What impact will the upcoming launch of Allure of the Seas have on 2011 Caribbean rates? As Steve Tracas, CEO of Vacation.com, notes, “Generally speaking, whenever you have more capacity in the marketplace, it has an impact on the pricing, whether you’re running an airline or a cruise ship.”
Allure isn’t just any ship, of course. Its entry alone will result in a capacity increase of 1,765,800 passengers to RCI’s Caribbean market in 2011.
When RCI President Adam Goldstein was asked recently whether Oasis’ premium pricing might be “coming in a little bit” given Allure’s entrance, his response was: “Well, there’s a doubling of the capacity of that class of ships to be sure… there may be some effects of that. But, what we’re seeing in the marketplace is very strong premiums for these two ships compared to anything else that is there.”
Some agents report there is such pent-up demand for Oasis-class that any reduced rates because of Allure’s debut wouldn’t last long.
Tracas isn’t so sure. “It’s a matrix of capacity, supply and demand and the economy that dictates the pricing,” he says. “Allure can only do good for the industry in the long term, as it will give visibility and consumers will read about it. Royal has great launches for its product. It takes time to find the right watermark – no pun intended – with the new capacity in the market and the new price points.”
Another important point is Royal’s recently announced revisions of 2011 Caribbean deployments. Independence of the Seas, for one, will be off to Europe on a full-time basis and other ships will also be cutting back on their Caribbean schedules. The effect of all these changes is a decrease in capacity of 1,429,788. So Royal’s total capacity in the Caribbean will go from 10,910,578 in 2010 to 11,268,422 in 2011 with Allure’s launch. That’s just over 3%, so Caribbean pricing and capacity should not be dramatically impacted. For Royal Caribbean, the net result of Allure of the Seas entering the marketplace will be a big increase in European deployment, both seasonally and year-round.