hand, while the corporate offices of the major cruise companies are based in the
United States and Europe, and their clientele comes mostly from the same regions, these
organisations are organised as an integral part of the shipping industry and have most of their
fleet registered in Panama, Liberia, Bermuda and Bahamas to obtain a set of advantages and
benefits that allow them to obtain a range of benefits and benefits.

4.3 The Market for the cruise industry

The size of the cruise liner market is relatively small, with substantial entry and exit barriers
associated with the extremely high cost of buying or selling a single cruise ship, as well as the
high level of investment required to operate and run a cruise line, which has a decisive effect
on various aspects and strategies relating to organisational and management issues.

In the same way, the bargaining power and the opportunity to take advantage of the economies
of scale present in the cruise industry also influence the size of the market in two distinct and
conflicting ways:

a) the presence in the industry of a few shipbuilders and technology developers forces the cruise
companies to embrace the prices and costs offered to them;

b) the large number of suppliers of shipbuilders and technology developers.

Such a reduced number of businesses helps them to closely track possible market risks in
constant competition for clients impacted by general economic conditions and other holiday
alternatives, such as sightseeing holidays, resort hotels, theme parks, etc. A situation that has
given rise to various strategies and proposals to define and specialise in the specific areas within
this business context, leading to a division of the cruise industry into well-differentiated luxury,
premium and contemporary sectors or market niches that provide diversified and targeted
cruise products and services to satisfy both mass customer markets that are interested in buying.

26
Therefore, in such a dynamic business environment, marketing, creativity and brand awareness
are critical elements and main factors for a sector's success in constant efforts to find new
sources of revenue and new strategies to optimise economic efficiency and benefit.

4.4 Revenue in Cruise Industry

FORECASTED REVENUES(IN BILLIONS) FOR

CRUISE BRANDS FOR 2021
$3.50

$3.00
Revenue(in Billions)

$2.50

$2.00

$1.50

$1.00

$0.50

$0.00
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Figure 04: Graph of FORECASTED No. OF Passengers (in Millions) for Cruise brands for 2021

Cruise ship passengers produce the biggest revenue in the cruise industry for the most part, and
the ability to retain and maintain a clientele is thus important to its financial success. Cruise
fares, however are actually just another part of the dynamic mosaic of commercial ties around

27
the cruise industry, far from the comparatively inexpensive or original all-inclusive holiday
packages offered in the 1970s, with an increasing range of on-board revenue generation
strategies.

Long ago, some souvenirs and duty-free goods were left behind when on-board shops supplied
a few pieces to complete passenger baggage. To never come back. Cruise ships currently
deliver a growing variety of shipboard shops and boutiques, spa and personal care facilities,
departments of photography and art auctions at prices that compete with land-based
establishments. Most of them are provided by concessionaires and subcontractors and are
controlled.

Various practises have also been adopted by cruise ships to encourage passengers to invest
their money, for example, in extra-tariff and alternative restaurants and bars, satellite
telecommunications facilities, cybercafés, and various revenue-generating systems (interactive
multimedia and TV, minibars, etc.) in passenger cabins.

Moreover, while many people go on a cruise with the purpose of doing nothing more than
relaxing and unwinding, some consumers are involved in engaging in all kinds of activities and
enjoying the destinations to the fullest, and ready to pay for it. As a consequence, shipboard
events and facilities are increasingly offered, such as bingo and casino gaming, adventure
sports, culinary courses, video games, computers and virtual reality centres, theme nights, etc.

In the same manner, cruise passengers are often encouraged to engage in an increasing number
and variety of onshore auxiliary activities. Cruise companies started marketing a diversity of
onshore events and facilities in the early 1990s. Since then the largest growing source of
income for some cruise companies has been guided tours and port lecturers, contracted with
local concessionaires and local tour operators to be later sold to passengers on board.

Several hours of cruise-based tours while the vessel is docked at a port of call or anchored a
few miles offshore, offering various themes and exciting activities: Sightseeing, with trips to
natural, ecological and biosphere reserves and protected areas, including wildlife viewing;
adventure tours, adventure sports excursions and various activities in privileged natural
environments; and historical and cultural tours, with a strong educational aspect derived from
the ability to visit museums and monumental heritage.

28
The cruise ship industry has also demonstrated the ability to develop and maintain efficient
relationships with the tourism industry on land. In addition, the increasing buying and
negotiating power of cruise companies has a considerable effect on the suppliers of those
services, battling and pressuring each other to effectively secure a deal with a cruise line,
allowing the industry to extract additional revenue from the disparity between the purchasing
and sale rates of those goods and services.

In general, on-shore excursions and visits to ports provide cruise companies with extra profits.
Cruise passengers are also generally provided with a map to explain the most recommended
itineraries, including a buying guide describing the list of shops and commercial establishments
in the region, approved by the cruise company on the basis of good prices and quality
assurance. Not everybody understands that the same shops and companies had to pay an
upfront fee or promise to share a certain portion of the purchases of the passengers in order to
be accepted and included in the listings.

In 1990, these tactics and policies were brought to a next step with the implementation of the
idea of "private island", established by Norwegian Cruise Lines and embraced by other
companies based mainly in Caribbean waters, with cost advice advantages by providing an
alternative to conventional cramped ports, Includes monopoly power of nearby shops and
facilities, available and affordable round-the-clock when the cruise ship is docked, removing
all rivalry and offering a regulated scenario that provides their clients with a favourable
experience, resulting in additional rewards in the form of positive recommendations to other
prospective customers.

With the exception of on-board sales, the cruise industry has other alternative means of
enhancing its economic performance: reducing its costs through economies of scale and
introducing enhanced management structures (as already stated above and taking part in the
economic benefits of ports and port-related activities.

Since the 9/11 attacks, as several companies revamped their itineraries and destinations closer
to the United States, port charges have become a fascinating source of income for cruise
companies, opening a market for diverse Caribbean cities willing to offer a reduction in their
port charges or a bounty for each passenger to draw cruise ships to their ports.

29
Similarly, in exchange for a potential revenue-sharing formula, which would include, in some
cases, priority berthing and a portion of port charges, there have been several efforts by cruise
ships to economically assist in the development or enhancement of port facilities and
infrastructure.

30
 05 Cruises Pricing Strategies

5.1 The Cruise Liner Sector

The cruise line industry had major changes during its formative years that affected its pricing
structure and approach. The following are included in these modifications (Lieberman 2012:
201):

• As the popularity of Caribbean cruise vacations started to dwarf the popularity of trans-
Atlantic cruising, the cruise port with the largest number of passenger shipments in the
United States moved from New York to Miami.
• As an integrated package, airline flights and cruises could be purchased; air/sea
divisions became critical within cruise lines.
• Cruise line marketing has changed from an emphasis on destinations to a focus on
experiences.
• Further out, successful marketing of cruises began (i.e. relative to the departure date)
• Computer-based reservation systems implemented by cruise lines
• There were substantially larger ships made,
• Many cabins have been built with balconies, not just a few suites.
• Cruise lines delivered enhanced on-board services, some of which were available at an
extra fee.
• Total industry capability has significantly improved.

Pricing strategy is the way to change prices, according to Dolgui and Proth (2010), with the
goal of setting an optimal price with the current optimization of benefit, optimising the number
of units sold, etc. They suggest that it is simpler and more effective to change the price than to
reduce production costs or raise market share. As a result,' price as a benefit change parameter
is the simplest and quickest way to improve competition' (Dolgui & Proth, p. 101). A few of
the pricing techniques used in the cruise industry today will be addressed in this paper: the air-
sea pricing model, the gateway city discount approach, and price differentiation.

5.2 Air-Sea Pricing-Model

After the need for a broader market during the early boom of the industry in North America
(Lieberman 2012), the integration of air flights and cruises began. The Caribbean cruising was

31
very popular and executives of cruise operators recognised the need for a broader marketing
campaign and attracted a lot more passengers from just outside Miami, or even Florida. This
resulted in air transportation being included in their product offering (Lieberman). In many
ways, the popularity of air-sea packages outpaced the ability of the cruise lines to accommodate
and pace them (Lieberman p. 203). Lieberman wrote,' Many cruise lines began selling tours,
return flight packages, land transfers, and even hotels to guests waiting at the ports of
embarkation a day earlier. Lieberman further claimed that the advantages of the Air/Sea
department of the line's integrated flight arrangements became more clear in raising new
pricing issues.

Questions such as how the cruise-only cost will apply to the air-sea packages, how the add-on
depends on the city from which the passenger travels, and whether the discounts will be added
to the cruise or the cost of the flight are just some of the questions discussed by Lieberman. In
a battle to answer the above-mentioned concerns, Lieberman proceeded to explore that cruise
executives use one of the following four pricing strategies:

• Free airfare-The cruise operator typically places free airfare or airfare included in the
advertising, but the discount is only for those who want to book the cruise and get the
all-inclusive cruise price allowance, deduction or credit.
• Air Supplement - they only advertise the price of a cruise and offer an optional air
supplement for particular gateway cities (from which the passenger departs).
Depending on where it is located, the listed cities cost the same while extra costs apply
to other cities. A return flight, ground transfers and baggage assistance can be included
in the optional deal.
• Region fares - they also advertise only the price of a cruise. Like the air substitute, the
additional cost is for travellers who arrange this via the cruise company and depends
on the city they are departing from. In this case, the cities are equally grouped into many
zones (similar zone, identical price).
• Promote the cruise price with an extra cost for flights depending on the gateway city
and departure date. Different air add-ons.

