Abstract

Purpose The purpose of this paper is to examine the effect on price of different cruise industry characteristics from the point of view of actual prices. The analysis is carried out from the supply side but taking into account the real prices paid by customers. Design/methodology/approach This paper uses the hedonic price methodology. To develop this research, a database of more than 36,000 prices paid by cruise passengers and different characteristics of ships in 2013 was built. To obtain the results, ten models have been developed with significant adjusted R2 of between 0.85 and 0.93 making the models and results robust. Findings The results show that the main attributes affecting prices are the number of nights of the itinerary, the departure date, the number of days before departure the booking is made, the accommodation type and some facilities, such as casinos, cinemas and swimming pools. The results also yield a ranking of ship companies based on price and quality dimensions. Finally, the authors suggest some implications for management and new research. Originality/value This paper offers a new approach in the academic literature of the cruise industry in two respects. First, in its use of a broad database of actual prices paid by passengers – more than 36,000 observations. Second, in the application of the hedonic pricing methodology, widely used in the tourism sector (see the Methodology and Database section) but until now not in the cruising segment.

Highlights

  • Cruises form one of the niches of the tourism industry that has expanded most in the last few years despite the economic recession around the world

  • The aim of this paper is to identify features and characteristics that affect the price of a cruise using the hedonic pricing methodology

  • This paper offers a new approach in the academic literature of the cruise industry in two respects

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Summary

Introduction

Cruises form one of the niches of the tourism industry that has expanded most in the last few years despite the economic recession around the world. According to the Cruise Lines International Association (2016) global cruise travel is continuing to grow steadily and, in the ten years from 2007 to 2017, the number of passengers will have grown by 62 per cent from 15.9 to an expected 25.8 million passengers This sector is characterised by the high level of business concentration, as three management groups accounted for 81.6 per cent of passengers in 2015: Carnival Corporation & plc (48.1 per cent of share and ten cruise companies); Royal Caribbean (23.1 per cent of share and five cruise companies); and NCL (10.4 per cent of share and three cruise companies). Kwortnik (2006) highlights the competitiveness of the cruise industry and the increasing price wars as a result of new and more efficient vessels attracting price-sensitive cruisers. Cruise ships have sometimes been considered as “floating hotels” exists relevant differences between ships and hotels such as the room-inventory management (Toh et al, 2005), JEL Classification — D40, L11, Z33 © Josep Maria Espinet-Rius, Modest Fluvià-Font, Ricard Rigall-Torrent and Anna Oliveras-Corominas

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