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A NEW DAY FOR
SINGLE CABINS

Two cruise lines have gone against the
conventional wisdom and included single
occupancy cabins on their new ships but
will others follow?

by
Richard H. Wagner
At one time, staterooms designed for occupancy by one person were
standard on passenger ships.  Indeed, even as recently as the Queen
Elizabeth 2, which entered service in 1969, ships for the major passenger
lines were built with a significant number of single cabins.  These cabins
were always in high demand as they were attractive to singles, widows and
widowers and to people who simply enjoy privacy.

     In recent years, however, it has looked like the single cabin had gone
the way of the Dodo bird, at least with regard to the major cruise lines.  
Although the ships emerging from the shipyards were larger and had more
features than earlier ships, all the staterooms were designed for a minimum
of two person occupancy.

     As a result, single people who wanted to cruise on one of the major
lines either had to find a friend who was willing to share the cabin or else
pay a "single supplement," which could range up to twice the per person
double occupancy rate for that cabin.  This state of affairs has discouraged
quite a few solo travelers from cruising as the first option is for many
impractical and the second option is often seen by solo travelers as
uneconomic and unfair.

     Two ships that entered service in 2010 are providing new hope for solo
travelers.  The first of these is P&O Cruises' Azura, which entered service
in April 2010.  A sister ship to P&O's Ventura and to the Grand-class ships
in the Princess Cruises' fleet, P&O has re-thought the interior layout of the
ship so as to include single occupancy cabins.

     P&O's Managing Director Carol Marlow explained the reason why
P&O decided to take this step.  "We recognize that cruising requires more
than a 'one size fits all' approach and Azura has a number of innovations.  
[The ship] is designed with the needs of British holidaymakers in mind, and
we have an increasing number of passengers who want to travel solo. There
are 18 single staterooms on board - the first in our fleet - and these were
included to offer more affordable travel suited to today's diverse market.
The single cabins do not carry a supplement and are generously
proportioned with all the amenities of a twin cabin in addition to a wider
bed, making them more comfortable and excellent value for money for the
single traveller."

     The single staterooms on Azura include both inside cabins and outside
cabins.  They are approximately 130 square feet, which is only 30 square
feet less than a double occupancy cabin.

     Norwegian Epic, which entered service in June, is taking a somewhat
different approach to single cabins.  The 4,200 passenger ship includes 128
"studio" staterooms that are approximately 100 square feet, which is 28
square feet less than an inside double-occupancy cabin on Epic.  Still, it
has enough room for a full sized bed, a flat screen television, a desk, and
storage space.  The studio cabins are interior cabins with a window that
looks out into the corridor.  They open out into a studio lounge, which will
be shared by passengers in other studio cabins.  No single supplement is
applied to the studios thus making them effectively single cabins.

     "This is really a big step away from everyone else in the industry,"
commented Norwegian Cruise Line Executive Vice President of Global
Sales and Passenger Services Andy Stuart.  "It has been very well-received
so far."

     In fact, the demand for the single cabins on both ships has been
extremely good with a number of sailings sold out well in advance.  The
reason for this is straightforward.  Cruising is a very attractive means of
travel for single people.  Passengers on a cruise tend to be open and
friendly and thus there is more of an opportunity for social interaction than
travelling by airplane and staying in hotels.  Also, in the ports of call, the
cruise lines have organized excursions, which tend to be safer and less
intimidating than exploring a strange locale on your own.

     Still, the cruise lines are taking a wait-and-see approach to the
questions of whether future ships will have single cabins and whether
existing ships will be retrofitted to have single cabins.  "We are still sort of
scratching our heads a little bit because it is a little difficult to make the
economics work overall.  But we are looking at it," said Stuart.

A question of economics

Broadly speaking, there are two economic issues. The first issue involves
ticket revenue, i.e., the money  charged for a cruise ticket. The argument
begins from the premise that there is a finite amount of space on a ship that
can be used for passenger cabins. In order to derive the same amount of
ticket revenue from that space, seemingly the space would have to
accommodate the same number of passengers regardless of whether the
space was divided into single occupancy or double occupancy cabins. In
order to serve the same number of passengers in a series of single cabins as
in a series of double cabins, the single cabins would have to be half the size
of a double occupancy cabins.  That way, there would be twice the number
of cabins, which would make up for the fact that only half the number of
people were in each cabin.