Lieberman suggests that the cruise line usually charged the airline a smaller sum in all four
methods compared to when bookings are made by the passengers. Cruise lines typically
negotiate contract rates with airlines and fares differ depending on the city gateway, airline,

32
and weekdays. Lieberman (2012) added that at least two of the four pricing techniques
discussed earlier have been adopted by most cruise lines over the past 20 years.

5.3 Discount Strategy for Gateway

The introduction of the 'one size fits all' policy (flights add-on) to become a completely
personalised product allowed the cruise lines radically refine their pricing strategies
(Lieberman). Airfare depends on the passengers' gateway town and departure times. Phillips
(2012:125) writes that one way cruise lines can optimise contribution from each sailing is to
'manage accessibility by city'. He explains the reward category in which businesses buy for
their workers in bulk by booking lower fares early than individual cruise fares. Lieberman
wrote that 'cruise lines' put greater emphasis on promoting early booking for passengers (p.
205). As the author gave Princess Cruises and Holland America Lines as examples that
provide it, the "Lowest Price Guarantee" is a way to promote early bookings. Where the same
combination of goods is given at a lower price at a lower date, the two cruise lines referred to
have undertaken to refund the difference.

5.4 Cruise Dynamic Pricing

REVENUE, PROFIT PER PASSENGER ON A 7

DAYS CRUISE
2500

2069
2000

1587
1475
1500

Revenue
1000
Profit

500 329
250 301

0
Carnival Corporation and Norwegian Cruise Line HLD Royal Caribbean Cruises
plc Ltd.

Figure 05: Graph of Revenue, profit per passenger on a 7 days cruise

33
Price differentiation is a term used to describe the 'ways to extract additional value by
charging different prices from the marketplace' (Phillips 2005: 76). Price differentiation
strategies which involve charging various prices for exactly the same product, charging
different prices for different product variants, and variations of the two. To avoid the negative
effects of the expression, Phillips suggests that this is the less contentious term for price
discrimination. The subtle techniques of product versioning, regional pricing, and channe
pricing are used for market differentiation.

After a surprising pattern was discovered after reviewing data for 18,983 sailings
by region with departures in 2017, cruise rates fluctuate to a greater degree as the
departure date approaches. A price decrease of up to 71 percent on flights is also
seen in some areas. There are significant differences between destinations,
however.

Region No. of Days Saving

Alaska 87 19%

North America 63 72%

Hawai 21 61%

Mexico 32 46%

Carribean & Bermuda 55 48%

South America 59 56%

Euope 67 52%

Middle East 59 64%

Aisa 84 38%

Ocenia 102 31%

Table 03: Table for Region Vs Saving for booking before X no of days.
(Source: https://www.prnewswire.com/news-releases/when-to-book-a-cruise-by-destination-to-save-up-to-71-
300590271.html)

It has been found that short-term planning really pays off. Many of the world's 15
cruise regions show the highest decline in maximum prices between 75 and 55

34
days before departure, with more than 1.8 million data points being intensively
analysed. These include North America (71 percent), South America (56
percent), Southern Europe (59 percent), and the Middle East (64 percent). "When
booking a cruise, if cruisers are flexible with their cabin choices, they could save
significant amounts of money simply by booking their cruise last minute,"
explains Markus Stumpe, CEO and co-founder of Cruisewatch. "In fact,
spontaneous travellers could save up to 61 per cent on Hawaiian cruises by
booking within 3 weeks of the departure date!"

If you're wondering when to book a cruise to get the best offer with a short-term
booking, you might soak up both the sun and the savings. Hawaii and Mexico are
the best regions for this option. The best time to book Hawaiian cruises is 21 days
prior to departure, and up to 46 percent off can be offered on Mexican cruises
within 32 days prior to departure.

5.5 When to book Caribbean cruises for the lowest deal?

The Caribbean is America's most popular cruise area, and this iconic playground boasts
maximum price cuts of 51 percent off when you book about 59 days before departure. In
addition, the trend extends to the nearby Bermuda area, where maximum price reductions of
46 percent occur exactly 51 days before cruises set sail. This means that cruise enthusiasts
looking for a dose of Vitamin D will save about half of their journey by booking at the right
time.

35
5.6 How can long-term planning pick the right regions?

"Areas such as Australia (35 percent), the South Sea (27 percent), and Alaska (19 percent) are
good options for those who want to plan ahead," says Markus. These regions see relatively
small price fluctuations, and they appear to occur 85 days before departure.".

However some nations also offer good price cuts and more time for training. Included
are:

• Northern Europe (45% off 70 days before leaving),

• Cruises to Galapagos (39 percent off 79 days before departure),
• Asia (38 percent off 84-day pre-departure) and
• Transatlantic or Transpacific cruises (41 percent off 73 days prior to departure).
• Although these regions do not offer as drastic price cuts as Hawaii or the Caribbean,
knowing when to take a cruise to these locations can still save customers a significant
amount of money.

36
 06 Introduction
Carnival Corporation & PLC

For over 40 years, Carnival Corporation & PLC has been taking people around the world
with them. Established in 1972, on a second hand ship, Carnival Cruise Line started as a
single trip from Miami to San Juan. Carnival has 10 different cruise line brands and over 100
ships after years of expansion. It has over 100,000 staff and serves nearly 10 million clients a
year. "Carnival states, "Our goal is to take the world on holiday and offer exceptional
experiences across many of the world's best-known cruise brands that appeal to a range of
different geographical regions and lifestyles, all at an unrivalled outstanding value on land or
at sea.

The business model involves taking guests on enjoyable holidays, which occur at many
different price points in many different geographies. Carnival has the ability to "upsell"
passengers with drinks, specialty restaurants, casinos, and shore excursions once a passenger
is on board. Usually, 80% of the total income comes from ticket sales and the remaining 20%
comes from these extra transactions.

In segmenting the market with their cruise brands, Carnival Corporation has been very
successful. Though Carnival Cruise Line, their biggest brand, is known as The Fun Ships" and
caters to families and cost-conscious passengers, they have many other passenger options
available. On a small and intimate ship, Seabourn offers an ultra luxury holiday. Costa, which
is headquartered in Italy, is the biggest cruise line in Europe. Both the UK and Australia also
have dedicated cruise lines.

It is a dual-listed firm on the New York Stock Exchange and London Stock Exchange, with its
large range of goods selling and attracting 10 million guests annually. It is also notable that
both the S&P 500 (Standard & Poor's) indexes and the FTSE 100 index (commonly referred to
as footsie) are the only business in the world to be included in it. Both indices are based on the
market capital structure of the common stock of major corporations.

37
6.1 Brands under Carnival Corporation & PPL

CARNIVAL CRUISE BRANDS BY REVENUE(2018)

5
4.3 4.3

4
Revenue(in billions)

3 2.7
2.2 2.3
2

1.1
1 0.8
0.6 0.6

0
AIDA Carnival Costa Cunard Holland P&O P&O Princess Seabourn
Cruises Cruise Cruises Line America Cruises Cruises Cruises Cruise
Line Line Australia Line
Brand

Figure 06: Graphs of Carnival Cruise brands by revenue (2018)

Established in 1972, Carnival Cruise Line is one of the cruise industry's

most recognised brands and carried more than 5.4 million guests in
2018, the most of any individual cruise brand. As those who want to
"Choose Fun" and live life to the fullest, Carnival Cruise Line describes
its target customers. The focus of the company continues to be on
improving its goods and services with developments that cater to both
new customers and past guests. Carnival Cruise Line launched the fully
Ships: 22 revamped Carnival Sunrise in April 2019, part of a $2 billion initiative
that enhances the vacation experience of the line and introduces a range
of fresh developments throughout the fleet.

38
 A number of revolutionary features will be introduced by Mardi Gras,
expected to enter service in 2021, including:
• BOLT, the first ocean roller coaster with an 800-foot-long route
where riders can hit speeds of almost 40 miles an hour.
• Big Chicken, a restaurant concept established by NBA Hall of
Famer Shaquille O'Neal, the line's Chief Fun Officer.
• World-renowned chef Emeril Lagasse's first seafood restaurant.
• Six areas with a range of bars, restaurants and attractions are
each related to a specific theme.
• A broad range of options for staterooms, including 180-plus
suites spanning 11 different categories.
• The first Liquefied Natural Gas (LNG) fuelled ship in North
America, part of the green cruising platform of Carnival
Company.

In 1965, Princess Cruises started operations. Enchanted Princess, the

fifth Royal-Class ship and its sister ship Discovery Princess, was
recently delivered by Princess, and is scheduled for delivery in
November 2021. Princess sails to nearly every corner of the globe,
from Alaska to Asia and Australia, the Caribbean and Mexico, Europe,
the Panama Canal, South America, and more, 11 times awarded Best
Cruise Itineraries by Recommend Magazine. By providing customers
with lifelong memories and meaningful storeys to share from their
cruise holiday, Princess has improved the onboard experience. There
Ships: 16 are many goods and services in the programme, such as:

Personal Preference Dining, offering guests three dining choices,

including traditional dining, anytime dining and specialty dining at
locations, such as international chef & TV host Curtis Stone's award-
winning restaurant SHARE, and culinary experiences, such as our
"Chocolate Journeys" dessert experience with master chocolatier
Norman Love specialties.

