Saturday, August 15, 2009

Single Supplement on Cruises

Recently a single cruiser commented on the apparent unfairness of the cruise business's single supplement. Passengers wishing to cruise solo typically have to pay 150% to 200% of the per person cruise fare. The protester did not feel that it was fair that, as a single traveler, she should have to pay so much more when she was not consuming the food or using the services of two passengers. During the discussion, she and others brought up hotels and airlines as examples of other travel industry sectors that price per room and seat respectively, and wondered why cruises couldn't be priced similarly to be more fair. However cruises, hotels and airplanes are not comparable and thus are not and cannot be, priced similarly.

A hotel room is priced as basically a facility charge, i.e. you are paying mostly for a room. That room is a fixed cost to the hotel that does not change much whether you put one person or four people in it. The incremental cost of accommodating the second, third and fourth person into a hotel room is negligible.

Airplane flights are priced per seat and that cost is fixed. So if you are big and need two seats, you pay for it. Otherwise you pay for a single seat. It does not matter to the airline whether you are single, traveling with a spouse or significant other, or with 20 other family and friends. They each pay the same fare because there are no additional services being provided in the base fare.

A cruise operates with an entirely different operational paradigm. Because a good portion of a cruise's profits are based on excursions, on-board activities and purchases, a cruise line is heavily dependent on the number of passengers on-board. Thus, cruises must be priced per person. A single traveler costs a cruise line all the potential revenues and profits of the other passenger that does not exist. There is a significant "opportunity cost" is lost because the single traveler takes up a cabin that is designed and priced to be double occupancy.

In addition, and just as important, a cruise's costs are relatively fixed. They plan for a specific number of passengers or customers, i.e. a ship full of staterooms with double occupancy. In other words, they have enough staff, and order enough food, drink and supplies, for a full ship. Thus with each single traveler, one traveler's worth of overhead, services and consumables are "wasted".

In conclusion, one cannot apply the "logic" of hotel or air flight pricing to cruise pricing. Thus, the single supplement for single travelers makes complete sense from a business and practical perspective. The cruise line business model clearly favors passengers traveling in groups of two or more, and does not work well for single passengers. So single travelers, if you can't afford the single supplement, you'd better find someone to share that stateroom with!

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