Pricing methods and strategies in the cruise line industry : A case study on Carnival Corporation's premium and luxury brands

Abstract: This research paper investigates the factors affecting pricing strategies and models within the cruise line industry. The kind of pricing models that can contribute to the development of pricing strategies and processes within the industry is also being investigated. The first and the latter are both this research’ purposes and are important topic for both academic and managerial perspective. The paper uses Carnival Corporation’s two distinct brands, the premium Holland America Line and the ultra-luxury The Yachts of Seabourn as a case study to find out the existing pricing strategies and models in the industry today. Pricing factors and processes are also taken up. Semi-structured interviews with key personnel within sales and revenue were done and used as a source for empirical data. Studying the case’s website also supports the gathered information from the interviews. Scientific articles and business textbooks were studied for theoretical perspective. Journals about pricing, pricing in the cruise line and revenue management written in random by, for example, Phillips (2005), Lieberman (2012) and Oxenfeldt (1973) to name a few were primarily used. The academic textbooks written by Olve et al. (2013) about pricing and the method book by Bryman & Bell (2011) are a few of the examples used amongst others. By analyzing and comparing theoretical information and empirical data, the author of this research comes up with viable results that aim to give a better understanding of the subject in both academic and professional fields. The findings show that the cruise industry still focuses primarily on profit that makes pricing a critical part of the process. There are several factors affecting price decisionmaking and strategies that include sales, seasonality, and customer’s feedback. The primary objectives for these decisions are long-term profit, growth, loyalty of resellers and brand’s reputation. It was also founded out that the existing price models could be adjusted in order to conform to the other types of hospitality businesses. One or more characteristics of the five components in the price model equalizer by Olve et al. can be used and combined if necessary. These findings have theoretical and practical implications suggesting that the cruise line industry’s price setting continues to evolve and adapt when deemed necessary.