Situation:
This Mediterranean cruise operator had been recently acquired by a PE company and wanted to evaluate opportunities to increase yield through occupancy and pricing. They operated 2 ships with different itineraries attracting bookings from a range of countries and across different sales channels including tour operators, travel agents and direct (online, contact centre).
What we did:
Our start point was to understand the drivers of sales channel profitability covering different products (cruise itineraries, cabin types, excursions, food & beverage etc), achieved price by market and sales channel and related costs (agent incentives, marketing, sales teams). The other key variable was the time of booking pre-departure since the industry widely operates dynamic pricing. This data was then used to compare achieved cabin yield and wider profitability across different products, markets & sales channels to drive insights for decision-making.
Business Outcomes:
Through this work, we identified that the main driver of low yield were late bookings relative to the rest of the market. This was placing downward pressure on price as the commercial team chased occupancy and relied heavily on domestic market bookings. We developed new pricing rules around the booking curve (sale to departure period) by market and channel to provide greater incentives to secure early bookings and avoid heavy discounting close to departure. The work also identified which markets and channels to prioritise with sales team effort and marketing initiatives.