39
 Voice of the Ocean onboard entertainment, an immersive display
modelled after the wildly successful international singing competition,
as well as four original musical productions produced by Steven
Schwartz, the award-winning composer.

In partnership with Discovery Channel and local experts in key

regional cruise destinations, immersive onboard activities and shore
excursions are planned to provide guests with authentic and unique
onboard and ashore experiences and to entertain and delight them with
the nature, wildlife, history and culture of the regions they visit.

In addition, Princess customers can now select a new type of luxury

stateroom with VIP facilities and exclusive dining.

Holland America Line has been carefully crafting the next journey for
its customers for 145 years. Our fleet of 10 spacious, medium-sized
ships offers more than 425 ports of call in 100+ countries on all seven
continents with a classic cruising theme. We welcome this fleet of 10
ships to our third Pinnacle-Class ship, Rotterdam, when it debuts in
July 2021.
Ships: 10

They'll enjoy dining inspired by our global culinary council of seven

world-renowned chefs for customers searching for the most full and
immersive culinary experience at sea. The Dining Room is known for
daily excellence, while specialty choices are provided by restaurants
such as Pinnacle Grill, Tamarind, and Canaletto. Your customers will
enjoy an extensive variety of wines, chosen by our Wine Curator James
Suckling, and our classic cocktails are enjoyed by spirit lovers, led by
our Master Mixologist Dale DeGroff.
Holland America Line ensures both days and nights are packed with
delight and inspiration through unique collaborations with

40
 internationally acclaimed brands in entertainment and personal
enrichment. Live shows at Lincoln Center Stage, B.B. King's Blues
Club, Rolling Stone Rock Room and Billboard Onboard are provided
by Music Walk. Special live shows and state-of-the-art theatre
equipment are available at The Mainstage. And in partnership with
BBC Earth; O, The Oprah Magazine; America's Test Kitchen; and
Microsoft Windows, your clients will enjoy fun and life-enriching
activities and workshops.

Seabourn, which started operations in 1988, offers the best ultra-luxury

travel experience in the world on smaller ships that concentrate on
intuitive tailored service and guest recognition. The line's fleet of three
458-passenger and two 600-passenger vessels, the youngest in the
cruise industry's ultra-luxury category, provides spacious all-suite
suites, award-winning gourmet dining, free drinks and fine wines,
exclusive experiences such as Marina Day and Chef Excursions
Shopping. In May 2018, Seabourn launched its newest ship, Seabourn
Ships: 5 Ovation, and has two ultra-luxury purpose-built expedition ships set to
be launched respectively in December 2021 and May 2022.

Seabourn's ships sail to more than 400 destinations worldwide,

including Europe, Asia, Australia and New Zealand, the South Pacific
Islands, the Americas and Antarctica, with cruises normally lasting
between seven and 14 days, along with a variety of longer journeys.

Cunard's premium cruise line is known internationally as running the

world's most renowned ocean liners, providing iconic travel
experiences with excellent service. Three ships are currently being
sailed by the brand: Queen Mary 2, Queen Victoria and Queen
Elizabeth, with a fourth vessel expected to make its debut in 2022. All
three Queens deliver luxurious accommodations in Britannia, Britannia

41
 Club, Princess Grill Suite and Queens Grill Suite staterooms, renowned
Ships: 3 for impeccable White Star Service, gourmet dining and world-class
entertainment. Cunard is the only line to provide regularly scheduled
transatlantic service on the flagship Queen Mary 2 between New York
and London; they continue the World Cruising tradition that Cunard
pioneered in 1922; and offer itineraries to visit Europe, North America,
South America, Africa, Asia and Australia from two-night short breaks
to Grand Voyages. Incorporated in 1840.

The legacy of iconic ships and exclusive onboard programming by

Cunard has given the company a unique and distinct place in the market
for luxury travel. They have won several honours, including the #1
Mega-Ship Ocean Cruise Line by Travel & Leisure's World's Best
Awards in 2018, 2017 and 2016, and the 2019 Readers' Choice Awards
for Best World Cruise' by Porthole Cruise Magazine.

AIDA Cruises opened up a new chapter in the history of cruising in

1996 with its relaxed and premium-quality cruise model. In the
German-speaking cruise industry, AIDA Cruises is today the market
leader. The epitome of a premium-quality, relaxing cruise is AIDA
Cruises, with its guests living and loving the special experience of
AIDA Cruises. On board and on ground, unforgettable boundless
diversity awaits them instead of a Captain's Dinner, dress code and set

Ships: 13 meal times. Guests love being part of the family of AIDA Cruises and
feel at home anywhere in the world. The friendliness of the crew and
having German as the onboard language foster this feeling.

Every guest will experience a personal holiday every day and explore
a new world. With an impressive selection of itineraries, destinations
and shore excursions, culinary delights, world-class entertainment,
health and fitness, and top-notch programmes for children and

42
 teenagers, AIDA Cruises appeals to the lifestyle of adventurous, open-
minded people of every generation. At the Meyer shipyard in
Papenburg, Germany is scheduled to join the fleet by 2023, AIDA
Cruises operates one of the world's most state-of-the-art fleets,
currently consisting of 13 cruise ships with two additional ships being
constructed. Featuring the 'eco cruising' concept of Carnival
Corporation with dual-fuel engines, AIDAnova is the world's first
cruise ship to be entirely operated both in port and at sea by liquefied
natural gas (LNG). Using LNG, the world's cleanest fossil fuel for
combustion, almost completely eliminates emissions of particulate
matter and sulphur oxides at sea and in port. It also decreases the
emissions of nitrogen oxides and CO2 substantially.

Since 1948, Costa has been offering cruises and today it visits more
than 260 ports around the globe. In 2019, over 1.5 million guests were
transported by its ships. The brand operates a fleet of 10 modern ships,
including the recent delivery of the first of two liquefied natural gas
(LNG) ships, the Costa Smeralda. Costa Toscana, the second new
building, will arrive in 2021. Costa calls himself the world's best Italian
ambassador. By offering beautiful Italian paintings, unique interior
decorations with superb Italian mosaics and precious Murano
chandeliers, fine Italian wines, excellent choices of Mediterranean food
Ships: 10 and unique shops that carry well-known Italian fashion brands, its ships
reflect the best of Italy. Because of its multi-lingual operation, Costa
attracts foreign visitors and is considered to be Europe's top vacation
provider. Costa is also known for providing imaginative itineraries that
combine the excitement of new destinations with the service and
atmosphere of onboard pampering.

Operating a fleet of five luxury ships, P&O Cruises (UK) is the UK's
leading and most known cruise brand. The fleet will be joined by its

43
 newest ship, Iona, a 180,000-ton vessel fuelled by liquefied natural gas
(LNG), the world's cleanest burning fossil fuel, in 2020. Iona will
deliver the holiday of a lifetime to the next generation of guests on the
next generation of P&O Cruises ships. P&O Cruises (UK) sails to over
230 destinations across the globe, delivering World Cruises and all in
between with two to five nights of short breaks. With indulgent
Ships: 5 holidays to family-friendly vacations only for adults, there is a ship for
every occasion and style.

Guests should expect a combination of excellent service, relaxation and

exploration while sailing with P&O Cruises. The much-loved customs,
including black tie nights and regular afternoon tea, are adapted to
British tastes, coupled with the very best contemporary food and
entertainment scene.

The Australia and South Pacific region's leading cruise operator is

P&O Cruises (Australia), which started cruising from Australia in
1932. "P&O Cruises (Australia) was voted Australia's "Most Trusted
Cruise Operators" by Readers Digest in 2019 for the sixth consecutive
year. With an emphasis on contemporary design, great food, friendly
service and a range of exciting activities and entertainment, the
onboard atmosphere is comfortable. The line currently operates a fleet
of three vessels, including Pacific Aventure, due in October 2020 to
join the P&O family. Pacific Adventure will deliver a wide variety of
Ships: 3
iconic P&O features as well as a host of new ones, including an adult-
only oasis at Byron Beach Club.

P&O Cruises (Australia) sails from numerous home ports in Australia

and New Zealand to more destinations in Australia and the South
Pacific than any other cruise line and provides cruises, usually between
three and 16 days. Furthermore the routes of the line include distant
idyllic ports of Papua New Guinea and the Solomon Islands, as well as

44
 a "taste" of Asia. P&O Cruises (Australia) provides itineraries focused
on major Australian activities, including the Melbourne Cup, the
Australian Open Tennis and the State of Origin Rugby League.
P&O Cruises (Australia) recently partnered with Luke Mangan, the
leading restaurateur and celebrity chef, and opened Salt Grill, a
signature fine-dining restaurant. Moreover the traditional cruise ship
buffet has been replaced by new refurbishments with an international
market place of fresh food outlets representing the many flavours
Australians love to eat.