     The major sticking point is the bathrooms.  Despite the best efforts of
the world’s ship designers, no one has been able to figure out how to have a
full bathroom in an area that is half the size of a typical double occupancy
cabin.

     NCL addressed the bathroom issue on Epic by separating the bathroom
into its component parts.  The shower is in one part of the cabin, the toilet
in another and the sink in yet another.  As a result, the bathroom facilities
do not take up as much space as when they are combined into a traditional
bathroom.

     Still, the studio cabins are not half the size of an interior double cabin -
- they are approximately 80 percent as large - - largely owing to the fact
that NCL has also used the component part system in some of its inside
double cabins as well.

     This indicates that the bathroom problem may well be an illusory
obstacle.  From a business perspective, the issue is not the number of
passengers that can be accommodated in a given amount of space but the
revenue that can be derived from the space.  Single cabins traditionally
have not been priced at the per person rate charged for a comparable
quality double cabin.  Rather, on ships such as QE 2 the single cabin fare
included a premium in recognition of the fact that a single cabin was
somewhat larger than half the size of a comparable quality double cabin.  
Both P&O and NCL are following the traditional pricing system with their
new single cabins, which are priced higher than the per person price charged
people staying in a double cabin.   Thus, a single cabin does not have to be
half the size of a double cabin in order to produce a comparable amount of
revenue on a square-foot basis.

     To illustrate, suppose a cruise line was considering what to do with
1,200 square feet of space on a new ship.  One option would be to build six
200 square foot double occupancy cabins.  Another option would be to
build 10 120 square foot single cabins.  If the per person double occupancy
fare for a hypothetical cruise was $1,000, the six double cabins would
produce $12,000 in fare revenue (i.e. $1,000 from each of 12 passengers).  
If the cruise line charged $1,200 for each of the single cabins (in effect a 20
per cent premium), the revenue produced by the space in question also
would be $12,000.

      In addition, the argument assumes that the demand for double cabins
and single cabins is the same.  Even prior to the recession, double cabins
were often discounted well below the fares listed in the brochures.  Single
cabins have always been in high demand and thus they would not have to
be discounted as much.. In other words, single cabins have more pricing
power and in some situations could produce as much revenue as a double
cabin.

     For example, suppose a cruise ship has both double and single cabins.  
On a cruise to say, the Caribbean, it charges $1,000 for a single cabin and
$2,000 for a double cabin.  Because there are only a few single cabins, they
sell out quickly at the brochure rate.  In order to sell all of the double
cabins the cruise line has a sale where it discounts the per person double
occupancy rate by 50 percent.   As a result, these double cabins would
only yield $1,000, the same amount of revenue as the single cabins.
      
      Also, this economic consideration only comes into play where the
cruise line is going to replace double cabins with single cabins.  On Azura,
the single cabins utilize space that was not used for cabins on Azura's
predecessor the Ventura.   Along the same lines, on QE2 single cabins were
a means of increasing the overall fare revenue as most of them were built in
what would have otherwise been unused space.

      The second economic consideration that makes the cruise lines
reluctant to embrace single cabins derives from the fact that a ship's
revenue stream comes not just from the fares.  Rather, it also flows from
the money passengers spend once they step aboard.  In theory, all else
being equal, two passengers will spend more onboard than one.   As
Celebrity Cruises President and CEO Dan Hanrahan has said: "With the
two ships that we have on order, we don't have any plans to convert any of
those [staterooms] into singles.  We like the fact that we get two people
into a stateroom.  We like the fact that we have two people spending on the
ship or going on shore excursions."

     Consequently, while the industry watches with interest what is
happening at P&O and NCL, other cruise lines are focusing on different
ways to meet the needs of single travelers.   For example, Peter Shanks,
Managing Director of Cunard commented: "What we are doing is getting
much better and cleverer at looking at which sailings sell well and which
sailings need a bit more promotional support; identifying our single cruisers
and going to them earlier with some really good offers.  We value our
single customers a lot.  Where it becomes really tough is looking at a full
world voyage or a really popular transatlantic crossing.  If we were to sell
the [staterooms single occupancy] at the same price as [the per person
double occupancy rate] - - economically, that is very hard for us.    We are
not alone.  No one has really found the Holy Grail to all of this but I do
think we need to work harder at finding ways with our valued single
travelers and giving them something which they can focus on."




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