Room occupancies: cruise lines out-do the hotels

Abstract

The cruise industry, which is essentially a North American phenomenon, is the most successful and fastest growing sector of the tourism industry, carrying nearly 8 million North American passengers in 2003 and achieving an 8.4% annual growth rate since 1980. Yet, there is a dearth of published literature on it. This paper seeks to describe how cruise lines go about managing their cabin inventory with regard to the acceptance and cancellation of reservations, collection of deposits, and dealing with no shows, overbooking, over-sales, upgrades, auctions, and walks (with compensation). Individual as well as group bookings will be analyzed. In 2003, with an average of more than 95% cabin occupancy rate, the North American cruise lines have out-performed the hotels, which have an average room occupancy rate of only 59%. The authors advance 13 reasons why the cruise lines have out-done the hotels in cabin/room occupancy rates, grouped into three categories: inherent structural advantages, idiosyncratic marketing conditions, and proactive management initiatives. But the most unexpected discovery of the study is that the cruise industry has made travel agents an important and essential arm of their cabin-inventory management strategy, from making individual as well as group reservations, collecting the deposits and full payments, tracking down late arrivals, and conducting silent auctions when the system breaks down and the cruise ships are oversold.