Table 04: Table Brands under Carnival Corporation & PLC

6.2 Market Share of Cruise Industry

Dozens of cruise lines and over 250 ships make up the global industry. But three players
dominate about 75 percent of the market: Carnival Corporation & PLC, Royal Caribbean
Cruises LTD and Norwegian Cruise Line HLD.

CRUISE SHIP COMPANIES BY MARKET SHARE

(2018)

Carnival Corporation and plc

25% Royal Caribbean Cruises Ltd.
41% Norwegian Cruise Line HLD
Others
13%

21%

Figure 07: Graphs of CRUISE SHIP COMPANIES BY Market Share (2018)

45
 CRUISE SHIP COMPANIES BY REVENUE(2018)
20 18.9
18
16
Revenue(in billions)

14
11.4
12
9.5
10
8
5.8
6
4
2
0
Carnival Corporation Norwegian Cruise Line Others Royal Caribbean
and plc HLD Cruises Ltd.

Company

Figure 08: Graphs of Cruise Ship companies by revenue(2018)

46
 07 Dynamic Pricing in Carnival Cruises

Here we present the details and data collected about the cruise company Carnival Corporation
and its separate Holland America Line brand. Depending on the area where the ship sails and
the length of the voyage, the various brands under the Carnival Company have different prices
for their goods.

The word "churn" means that cancellations are not penalised. There is an option time, a period
where individuals can choose to cancel their reservations without penalty by not paying the
deposit within 24 hours-three days, half of the reservations are made within the option period,
and 20% of those lack deposit. There is a no-money return penalty for cancellations made
within 75 days of the sailing date.

As the income on board is much needed, 100 percent full-ship capacity. Onboard revenue
applies to transactions made on board, including beverages, food and wine, tours, tax-free
shopping, events, etc. Losses in bookings reduce the full capacity they are striving for and
thereby affect the company's overall revenue. They try to stop this option, just like they have
to drop rates a few times at the last minute. For example, they will not drop the prices of their
luxury brands too much The cruise will cost $399 per person a week as an exclusive price at
its lowest. That means food and drinks or any flight or ground transfers are not included.

The price of the goods is scheduled by Holland America Line at least 12-18 months before the
date of sale (when the system is available for bookings).

*Note: Global passengers carried forecasts for 2021 presume that post-COVID-19 sailing
begins on 1 March 2021 at 50 percent capacity and hits 90 percent capacity by year-end (pre-
COVID-19 sailing at 105 percent-109 percent capacity).

47
7.1 Holland America Lines - “A signature of Excellence ”: Pricing Strategy

As a pricing example of a cruise in January 2015, a 7-day Caribbean cruise will cost around
$2,266 as a value fare for double occupancy, including taxes, fees and port expenses. HAL
charges $4,100 per person for double occupancy for the same destination but on a 14-day
cruise. Revenue management is structured in two areas at most cruise lines: planning/launch
pricing and yield management.

To ensure that the sailings are sold according to schedule, the Revenue Planning & Analysis
department is responsible for day-to-day pricing and inventory decisions. All the terms and
conditions relating to the sale of cruises need to be carried out concurrently alongside the
launch rates. They include strategies of cancellation, community bonuses and foreign exchange
rates. They appear to start a commodity trade about a year to a year and a half before the first
sailing date, such as Europe, Alaska, Australia, etc.

The company is very much in line with one of the targets of the HAL of earning an acceptable
return on money. Ticket income, which comes under the oversight of the senior director for
revenue planning & review, is the single largest portion of the balance sheet. Their attempts to
maximise ticket sales are also aligned with the corporate objective. When determining rates for
individual cruises, some of the considerations to consider are the following:

• The output of the previous year on the same or similar sailings (if they have to reduce
the prices tactically to fill the sailing, then they will probably start with a lower strategic
price)
• Ship/class-more verandahs, enhanced returns
• Changes in HAL capacity - more capacity, lower prices
• Changes in trade power - more capacity, lower prices
• Competitive pricing-relevance requirement
• Macro-political/economic considerations: soft marketability implies lower prices

HAL attempts and anticipates the perceived utility of customers for a sailing and a specific
cabin category and prices accordingly. They are aware of the rivalry and of which segment of
the market they are participating in. In today's cruising industry, the three general categories

48
are the contemporary (e.g. Carnival and Royal Caribbean), the premium (e.g. Holland America
Line, Celebrity), and the luxury (e.g. Seabourn and Crystal) category. They guarantee that the
price represents the premium market and is not inherently lower or higher in the same segment
than the others.

One of the key "rules" in the cruise industry is to optimise occupancies and, unlike the 75%
capacity hotel industry, the former aim for the high 90%. This makes identifying prices a must.
They offer special rates for classes, foreign markets, or select U.S. states, travel agents, past
passengers (loyalty), friends and family members of the crew, etc. The loading of the ships
includes all of these various price promotions.

7.2 Pricing processes within- HAL

In order to illustrate how the strategy can meet the budget requirements, the revenue
management department (in HAL's) is expected to present its strategic pricing to the CEO.
Tactical pricing often has corporate scrutiny, mostly at the level of the CEO. They have a
conference called the "Inventory Meeting" where they decide the pricing strategies. At the
pricing analyst level, price adjustments at a segment level that are $50 or less may be executed.
They believe in inspiring analysts for their sales.

Revenue Management Dept.

Strategic Planning Tactical Pricing

CEO DP> $50 DP< $50

Pricing Analyst

Figure 09: Holland America Line method of price planning. The department of sales management is sending its
strategic pricing strategies for approval to the CEO. In case of tactical planning, if the adjustment in price is

49
lesser than $50 (∆P<$50), the price analysts will make the decision by themselves. But if the price adjustment is
greater than $50 ( ∆P> $50), then the CEO must scrutinise and authorise it., Ruby Bengtsson (2014)

HAL has an air programme where guests can choose an air schedule from choices customised
to suit the sailing/arrival times of the voyage. "The air booking tool adds a mark-up to the air
cost and offers for each air schedule a total price, including air taxes." The mark-up is applied
to cover costs associated with the security of the next port and the air/sea package's 24-hour
flight assistance services. Transfers to and from the ship as well as pre- and post-hotel stays
are not included in the air/sea HAL kit, but may, if desired, be bought separately.

The decision-making processes can be more complex because the cruise industry has so many
moving components that it is difficult to keep track of them and make successful decisions.
Especially because about a year and a half before sailing, the revenue management group
finalises pricing, a lot can still happen in that span of time. In the cruise industry, the
implementation of big data and scientific modelling holds great promise. In applying dynamic
forecast models and pricing elasticity controls, HAL's sister brand, Carnival cruises, is so far
the furthest, but Hal is making good progress. Eventually, each sailing will have its own
forecast and pricing guidelines that allow analysts to make optimal choices.

In HAL, the decision-making process can be difficult when there is an inherent noise in the
data, according to revenue scientist Greg Vogel (2014). There is no 100 percent faith in
everything they do, but they usually strive to make decisions based on models of high trust.
Within every model, there is always a sound in the data and volatility and the risk reward ratio
must be weighed. In the current pricing model, there are aspects to be changed. It also needs
further development as they just began the process a little over a year from scratch.

7.3 Dynamic-Pricing(DP) & Revenue-Model(RM) in HAL

The Holland America Line (HAL) Revenue Scientist works as a data scientist. In order to
construct predictive models such as forecasting future demand and proposed price adjustments,
he is in charge of using the revenue data. Within the cruise industry, there are a range of
solutions that exist for pricing technology. Whether it is a framework constructed by data
scientists such as HAL and Carnival, or a black box solution such as the one designed by PRO,
or a pre-built solution that can be run by statisticians that still allows a lot of versatility. An

50
example of this could be SAS (Scandinavian AirlinesRMPOA )'s solution. Within the cruise
industry, all three solutions have visibility, but HAL is designing its own method within the
home.

The revenue researcher claims that nothing is automated when it comes to automation. He/she
indicates that there is no automated pricing machine, but people who do the pricing, contrary
to common opinion within the industry. Based on booking data and market elasticity, he/she
will create a list of pricing recommendations at a certain time and pass on the created
information to the analysts of Revenue Management (RM) who will have the flexibility to
review those recommendations using their own expertise. From there the RM analysts go
through a decision-making phase in which the findings will lead to the system of the GDS
(Global Distribution System) and other related systems. The pricing model of the revenue
scientist follows the proven formulas in economic theory in which the application of price
elasticity to the forecast of demand is carried out. It is determined from the most comparable
voyages based on previous sailings based on weighted history. The similarity is calculated on
the basis of a scored metric, using statistical theory, which he developed.

Figure 10: Model method for pricing HAL Revenue Management

51
An advantage of their approach would be that it is possible to combine the power of the pricing
models with knowledge and human experience. Both models naturally have errors and are able
to integrate a system and human expertise to minimise each other's errors. They also capture
troubled voyages much quicker and are able to work on them as before without drastic changes.
Human error is also involved, and decision-making is left up to human discretion.

The essence of how the trade is doing as a whole, how far the company has gone, and what the
experiences suggest, are factors that can influence pricing decisions within HAL. Sudden price
shifts may be induced by incidents that are actually' unusual events.' These add to market
ripples and to the industry as a whole. The Costa Concordia, Carnival Triumph, the situation
in Ukraine, etc, are some examples.

