Vices: The Drink Package
In my blog and podcast, I’ve mentioned numerous times how cruising, and really following the cruise industry is a big interest of mine. A major reason it stuck is because of the value cruising offers. Usually, your room, better than average food and entertainment are included at a competitive price. There are of course major criticisms as to how the cruise industry operates to get to that aggressive price, but for the most part I don’t think the industry is any more evil than any other profit driven and shareholder value oriented sector within the economy. To drive profits higher the industry has a bunch of optional add ons they push on cruisers. One of the things that’s usually a big upcharge is the unlimited drink package and as a value conscious cruiser, it’s one of the things I’ve never purchased. I didn’t want to pay the exorbitant pricing. That being said, like most people, I do like to drink a little more when on vacation. Unfortunately, a ship is like a theme park or a sports complex. Because competition is very scarce or non-existent, the prices are higher for everything that’s not included in the base fare. This is especially true for the al-a-carte drinks. So when I traveled with my wife we’d always have to carefully manage our drinking so as to not have a huge bill at the end of the trip. Then a couple of things happened, that made me really think about drink packages.
Why didn’t I get the drink package? Well, like I said I’m a value driven kinda guy. For cruising, that means booking inside cabins, traveling off season where possible, and of course not spending a significant amount of money on the unlimited drinks. How expensive? Well let’s look at what I believe is the worst offender in the cruise space. NCL. NCL’s 2023 pricing for its Premium Plus drink package is $138 per person, per day, plus a 20% gratuity. This means your paying a whopping $2318.00 for drinks while onboard for a 7 day cruise for two. Now, admittedly that’s probably to create false value for their more expensive cabin offerings that include drink packages. It’s easier to sell a $2000 cabin for $3000 when you say to your guests “Look, you get over $2000 worth of drinks included!”
A more realistic example is Royal Caribbean’s drink package when purchased on sale before the cruise. After discounts and sales, you can pick up the package for about $65–75 per person per day. So averaging $70, your looking at $1176 for the week for unlimited drinks for two. That price is inclusive of the extra gratuities that are added to the bill. It’s still expensive for drinking, but not NCL expensive. If the value oriented guy in me is finding the inside-cabin cruise on sale for $1200 to $1500, I can’t bring myself to spend nearly that again to have drinks. I’ll just buy a bucket of beer a day for $40 and share it with my wife. I also do things like buy drinks if they are on sale. I’ll go to the captain’s toast, the art auction, and the jewelry sales, all who tempt you to go with free champagne or mimosas. Cheesy, I know, but to me it’s part of the game. In the end, I drink as much as I usually want and my total cost is usually a couple hundred dollars at the end of the cruise. A far cry from $1176 assuming I find a good drink sale.
Then I had my first day of unlimited drinks. It was on a cruise, but not on a cruise ship. The first time I had anything close to the drink package was when I chose to spend the day at an All-inclusive in Jamaica. Now, I’ve been to Jamaica a couple of times. It’s an economically depressed third world country. To use the vernacular, it’s a cesspool, admittedly one with some stunning beaches. We wanted to enjoy the beaches but chose to pay the day-rate for the all-inclusive as getting to a highly secure and well managed facility was our main focus. We didn’t want to get overrun by aggressive sales people and we wanted a clean, neat environment. The unlimited drinks were just a benefit of the resort. I discovered that free drinking was fun, not because of getting drunk. We enjoyed it because we didn’t have to worry about pricing. We could try whatever we wanted and have as much as we wanted. Now, as I’ve said, we aren’t super heavy drinkers, but we were able to get a little tipsy and relax. We purposefully sobered up before we returned to the ship, but all-in-all it was a very good experience.
Then, I had the experience two more times, both with MSC cruises. MSC is a massive cruise line with very limited presence in the US market. Because they are trying to build significant market share in the US, they are tempting potential customers with low fares and they are throwing in the drink packages as well as Wifi. Wifi, for some who prefer to stay connected, is a big incentive. Internet connectivity, similar to hotel long distance calls years ago, is another overpriced ad-on for the cruise companies.
The first drink-package-included trip was on a Me-cation, a solo cruise. I wasn’t planning it, but while researching a trip to take my daughters on, I came across a comicily low rate for a week where only I was available to travel. When I say comically low, it was $600 for the week. That price was inclusive of taxes and port charges, wifi, and the drink package. I can’t turn down that kind of deal so I booked the trip. The solo experience was good. I made some friends, all of whom had similar deals, i.e. they also had the drink package. I started to watch the behavior. Many were even keel like me. I.e. They didn’t drink too much. In my case for every beer I’d have a diet coke or a bottle of water. The strategy was to keep me hydrated, mostly sober, and not feeling sick the next day. I could see where a smaller subset of the group around me drank too much. My guess was they were probably drinking much more than at home because of the desire to “get their money’s worth.” For full disclosure, I did purposefully try to overdue it the first day. More so to try every drink I was always too cheap to buy. I realized very quickly, as in by the third drink, I didn’t like any of them. I quickly resorted back to my old school light beers and water regime.
