Revenue Management

Diving in: 5 Cruise Revenue Management Questions Answered

With global cruise demand looking strong—a record 19 million passengers are projected to cruise in 2025 in the US alone—it’s an exciting time for cruise providers, and new solutions like IDeaS Cruise RMS are ready to help operators make the most of a fast-moving market.

So what’s all the hubbub around revenue management tools for cruise lines? We recently sat down with IDeaS’ own Crystal Pernici and Michael Maher to shine some light on why they believe the future is bright for a scientific approach to revenue management in the cruise industry.

Let’s dive in.

Why is revenue management important for cruise lines?

Crystal Pernici: There are several reasons why revenue management is vital to the cruise industry. But if I had to pick just three, it boils down to how revenue management can help cruise lines with their ability to maximize ticketing and fare revenues while optimizing their cabin capacity, assist operators with the effective management of their perishable inventory, and ultimately help to ensure each voyage is profitable.

To start with maximization of ticketing revenue and cabin optimization, revenue management tools optimize pricing and improve the forecast accuracy around demand. This enables cruise lines to maximize ticket fares across each inventory type (or in other words, cabin category) to ensure they maintain higher fares across the booking curve. In the cases where we have the right data structure, revenue management systems can also play an important role in identifying the most profitable guest segments to help capture additional onboard and ancillary spend opportunities.

Secondly, managing perishable inventory is critical. Since cruise cabins are a perishable product (as they must be sold prior to embarkation), effective revenue management tools minimize the risk of lost revenue from unsold cabins, ensuring that every sailing maximizes both ticketing revenue and onboard spending.

Last but certainly not least is ensuring profitability. No matter the ownership structure, cruise lines are a business that requires profitability. Revenue management strategies, particularly when aided by the right tools, help cruise operators achieve financial goals, providing returns to stakeholders and allowing for continued investment in improving guest experiences.

At its essence, revenue management is vital for cruise lines to enhance forecasting, optimize revenues, manage fixed costs and ensure profitability—all while still providing an exceptional experience for guests.

Why is now a good time to change your revenue management strategy?

Michael Maher: Demand for cruises has surged in the post-pandemic world, and booking patterns are changing. While the booking window is still much greater than most tourism sectors (with a significant share of bookings made more than 12 months in advance) cruise lines are seeing an uptick in close-in, high-value demand.

This poses a challenge for commercial teams and revenue managers. How aggressively do they fill the ship in advance and still allow for high-rated, late booking business? It starts with a quality demand forecast to detect changes in that booking curve and capture the highest value guests. Revenue management technology providers like IDeaS are providing the tools that enable cruise lines to do just that.

Now is the time for commercial teams to centralize their data, take a holistic view of their commercial operations and focus on the profitability of all revenue streams; in the base fare, onboard spend and other ancillary products.

What value does a cruise line gain from a sophisticated revenue management solution?

Crystal Pernici: First and foremost, cruise lines will benefit from improved forecast accuracy. A sophisticated revenue management solution enhances forecasting capabilities, allowing cruise lines to predict demand more accurately and in turn make better-informed pricing decisions.

Another big benefit is increased efficiency and automation. Our automation capabilities can streamline processes, reduce error-prone manual work, and accelerate time-to-market for dynamic pricing strategies. Combined, this enables cruise lines to respond quickly and effectively to market changes.

Finally, advanced analytics and consolidated data provide deeper insights and robust reporting, supporting your organization’s ability to not only make data-driven decisions but also validate your revenue optimization strategies are on target.

What are the key benefits of working with IDeaS for cruise line revenue management?

Crystal Pernici: To start, our expertise in collaboration. With decades of proven revenue science experience and a system tailored for the cruise industry, IDeaS allows for collaboration that drives innovative solutions specifically designed to meet the unique challenges of effective cruise revenue management.

Second, we’re committed to continuous innovation and support. By partnering with IDeaS, cruise lines benefit not only from a dedicated team that includes dozens of PhDs, but also from the dedicated investments we’ve made into research and development.

And lastly, it’s still a solution that can be molded to fit your needs. IDeaS provides a flexible revenue management solution that cruise lines can configure according to their unique business requirements while currently having the ability to influence future development, which allows you to customize it to your specific needs without the burden of building an in-house system.

What does the future look like if you have a revenue management solution in your toolbox?

Michael Maher: Simply put, it looks profitable. With demand behaving as it is, there is an opportunity to really capture that most valuable guest and leverage their ancillary spend in addition to the base fare.

I think looking at revenue more holistically, looking at the whole guest journey and how to optimize while accounting for all the revenue streams on board and shore side is a real opportunity for cruise lines right now. Revenue management technology can certainly help them achieve that.

I think we’ll also see the industry make great strides when it comes to collaboration across the commercial organization. The revenue management team should be working in tandem with marketing, sales and operations to utilize their forecasting and pricing ability to address need periods and really streamline the organization.

Is your organization ready to test the waters of unlocking its full revenue potential? Contact us today to get the conversation started.

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