52
 08 Recommendation

Ship companies generate revenue from the price of the fare, but also from on-board revenue
and fees and from stakeholder deals, such as those involving shore excursions, restaurants,
shops or airlines (Weaver, 2005; Vogel, 2011). In order to have higher occupancy rates, this
leads to ship companies providing cheaper costs, since a significant proportion of sales come
from onboard spending (Toh et al., 2005). They still want customer satisfaction to be achieved.
Vogel (2011) points out that three major trends are currently ongoing in the cruise industry:
net on-board profits outgrow ticket sales; ticket prices barely cover costs; and ticket prices are
dropping. This view is echoed by Chua et al. (2015), emphasizing the fact that cruise companies
concentrate on making an attempt to bring passengers on board (e.g. selling tickets at cheaper
prices) due to their high fixed costs. Hence, we recommend use of dynamic pricing over
onboard services which can further help this industry to increase its profits. Following is the
list of onboard activities on Holland America Line. To understand and check the viability of
the recommendation we have taken a micro level approach considering it for one of the brands
for Carnival Corporation & plc i.e., Holland America Line.

8.1 List of onboard services that are available on Holland America Line:

• BLEND: At BLEND by Chateau Ste., wine connoisseurs and novices alike will learn
the art of winemaking. The intimate venue will encourage guests to mix their own wine
and drink it at dinner or in the privacy of their stateroom. Michelle, the oldest and most
acclaimed winery in Washington State. BLEND has a tasting table that accommodates
10 guests who can make their own blend from a range of five barrels of single-vineyard
red wine, the first of its kind for the Holland America Line and the only purpose-built
wine-blending location at sea.

• CASINO ACTION: The Casino of the Holland America Line Ship provides a wide
variety of gaming options. If you prefer slot machines or want to try your hand at
blackjack or poker, dealers and employees are available to provide free coaching and
will provide many engaging options for the tournament. The Casino is open at sea only.

53
• GREENHOUSE SPA & SALON: Few places allow one to refresh, relax and
rejuvenate during a restful day at sea, such as the Greenhouse Spa & Salon®. With
renowned spa rituals and healing touches, this heavenly retreat nurtures every aspect of
well-being. You get the chance to pamper your skin in the spa with facial treatments
that include quality, naturally derived ingredients. Nurturing one's body, too using time-
honored, hands-on massage methods gleaned from across the globe with massage
treatments.

• ONBOARD SHOPPING: In such signature stores as The Vault, Diamonds and

Gemstones by Merabella, which offers the finest diamonds at sea, brought by Sophia
Fiori, offers an opportunity to enjoy a wide range of duty-free shopping.
Revenue Expenses
Ticket $
1,217
Onboard Spending $
497
Casino & Bar $
273
Shore Excursions (cruise line $
portion) 99
Spa $
50
All other onboard spending $
75
Total Spending $
1,714
Other operating costs $ 249
Agent commission $ 223
Ship fuel costs $ 185
Corporate Operating Costs $ 199
Payroll $ 189
Depreciation/Amortization $ 165
Victualing (food) $ 103
Onboard and other $ 75
Other and transportation $ 57

54
 Interest Expense $ 53
Total Expenses $ 1,564
Profit before taxes $ 218
Table 05: Table of Financial Breakdown of Cruise Line Passenger
( Sources: Royal Caribbean Cruises, Ltd., Carnival Corporation and plc, NCL Corporation Ltd., Cruise Lines
International Association (CLIA), The Florida-Caribbean Cruise Association (FCCA) and DVB Bank.)

The breakdown of the estimated 2021 average cruise revenue and expense per passenger per
day for all cruise lines world-wide. The average per passenger per day cruise expense is
projected to be $214.25, with $152.12 per person per day ticket price and $62.13 per person
per day on board spending (average cruise duration 8.0 days, median duration 7.0 days).

We propose the use to dynamic pricing in specific to but not limited to Bars & Lounge. Holland
America Line provides a large range of onboard lounges and meeting areas, the shake of a
martini, the hum of conversation with new friends.

8.2 List of onboard Bars & Lounges offered at Holland America Line:

• CROW’S NEST: Holland America Line gives an extensive range of onboard lounges.
The panoramic view takes center stage at the top of the ship in The Crow's Nest, where
people can relax and enjoy their favorite drink at just about any time of day.

• EXPLORER’S LOUNGE: An elegant and refined place to enjoy a glass of wine, a

cocktail or your preferred liqueur.

• GALLERY BAR: An eclectic and whimsical mix of artwork, including portraits,

landscapes, still life and abstract pieces, adorns this sophisticated venue. People can
order their favorite cocktail or try one from their signature cocktail menu created in
conjunction with a James Beard "Who's Who" inductee, Master Mixologist Dale
DeGroff.

• MIX: The Holland America Line gives a wide variety of onboard lounges and meeting
places. For Champagne, Martinis, and Spirits and Ales, explore Mix.

55
 • NOTES: This is really your whisk(e)and wonderland for aficionados. At NOTES,
guests of a dedicated whisk(e)y bar will look in wonder at the more than 120 labels on
show and sample some of the world's most rare whisk(e)y collections. To define
distinctly customized flavor profiles for each guest, an interactive menu board and
numerous tasting options are planned.

• OCEAN BAR: Enjoy live music, ideal for pre-dinner cocktails, in this famous bar.

• PIANO BAR: The Holland America Line provides a wide range of on-board lounges.
At the Piano Bar, when the pianist plays your favorites, you can sit around and sing
along.

• TAMARIND BAR: Which is more enjoyable: the apple-pear saketini in your chilled
glass or the vision of the crimson blaze of the sun? In this elegant hideaway, a paradise
for panoramic views and exotic drinks, and only one of the large range of lounges and
meeting places on board, people can enjoy both.

8.3 Bars & Lounges Packages offered at Holland America Line:

• A new Elite Beverage Package for guests offering premium choices of drinks has been
launched by Holland America Line.
The Elite Beverage Package is per user, per day, from $63. Up to $15 each, any luxury
spirits, cocktails, wines, beers, coffees, non-alcoholic drinks, bottled water and sodas.
The kit also includes the Coca-Cola Freestyle program on the Koningsdam, where
guests can enjoy more than 100 special flavours of Coca-Cola.

• The Signature Beverage Package begins at around $51 a day per person.
This includes regular choices up to a value of $9 each of wine, beer, spirits, sodas,
coffees and cocktails.
Holland America Line now provides two non-alcoholic beverage options and a water
kit, in addition to the Elite and Signature beverage packages.

56
 • The Quench Beverage Kit contains unlimited non-alcoholic drinks at a price of $17.95
per person, per day, including any fruits, bottled water, non-alcoholic cocktails, non-
alcoholic beers and specialty coffees.

• The Coca-Cola package includes $8.00 per user, per day for unlimited fountain sodas.
This kit also includes the Coca-Cola Freestyle software with over 100 exclusive Coca-
Cola flavours on ms. Koningsdam.

• For a price of $32, the Water Package includes 12-litre bottles.

• The Cellar Master Package, consisting of a choice of five wine bottles, a regular and
a luxury wine tasting, one Pinnacle Grill dinner, a wine accessories gift collection and
a commemorative bottle of wine from the Holland America Line, can be enjoyed by
wine enthusiasts. Prices for the Cellar Master Package start at $252 per person.

We suggest a creative and cutting-edge bar design that enables customers to trade in booze,
conceptualized on the lines of our popular stock market. If the prices of drinks change
depending on real-time demand, an experience similar to stock market trading - Think of it as
happy hours where you monitor the prices of all drinks. Customers can also place an order
through a specially designed app that allows you to track prices and order in real time (Android
and IOS).

Basically, it is a drink pricing mechanism focused on the stock market, where drink prices
change based on real-time demand. Think of it as the best deal where the prices of all the drinks
can be regulated!

8.4 How will it function?

In order to decide and adjust the price of that drink for the next customer depending on
demand, proprietary software can use a comprehensive algorithm when a customer orders a
drink.

57
Following are the factors which can be further taken into considering along with the demand
as a factor:
• Seasonality
• Real time demand:
• Port content vs. sea days
• Competition
• Cost

58
 References
1. Espinet-Rius, J. M., Fluvià-Font, M., Rigall-Torrent, R., & Oliveras-Corominas, A.
(2018). Cruise tourism: A hedonic pricing approach. European Journal of Management
and Business Economics.
2. Ministry of Shipping, Government of India (2008). Cruise shipping policy.
3. Ayvaz-Cavdaroglu, N., Gauri, D. K., & Webster, S. (2019). Empirical evidence of
revenue management in the cruise line industry. Journal of Travel Research, 58(1), 104-
120.
4. Bengtsson, R. (2014). Pricing methods and strategies in the cruise line industry: A case
study on Carnival Corporation's premium and luxury brands.
5. Kittur, M. (2015). Pricing Intelligence 2.0: A Brief Guide to Price Intelligence and
Dynamic Pricing. Amazon Digital Services LLC.
6. Gallego, G., & Van Ryzin, G. (1994). Optimal dynamic pricing of inventories with
stochastic demand over finite horizons. Management science, 40(8), 999-1020.
7. Ji, L., & Mazzarella, J. (2007). Application of modified nested and dynamic class
allocation models for cruise line revenue management. Journal of Revenue and Pricing
Management, 6(1), 19-32.
8. Özer, Ö., Ozer, O., & Phillips, R. (Eds.). (2012). The Oxford handbook of pricing
management. Oxford University Press.
9. Lieberman, W. H. (2012). Pricing in the cruise line industry. The Oxford Handbook of
Pricing Management, UK Oxford University Press, Oxford, 199-216.
10. Lieberman, W. H., & Dieck, T. (2002). Expanding the revenue management frontier:
Optimal air planning in the cruise industry. Journal of Revenue and Pricing
Management, 1(1), 7-24.

