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  • jeff2604

When a Guarantee…Isn’t

“We’re sorry to inform you that due to an unexpected inventory error, your scheduled Wonder of the Seas March 12th, 2023 sailing is currently oversold,”

No cruiser wants to get that e-mail, but Royal Caribbean has had to send such e-mails twice in the past four months for sailings on their newest ship, Wonder of the Seas. It’s a welcome problem for the cruise lines to be sailing at full capacity, not so much if you happen to be among those getting notified the cruise you booked has been oversold. How does that happen? And if it happens to you, what does it mean for your vacation plans? How can you avoid it?

I’ll start with the last question first, because it is easiest to answer. Avoiding the risk of being involuntarily bumped from a cruise because it is oversold isn’t something I worry about, because it isn’t a problem. At least not yet. If it concerns you, book early and book into a specific cabin. Both are good practices anytime you book a cruise, to ensure you get the best choice of cabin for the best price. If a cruise line ever involuntarily bumps guests, I would expect the last booked would be the first bumped, and they would start with guests who booked a category guarantee rather than booking into specific cabin…because they paid less.

Prior to COVID I don’t recall ever hearing about a cruise being oversold. I suppose it might have happened, but it wasn’t the norm. Airlines have long accepted the risk of having to bump passengers because of overbooking to avoid what they see as the greater risk of flying with empty seats because of last minute cancellations. Cruise lines haven’t. So why has Wonder of the Seas oversold cruises twice in the past four months?

Cruise lines ran up billions of dollars of debt during the two years of pandemic-imposed travel restrictions. Now that they are back to sailing, they’re trying to erase all that red ink, taking advantage of unprecedented consumer demand for cruising and booking their ships full as often as possible.

Ensuing a ship sails full without being oversold is not an easy task. Wonder of the Seas is the largest cruise ship in the world. She has 2,867 cabins in 35 categories, her double occupancy capacity is 5,734 passengers, and her maximum capacity is 6,988 passengers since she offers many cabins that can accommodate more than two guests. That’s a lot to keep track of. Multiply that by 52 sailings per year, and 25 times more for the rest of the ships in Royal Caribbean’s fleet and you get a sense of the challenge facing the cruise line when it comes to balancing their goal of sailing with full ships against the risk of overselling cruises. I’m surprised it hasn’t happened more often.

For their part, Royal Caribbean handled both oversold cruises well. They presented a generous compensation offer for cruisers willing to voluntarily rebook to different sailings, and nobody ended up bumped so I would say it worked. But what I worry about, a little, is that cruise lines have found more ways to monetize guest preferences than they can keep track of. There are two practices the cruise lines have been engaging in that came to my mind when I read about the oversold sailings…offering a discount for guests booking a category guarantee, and auctioning cabin upgrades to guests after final payments are made.

Category guarantee bookings are when a guest books a general category of cabin…inside, ocean view or balcony…but they don’t get their specific cabin assignment until just before the ship sails. Cruise lines have offered category guarantee bookings ever since I started cruising, but they used to be limited more to last minute sales. Now cruise lines offer discounted category guarantee bookings as soon as the booking widow opens for each sailing. Since the cost of cruising has gone up post-pandemic, category guarantee bookings have become a popular way to save money when booking a cruise, and I’m not sure the cruise lines are limiting them as much as in the past.

To avoid overselling a cruise, the lines reconcile category guarantee bookings at a gross level for their ships throughout each sailing’s booking window. But they don’t assign passengers with category guarantee bookings to specific cabins until a few weeks before the sail date, often not until a few days before the ship departs as the line tries to fill last minute cancellations.

Now let’s look at cabin upgrades. They used to be automatic and complimentary. After the final payment date for a sailing passed and cabins in a category higher than you booked into were unsold, you got bumped up. That practice ended a few years ago when cruise lines started monetizing cabin upgrades. Each line has their own approach, but they all work similarly. After final payments are made and the cruise line knows how many last-minute cancellations they have, they let you know what upgrades are available and suggest a bid amount. Interested cruisers let the line know how much they are willing to pay for an upgrade, and the highest offers get the upgrades.

It seems like a win-win, and maybe it is. But the practice of offering last minute upgrade auctions is complicating the cruise lines’ task of reconciling category guarantee bookings to specific cabins. The last thing the cruise line wants to do is take a cabin that they can make more money off through an upgrade auction and allocate it to someone who paid a discounted rate for a category guarantee booking. What makes things challenging for the cruise lines is that they allow both processes to continue in parallel right up to a few days before a ship sails.

I don’t know what role category guarantee bookings and upgrade auctions may have played in Wonder of the Seas’ two oversold sailings, but I’m sure they were a factor. The cruise industry may have reached the point where the complexity of reconciling their bookings to available cabins has outpaced their ability to manage the process. Or they may have reached the point where they view the risk of sailing below full capacity to be greater than the risk of losing business if they occasionally oversell a cruise. Maybe it’s a bit of both. Time will tell, but for now it isn’t something I’m worrying about. Well…maybe just a little.

And that’s all I have to say about that.

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