Just like Airlines, Cruise Lines Overbook – and It’s Nothing New. | CruiseHabit

Just like Airlines, Cruise Lines Overbook – and It’s Nothing New.

You’ve no doubt heard stories of airlines overbooking flights and having to convince passengers to make alternative arrangements. What many people don’t realize is that cruise lines overbook as well.  Let’s look at why this happens, why it seems to be happening more in the past months, and how to help ensure that you can stay on your cruise – even if overbooked.

In January of 2017 I wrote about how I canceled a cruise on Royal Caribbean’s Independence of the Seas, and why I was okay with it.  Give it a read and you’ll see that in short, Royal Caribbean offered me a refund and a future cruise credit to cancel my booking at the last minute.  I was satisfied with this proposal, so I took the offer.

This has been going on for years with airlines, cruise lines, hotels, and other businesses - I promise.  In fact, I’d wager that most flights or cruises you’ve been on, which were full when they pulled away, had been oversold. 

Why does this happen?

Hotel rooms, cruise ship cabins, etc. are perishable commodities.  If a company doesn't sell them, it's lost revenue that can't be make up.  Not just revenue from the room itself, but in onboard (or resort) revenue such as dining, retail sales, and more.  So, businesses with this challenge use loads of data to forecast no-show and cancelation rates.  More often than not, they nail it, and when they don't, they figure out how to incentivize people to voluntarily cancel.  It's rare to get involuntarily bumped from a flight, and I’ve personally never heard of anyone being involuntarily bumped from a cruise - not to say it doesn’t happen.  Why?  The carriers have good reason to incentivize people to voluntarily give up their seats or staterooms.  Cancelling customers’ plans without making it well worth it destroys brand loyalty, and has genuine costs.

When a cruise ship is overbooked they’ll often put out offers to booked persons who live near the port of embarkation, as they don’t have the logistics or cost of air travel to be concerned with.  Further, those who live far from the port may have already come to town by the time the cruise line reaches out to try and free up some space.  Lastly, those nearest the port are likely to see greater value in future cruise credits, as they are generally more likely to cruise.

What if someone doesn't take the bait? Well hopefully for them another passenger does, and if not, they'll have to keep upping the incentive.  I know without question of a cruise line that has had to pay out far more money in individual incentives than most of us reading this will ever pay for a single cruise - more than the cost of many of our cars.  Why?  If you overbook you've got to free up that space somehow.  Of course, these giant payouts aren't the goal – the aim is to pay out less in cash or future cruise credits than they would lose by sailing with vacant staterooms.

If you’re wondering why they don’t fill those staterooms at the last minute, remember that it’s much easier to show up to work when you were supposed to be on vacation than it is to drop everything at the last minute because of a good deal.  Granted, this is also why you see different overbooking and price drop practices on short Caribbean sailings than say, on three week long sailings in the Southern Pacific.

Why are so many more flights and cruises being overbooked lately?

They’re not.  As mentioned, this has been happening for years – in fact, I’d bet that the Nishiyama Onsen Keiunkan, a hotel operating since the year 705, has been overbooking since before anyone would think that going on a ship to cross the ocean would seem a pleasurable idea. After some very poorly handled incidents with United Airlines, overbooking is now the media's flavor of the week.  This isn’t a bad thing – clearly there is always room to improve on how companies manage tricky situations, and this attention helps improve process.  Combine that with the Baader-Meinhof effect (which is where you get a new car and suddenly that model seems to be everywhere) and overbookings seem rampant and inescapable!

What can I do to prevent being on an overbooked cruise?

This is tricky – because it’s rare that any cruise has a particularly low chance of not sailing full – that’s the opposite of what sales and marketing teams work toward, though repositioning cruises and such would seem to offer a lower chance. The real question is probably around how to avoid getting “bumped” from a cruise you’d like to take, and that answer is simple.  If a cruise line offers you money or credit to cancel your cruise, don’t take it if it isn’t worth it to you.  Odds are someone else will take the offer.  I’ve long said that while everyone has their price, the secret is our price is probably much lower than we think it is when not faced with incentive.  That is to say you might want $10,000 to cancel any vacation you had your heart set on, but if someone has $5,000 they’re ready to offer, you may very well change what you thought was your minimum price.

Eventually, after enough customers refuse incentive to cancel, the cruise line will up their offer to yourself and others, and possibly extend the offer to a wider base, such as those with flight arrangements, or suite guests they might not want to ask at the beginning.  Again, nothing is a guarantee, but I’m not familiar with anyone who was flat out told they couldn't sail.

Billy’s take.

Ultimately, regardless of what it happens, I’m not here to say whether we like it or if we think it's right – that’s a personal decision.  I will say that if you have strong opinions, voice those opinions to the cruise lines - but remember that if they were to change this and start sailing with empty rooms they'd otherwise have filled - they'll make up for that lost revenue somehow, and you may like that a lot less.

 

Have you received an offer from a cruise line to cancel your cruise?  Reach out on Twitter or Facebook, or comment below!