The Human side of the drink package
I quickly found that the drink package can give me insight into people, and maybe tell me something about their background. As an example, one interesting bit of behavior was the tendency for some adults to get drinks for some of the older but still underage teens. I don’t think it was because the adults wanted to seem cool, hip, and young, although I’m sure that played into it a bit. My guess was that they were giving the kids what they themselves wanted at that age, to feel like an adult and be able to drink. Since there was zero cost, this enabling behavior happened quite a bit. I’ve occasionally seen other adults exhibit this behavior when they were drunk and paying for drinks, but it was usually very limited because of the per drink cost at normal non all-inclusive resorts.
These were not bad kids who were drinking. It’s normal or age-appropriate for kids to push their limits in their early teen years, and roleplay like seasoned adults in later teen years. In both cases that means that many kids want to drink alcohol. This, to me, is universal throughout time. Even my friends found someone to sell us beer when we were in highschool so we could do the same things these kids on the ship were doing thirty years later.
For anyone who’s shocked or troubled by the concepts of adults giving under-agers alcohol, I did notice that by day three or four of the cruise that several of the ship’s officers were hanging around the area during the more festive periods of the day. My guess is that the ship’s management got several reports of the aforementioned behavior. Maybe even from the bar staff themselves, and it was an easy and unobtrusive way for the ship to put a stop to the behavior. Let the bar staff keep being your friend and get you the drinks you want, and let the officers be the bad guys.
My next drink-included experience was on the following cruise, the one I was planning when I found the solo deal. On this one, I took an adult child and a pre-teen. The adult child, who was well beyond legal drinking age, chose to enjoy the drink package like most twenty somethings. She overdid it one night, but only one. The young one was too young to care about drinking alcohol, but she did like the virgin daiquiris. Again, the real benefit was that I didn’t have to stress about the costs of my kid wanting expensive frozen fruity drinks, alcoholic or not.
These two examples are illustrative of my ultimate point. Yes, the drinking package, or a drinks-included resort can have some negatives. If you have a teen, it may mean you have to be on guard as a parent, although, to be fair, you’re always on guard as a parent with teens. You also have to avoid the really drunk people or the tendency to overdo it. That being said, the ability to have a drink, and not care about the price is very enticing and definitely more relaxing than having to manage what you are spending throughout your vacation. Unfortunately, in normal circumstances this is impossible to do, at least if you are as concerned about value for your dollar as you are enjoying yourself. There is a way businesses could do it, and now that we live in the information age, it’s easier than ever.
The Business Side:
For a while now I had a thought that the cruise lines need to be more strategic about the drink-package. The one size fits all pricing and requirements that everyone in the cabin get the package no matter if they drink or not isn’t efficient. It’s leaving money on the table. Taking myself as an example, now that I’ve cruised, the lines see my average drink consumption. Ideally, they would database me and and automatically generate a personalized offer that looks at my consumption, adds a small premium to the individual drink costs, and offers me the package. Taking my numbers into account when I’m purchasing my drinks al-a-carte, I purchase about $40 a day in alcohol for my wife and I. I bought much less than that on the days we are in port. My average total bill is between $200 and $300 for the week inclusive of gratuities. That’s roughly $18 per person per day. So assuming Royal Caribbean makes me an offer for say $25 per person per day, or $350 they will still make money on me even if I do drink a little more because it’s technically unlimited. Don’t forget, when you buy booze at the volume the cruise ships do, they don’t pay anything close to what we pay at retail. That means their cost of goods sold is much smaller than you’d otherwise expect. By my calculations, it’s 20% to 40% more profit for them out of me.
On top of that, they could just target what I’d normally spend as an incentive to close me on the cruise ticket knowing that means additional revenue. I’m frugal but I do occasionally buy excursions, T-shirts, and will eat at extra charge specialty restaurants. They could get this all because of a perceived great deal on the drink package.
From a deciding factor, even though I’m not a big drinker, the drink package is a no-brainer if I’m paying close to what I would pay normally for al-a-carte alcohol. It takes one more little vacation stress away. Now that I have experienced it, a reasonable cost or included drink package is the incentive to choose one vacay over another. Unfortunately, the cruise lines, with the current, and probably short lived exception of MSC, aren’t interested in offering reasonably priced drink packages on reasonably priced cruises. Hopefully someone, somewhere, who’s in charge of onboard revenue, figures it out. If they do, and I get a personalized offer for a $300 or $350 drink package on my next cruise, I know one thing for sure. The first glass I raise when I get on board will be a toast to the person who finally figured out how to make my vacation that much more relaxed and enjoyable!
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