59
Appendix 01. Carnival Corporation’s operations Summary

Target Market Passenger Market Segment Capacity

Market Segment
Passenger
Brand Target Market
Capacity

Mass Market/Discount
Carnival
“Carnival Cruise Lines is the best-known cruise
Cruise USA 58,273
brand in North America and the most profitable in
Lines
the world.”
Mass Market
“Princess is a global cruise and tour company
Princess United Kingdom 36,900
operating a modern fleet of 17 ships carrying more
than a million passengers each year.”
Mass Market
Costa Italy, France, “Based in Genoa, Italy, Costa Crociere is the
29,286
Cruises and Germany leading cruise company in Europe and South
America, operating a modern fleet of 15 ships.”
Premium
Holland
“...Holland America Line is recognized as the
America USA 23,492
undisputed leader in the cruise industry's premium
Lines
segment.”
Mass Market
“...market-leading P&O Cruises has been operating
P&O
United Kingdom 14,610 cruise ships for more than 170 years and
Cruises
combines innovation, professionalism and
unrivalled experience...”
Mass Market/Discount
“AIDA ships incorporate the successful elements
AIDA Germany 14,248
of upmarket clubs and resorts in the premium and
four-star range, with a host of on-board amenities

60
 and facilities that attract younger, more active
vacationers.”
Premium
“Royalty, celebrities and voyagers from every walk
United
Cunard 6,670 of life have enjoyed Cunard's classic luxury
Kingdom/USA
experience based on the history and tradition of
transatlantic liner service.”
Mass Market
P&O “...in the past five years P&O Cruises has expanded
Cruises Australia 6,242 its operations from one cruise ship, based in
Australia Sydney, to three cruise ships sailing year
round...”
Mass Market
Ibero “IberoCruceros is one of the top operators in the
Spain 4,176
Cruises fast-growing Spanish- and Portuguese- speaking
cruise markets.”
The Yachts Ultra-Deluxe
of United Kingdom 1,974 “...ultra luxury cruising vacations in a unique,
Seabourn small-ship style...”

(Levin et al 2012)

Appendix 02. Cruise Revenue source data

Cruise Revenue through 2017 2018 2019
Passenger ticket 12,944 13,930 14,104
Onboard Services & 4,330 4,679 6,331
Other
Tour & Other 236 272 390
Source: carnival, rc, norwegian annual reports 2018

61
Appendix 03. Growth in Cruise Line Industry
Year Worldwide Passengers Carried
1990 3774000
1991 4168000
1992 4385000
1993 4728000
1994 4800000
1995 4721000
1996 4970000
1997 5380000
1998 5868000
1999 6337000
2000 7214000
2001 7499000
2002 8648000
2003 9526000
2004 10460000
2005 11180000
2006 12006000
2007 14625000
2008 15779000
2009 17216000
2010 18421000
2011 19377000
2012 20335000
2013 20976000
2014 21556000
2015 22558800
2016 24178300
2017 25178000
2018 26504600
2019 27508900
2020 7092600

62
 2021 13905900
Sources: Royal Caribbean Cruises, Ltd., Carnival Corporation and plc, NCL Corporation Ltd.,
Thomson/First Call, Cruise Lines International Association (CLIA), The Florida-Caribbean Cruise
Association (FCCA), DVB Bank and proprietary Cruise Market Watch Cruise Pulse data.

Appendix 04. Growth by Region

Year North America Europe Other Worldwide Passengers carried
2017 12645600 6996000 5536400 25178000
2018 12927800 7285100 6291700 26504600
2019 12929200 7564900 7014800 27508900
2020 3225500 1935300 1931800 7092600
2021 6118596 3754580 4032711 13905900

Appendix 05. 2021 New Build Ships

Brand Ship Passenger Capacity
Carnival Mardi Gras 5200
Odyssey of the
Royal Caribbean Seas 4180
MSC MSC Virtuosa 4900
Virgin Voyages Valiant 2860
AIDA AIDAcosma 5186
Holland
America Rotterdam 2650
Princess Discovery Princess 3560
Costa Costa Toscana 5776
Sources: Royal Caribbean Cruises, Ltd., Carnival Corporation and plc, NCL Corporation Ltd.,
Thomson/First Call, Cruise Lines International Association (CLIA), The Florida-Caribbean Cruise
Association (FCCA), DVB Bank and proprietary Cruise Market Watch Cruise Pulse data.

63
Appendix 06. 2018 revenue by brands
Parent Company Brand Revenue (in billions)
$
Carnival Corporation and plc Carnival Cruise Line 4.3
$
Carnival Corporation and plc Princess Cruises 4.3
$
Carnival Corporation and plc Holland America Line 2.7
$
Carnival Corporation and plc Costa Cruises 2.3
$
Carnival Corporation and plc AIDA Cruises 2.2
$
Carnival Corporation and plc P&O Cruises 1.1
$
Carnival Corporation and plc Cunard Line 0.8
$
Carnival Corporation and plc P&O Cruises Australia 0.6
$
Carnival Corporation and plc Seabourn Cruise Line 0.6
$
Royal Caribbean Cruises Ltd. Royal Carribbean Int'l 6.5
$
Royal Caribbean Cruises Ltd. Celebrity Cruises 2.5
$
Royal Caribbean Cruises Ltd. Azamara Cruises 0.5
$
Norwegian Cruise Line HLD Norwegian Cruise Line 3.9
$
Norwegian Cruise Line HLD Oceania Cruises 1.1
$
Norwegian Cruise Line HLD Regent Seven Seas Cruises 0.8

64
 $
Others Others 11.4
Source: carnival, rc, norwegian annual reports 2018

Appendix 07. 2018 Company Market Share for cruise companies

Company Market
Share
Carnival Corporation and plc 41%
Royal Caribbean Cruises Ltd. 21%
Norwegian Cruise Line HLD 13%
Others 25%
Source: carnival, rc, norwegian annual reports 2018.

Appendix 08. 2018 Revenue and profit share for cruise companies
Company Revenue (per passenger for a 7-day Profit (per passenger for a 7-day
cruise) cruise)
Carnival Corporation $ $
and plc 1,475 250
Royal Caribbean $ $
Cruises Ltd. 1,587 301
Norwegian Cruise $ $
Line HLD 2,069 329
Sources: Royal Caribbean Cruises, Ltd., Carnival Corporation and plc, NCL Corporation Ltd., Thomson/First
Call, Cruise Lines International Association (CLIA), The Florida-Caribbean Cruise Association (FCCA), DVB
Bank and proprietary Cruise Market Watch Cruise Pulse data.

Appendix 09. 2021 Forecasted Revenue & Passengers Carried for Carnival
Ships
Brand Ship Parent 2021 Passengers Carried 2021 Revenue
Carnival Carnival Breeze Carnival 132100 94250000
Carnival Carnival Conquest Carnival 173300 66260000
Carnival Carnival Dream Carnival 121000 94890000

65
 Carnival Carnival Ecstasy Carnival 88300 42190000
Carnival Carnival Elation Carnival 92600 44680000
Carnival Carnival Freedom Carnival 77100 93930000
Carnival Carnival Glory Carnival 82100 69700000
Carnival Carnival Horizon Carnival 113800 112340000
Carnival Carnival Legend Carnival 43700 57510000
Carnival Carnival Liberty Carnival 172900 70880000
Carnival Carnival Magic Carnival 106800 96980000
Carnival Mardi
Carnival Gras Carnival 148900 155540000
Carnival Carnival Miracle Carnival 56700 55020000
Carnival Carnival Panorama Carnival 115100 94300000
Carnival Carnival Paradise Carnival 91200 45200000
Carnival Carnival Pride Carnival 58800 56990000
Carnival Carnival Radiance Carnival 104500 75530000
Carnival Carnival Sensation Carnival 92300 45660000
Carnival Carnival Spirit Carnival 68600 37710000
Carnival Carnival Splendor Carnival 83800 51410000
Carnival Carnival Sunrise Carnival 102900 64690000
Carnival Carnival Sunshine Carnival 130100 80800000
Carnival Carnival Valor Carnival 128400 68940000
Carnival Carnival Vista Carnival 143100 128470000
Costa Cruises Costa Deliziosa Carnival 50600 70970000
Costa Cruises Costa Diadema Carnival 102900 145020000
Costa Cruises Costa Fascinosa Carnival 61300 86050000
Costa Cruises Costa Favolosa Carnival 60400 89960000
Costa Cruises Costa Firenze Carnival 75200 120740000
Costa Cruises Costa Fortuna Carnival 89500 81090000
Costa Cruises Costa Luminosa Carnival 53200 79620000
Costa Cruises Costa Magica Carnival 57100 72350000
Costa
Costa Cruises Mediterranea Carnival 4000 4240000
Costa Cruises Costa Pacifica Carnival 79300 98530000

66
Costa Cruises Costa Serena Carnival 90800 99840000
Costa Cruises Costa Smeralda Carnival 86200 103910000
Costa Cruises Toscana Carnival 51900 68870000
Cunard Queen Elizabeth Carnival 29200 120690000
Cunard Queen Mary 2 Carnival 43100 177910000
Cunard Queen Victoria Carnival 27400 128510000
Holland
America Amsterdam Carnival 26100 56040000
Holland
America Eurodam Carnival 48300 78250000
Holland
America Koningsdam Carnival 52600 151310000
Holland
America Maasdam Carnival 11200 35920000
Holland
America Nieuw Amsterdam Carnival 28100 85900000
Holland
America Noordam Carnival 31600 104840000
Holland
America Oosterdam Carnival 33800 63320000
Holland
America Rotterdam VI Carnival 15300 65700000
Holland
America Ryndam Carnival 14200 44520000
Holland
America Statendam Carnival 17000 55880000
Holland
America Veendam Carnival 11400 41880000
Holland
America Volendam Carnival 24100 76130000
Holland
America Westerdam Carnival 21900 79860000
Holland
America Zaandam Carnival 24000 73200000

67
 Holland
America Zuiderdam Carnival 24600 82320000
Princess Caribbean Princess Carnival 58100 103250000
Princess Coral Princess Carnival 31300 86240000
Princess Crown Princess Carnival 50500 144830000
Princess Diamond Princess Carnival 49400 151050000
Princess Emerald Princess Carnival 66500 125360000
Princess Enchanted Princess Carnival 48500 165340000
Princess Grand Princess Carnival 43400 113230000
Princess Island Princess Carnival 14200 98930000
Princess Majestic Princess Carnival 88800 130770000
Princess Pacific Princess Carnival 5800 26170000
Princess Regal Princess Carnival 56200 170780000
Princess Royal Princess Carnival 79300 152100000
Princess Ruby Princess Carnival 60600 104180000
Princess Sapphire Princess Carnival 47700 92020000
Princess Sea Princess Carnival 7500 40380000
Princess Sky Princess Carnival 48900 189200000
Princess Star Princess Carnival 42900 116600000
Princess Sun Princess Carnival 16700 54920000
Seabourn Seabourn Encore Carnival 8000 75270000
Seabourn Seabourn Odyssey Carnival 7800 50980000
Seabourn Seabourn Ovation Carnival 7600 78900000
Seabourn Seabourn Quest Carnival 3300 48030000
Seabourn Seabourn Sojourn Carnival 5200 56790000
Seabourn Venture Carnival 1900 35150000
Sources: Royal Caribbean Cruises, Ltd., Carnival Corporation and plc, NCL Corporation Ltd., Thomson/First
Call, Cruise Lines International Association (CLIA), The Florida-Caribbean Cruise Association (FCCA), DVB
Bank and proprietary Cruise Market Watch Cruise Pulse data.

68
Appendix 10. 2021 Forecasted Revenue and profit share for Ships
2021 Passengers
Brand Ship Parent Carried 2021 Revenue
Carnival Carnival Breeze Carnival 132100 94250000
Carnival Carnival Conquest Carnival 173300 66260000
Carnival Carnival Dream Carnival 121000 94890000
Carnival Carnival Ecstasy Carnival 88300 42190000
Carnival Carnival Elation Carnival 92600 44680000
Carnival Carnival Freedom Carnival 77100 93930000
Carnival Carnival Glory Carnival 82100 69700000
Carnival Carnival Horizon Carnival 113800 112340000
Carnival Carnival Legend Carnival 43700 57510000
Carnival Carnival Liberty Carnival 172900 70880000
Carnival Carnival Magic Carnival 106800 96980000
Carnival Carnival Mardi Gras Carnival 148900 155540000
Carnival Carnival Miracle Carnival 56700 55020000
Carnival Carnival Panorama Carnival 115100 94300000
Carnival Carnival Paradise Carnival 91200 45200000
Carnival Carnival Pride Carnival 58800 56990000
Carnival Carnival Radiance Carnival 104500 75530000
Carnival Carnival Sensation Carnival 92300 45660000
Carnival Carnival Spirit Carnival 68600 37710000
Carnival Carnival Splendor Carnival 83800 51410000
Carnival Carnival Sunrise Carnival 102900 64690000
Carnival Carnival Sunshine Carnival 130100 80800000
Carnival Carnival Valor Carnival 128400 68940000
Carnival Carnival Vista Carnival 143100 128470000
Costa Cruises Costa Deliziosa Carnival 50600 70970000
Costa Cruises Costa Diadema Carnival 102900 145020000
Costa Cruises Costa Fascinosa Carnival 61300 86050000
Costa Cruises Costa Favolosa Carnival 60400 89960000
Costa Cruises Costa Firenze Carnival 75200 120740000
Costa Cruises Costa Fortuna Carnival 89500 81090000

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Costa Cruises Costa Luminosa Carnival 53200 79620000
Costa Cruises Costa Magica Carnival 57100 72350000
Costa Cruises Costa Mediterranea Carnival 4000 4240000
Costa Cruises Costa Pacifica Carnival 79300 98530000
Costa Cruises Costa Serena Carnival 90800 99840000
Costa Cruises Costa Smeralda Carnival 86200 103910000
Costa Cruises Toscana Carnival 51900 68870000
Cunard Queen Elizabeth Carnival 29200 120690000
Cunard Queen Mary 2 Carnival 43100 177910000
Cunard Queen Victoria Carnival 27400 128510000
Holland
America Amsterdam Carnival 26100 56040000
Holland
America Eurodam Carnival 48300 78250000
Holland
America Koningsdam Carnival 52600 151310000
Holland
America Maasdam Carnival 11200 35920000
Holland
America Nieuw Amsterdam Carnival 28100 85900000
Holland
America Noordam Carnival 31600 104840000
Holland
America Oosterdam Carnival 33800 63320000
Holland
America Rotterdam VI Carnival 15300 65700000
Holland
America Ryndam Carnival 14200 44520000
Holland
America Statendam Carnival 17000 55880000
Holland
America Veendam Carnival 11400 41880000
Holland
America Volendam Carnival 24100 76130000

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Holland
America Westerdam Carnival 21900 79860000
Holland
America Zaandam Carnival 24000 73200000
Holland
America Zuiderdam Carnival 24600 82320000
Princess Caribbean Princess Carnival 58100 103250000
Princess Coral Princess Carnival 31300 86240000
Princess Crown Princess Carnival 50500 144830000
Princess Diamond Princess Carnival 49400 151050000
Princess Emerald Princess Carnival 66500 125360000
Princess Enchanted Princess Carnival 48500 165340000
Princess Grand Princess Carnival 43400 113230000
Princess Island Princess Carnival 14200 98930000
Princess Majestic Princess Carnival 88800 130770000
Princess Pacific Princess Carnival 5800 26170000
Princess Regal Princess Carnival 56200 170780000
Princess Royal Princess Carnival 79300 152100000
Princess Ruby Princess Carnival 60600 104180000
Princess Sapphire Princess Carnival 47700 92020000
Princess Sea Princess Carnival 7500 40380000
Princess Sky Princess Carnival 48900 189200000
Princess Star Princess Carnival 42900 116600000
Princess Sun Princess Carnival 16700 54920000
Seabourn Seabourn Encore Carnival 8000 75270000
Seabourn Seabourn Odyssey Carnival 7800 50980000
Seabourn Seabourn Ovation Carnival 7600 78900000
Seabourn Seabourn Quest Carnival 3300 48030000
Seabourn Seabourn Sojourn Carnival 5200 56790000
Seabourn Venture Carnival 1900 35150000
Disney Disney Dream Disney 133900 197770000
Disney Disney Fantasy Disney 69700 190710000
Disney Disney Magic Disney 51600 138440000

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Disney Disney Wonder Disney 57000 126530000
MSC Cruises Bellissima MSC Cruises 89700 111990000
MSC Cruises MSC Armonia MSC Cruises 64700 25570000
MSC Cruises MSC Divina MSC Cruises 89500 74330000
MSC Cruises MSC Fantasia MSC Cruises 78200 84410000
MSC Cruises MSC Grandiosa MSC Cruises 117200 116790000
MSC Cruises MSC Lirica MSC Cruises 40100 33490000
MSC Cruises MSC Magnifica MSC Cruises 40300 64360000
MSC Cruises MSC Meraviglia MSC Cruises 79100 89640000
MSC Cruises MSC Musica MSC Cruises 63700 71560000
MSC Cruises MSC Opera MSC Cruises 43000 44240000
MSC Cruises MSC Orchestra MSC Cruises 67400 74830000
MSC Cruises MSC Poesia MSC Cruises 41300 64460000
MSC Cruises MSC Preziosa MSC Cruises 74300 85210000
MSC Cruises MSC Seaside MSC Cruises 136800 142950000
MSC Cruises MSC Seaview MSC Cruises 140500 145340000
MSC Cruises MSC Sinfonia MSC Cruises 35100 36460000
MSC Cruises MSC Splendida MSC Cruises 59500 88700000
MSC Cruises MSC Virtuosa MSC Cruises 52800 64870000
MSC Cruises Seashore MSC Cruises 101500 120450000
Norwegian Norwegian Bliss Norwegian 94900 202750000
Norwegian Norwegian Breakaway Norwegian 106400 140250000
Norwegian Norwegian Dawn Norwegian 49000 100750000
Norwegian Norwegian Encore Norwegian 73900 174150000
Norwegian Norwegian Epic Norwegian 112600 143450000
Norwegian Norwegian Escape Norwegian 105100 164520000
Norwegian Norwegian Gem Norwegian 63000 91600000
Norwegian Norwegian Getaway Norwegian 76600 159350000
Norwegian Norwegian Jade Norwegian 49000 79880000
Norwegian Norwegian Jewel Norwegian 44300 125120000
Norwegian Norwegian Joy Norwegian 113300 146560000
Norwegian Norwegian Pearl Norwegian 63800 86200000
Norwegian Norwegian Sky Norwegian 79100 59020000

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Norwegian Norwegian Spirit Norwegian 36700 71260000
Norwegian Norwegian Star Norwegian 35400 76480000
Norwegian Norwegian Sun Norwegian 48100 67400000
Norwegian Pride of America Norwegian 49100 169250000
Oceania
Cruises Insignia Norwegian 7900 52280000
Oceania
Cruises Marina Norwegian 16400 73190000
Oceania
Cruises Nautica Norwegian 8500 58090000
Oceania
Cruises Regatta Norwegian 10500 49870000
Oceania
Cruises Riviera Norwegian 19400 88280000
Oceania
Cruises Sirena Norwegian 8400 51430000
Regent
(Radisson) Seven Seas Explorer Norwegian 13000 147740000
Regent
(Radisson) Seven Seas Mariner Norwegian 10000 109280000
Regent
(Radisson) Seven Seas Navigator Norwegian 5000 55140000
Regent
(Radisson) Seven Seas Splendor Norwegian 11700 151830000
Regent
(Radisson) Seven Seas Voyager Norwegian 8800 101160000
Royal
Azamara Azamara Journey Caribbean 11000 55810000
Royal
Azamara Azamara Pursuit Caribbean 9300 54730000
Royal
Azamara Azamara Quest Caribbean 11400 50990000
Royal
Celebrity Celebrity Apex Caribbean 63300 155770000

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 Royal
Celebrity Celebrity Constellation Caribbean 35800 96580000
Royal
Celebrity Celebrity Eclipse Caribbean 45400 153940000
Royal
Celebrity Celebrity Edge Caribbean 56600 159560000
Royal
Celebrity Celebrity Equinox Caribbean 57900 114840000
Royal
Celebrity Celebrity Flora Caribbean 2600 27820000
Royal
Celebrity Celebrity Infinity Caribbean 48800 86250000
Royal
Celebrity Celebrity Millennium Caribbean 31700 119820000
Royal
Celebrity Celebrity Reflection Caribbean 45700 135810000
Royal
Celebrity Celebrity Silhouette Caribbean 44500 155640000
Royal
Celebrity Celebrity Solstice Caribbean 58600 133690000
Royal
Celebrity Celebrity Summit Caribbean 46300 94190000
Royal
Celebrity Celebrity Xpedition Caribbean 2400 15620000
Royal
Celebrity Celebrity Xploration Caribbean 400 2770000
Royal Royal
Caribbean Adventure of the Seas Caribbean 94100 91000000
Royal Royal
Caribbean Allure of the Seas Caribbean 143900 181410000
Royal Royal
Caribbean Anthem of the Seas Caribbean 98700 157420000
Royal Royal
Caribbean Brilliance of the Seas Caribbean 68300 58130000

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Royal Royal
Caribbean Empress of the Seas Caribbean 39500 39580000
Royal Enchantment of the Royal
Caribbean Seas Caribbean 58900 59450000
Royal Royal
Caribbean Explorer of the Seas Caribbean 98900 81400000
Royal Royal
Caribbean Freedom of the Seas Caribbean 118300 119760000
Royal Royal
Caribbean Grandeur of the Seas Caribbean 3500 4340000
Royal Royal
Caribbean Harmony of the Seas Caribbean 132700 178200000
Royal Independence of the Royal
Caribbean Seas Caribbean 166000 104520000
Royal Royal
Caribbean Jewel of the Seas Caribbean 39700 69470000
Royal Royal
Caribbean Liberty of the Seas Caribbean 94600 94710000
Royal Royal
Caribbean Majesty of the Seas Caribbean 62500 47800000
Royal Royal
Caribbean Mariner of the Seas Caribbean 163900 102550000
Royal Royal
Caribbean Navigator of the Seas Caribbean 167500 96660000
Royal Royal
Caribbean Oasis of the Seas Caribbean 142900 174080000
Royal Royal
Caribbean Odyssey of the Seas Caribbean 129200 232510000
Royal Royal
Caribbean Ovation of the Seas Caribbean 105300 185170000
Royal Royal
Caribbean Quantum of the Seas Caribbean 130200 150430000
Royal Royal
Caribbean Radiance of the Seas Caribbean 36400 107160000

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 Royal Royal
Caribbean Rhapsody of the Seas Caribbean 50900 60710000
Royal Royal
Caribbean Serenade of the Seas Caribbean 36900 106610000
Royal Royal
Caribbean Spectrum of the Seas Caribbean 209800 198870000
Royal Royal
Caribbean Symphony of the Seas Caribbean 138200 214730000
Royal Royal
Caribbean Vision of the Seas Caribbean 33800 54180000
Royal Royal
Caribbean Voyager of the Seas Caribbean 93300 77820000
Royal
Silversea Silver Cloud Caribbean 2600 48470000
Royal
Silversea Silver Explorer Caribbean 1600 6390000
Royal
Silversea Silver Moon Caribbean 10500 67260000
Royal
Silversea Silver Muse Caribbean 4900 36160000
Royal
Silversea Silver Origin Caribbean 2600 33390000
Royal
Silversea Silver Shadow Caribbean 7200 45290000
Royal
Silversea Silver Spirit Caribbean 10000 61540000
Royal
Silversea Silver Whisper Caribbean 5500 43650000
Royal
Silversea Silver Wind Caribbean 4000 49560000
Sources: Royal Caribbean Cruises, Ltd., Carnival Corporation and plc, NCL Corporation Ltd., Thomson/First
Call, Cruise Lines International Association (CLIA), The Florida-Caribbean Cruise Association (FCCA), DVB
Bank and proprietary Cruise Market Watch Cruise Pulse data.

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Appendix 11. Forecasted Revenue and passengers carried for cruise brands for
2021
Brand Parent Revenue Total Passengers
AIDA Carnival 1373710000 749300
American Cruise Lines All Other 37210000 13600
Azamara RCI 161530000 31700
Blount Small Ship Adventures All Other 10630000 3900
Carnival Carnival 1803870000 2528100
Celebrity RCI 1452300000 540000
Celestyal Cruises All Other 175440000 64100
Costa Cruises Carnival 1121190000 862400
Crystal All Other 111640000 40800
Cunard Carnival 427110000 99700
Disney All Other 653450000 312200
Dream Cruises All Other 723030000 264100
Fred Olsen All Other 303030000 110700
Grand Circle Cruise Line All Other 5320000 1900
Hapag Lloyd All Other 132910000 48500
Hebridean Island Cruises All Other 5320000 1900
Holland America Carnival 1095070000 384200
Hurtigruten All Other 334930000 122300
Lindblad Expeditions All Other 47850000 17500
Marella Cruises All Other 281770000 102900
MSC Cruises All Other 1539650000 1414700
Norwegian Norwegian 2057990000 1200300
Oceania Cruises Norwegian 373140000 71100
P&O Cruises Carnival 466790000 241500
P&O Cruises Australia Carnival 134980000 127300
Paradise Cruise Line All Other 138230000 50500
Phoenix Reisen All Other 119620000 43700
Ponant/Paul Gauguin Cruises All Other 233920000 85400
Princess Carnival 2065350000 816300
Quark Expeditions All Other 42420000 15500

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 Regent Seven Seas Norwegian 565150000 48500
Royal Caribbean RCI 3048670000 2657900
Saga Cruises All Other 106220000 38800
Seabourn Carnival 345120000 33800
SeaDream Yacht Club All Other 10630000 3900
Silversea RCI 391710000 48900
Star Clippers All Other 31900000 11700
Star Cruises All Other 219670000 80200
TUI Cruises All Other 903790000 330100
Viking Cruises All Other 393410000 143700
Virgin Voyages All Other 304100000 111100
Voyages to Antiquity All Other 21270000 7800
Windstar All Other 63800000 23300
Sources: Royal Caribbean Cruises, Ltd., Carnival Corporation and plc, NCL Corporation Ltd., Thomson/First
Call, Cruise Lines International Association (CLIA), The Florida-Caribbean Cruise Association (FCCA), DVB
Bank and proprietary Cruise Market Watch Cruise Pulse data.

78