I don’t like to think on vacation.
We’re just back from the Norwegian Bliss, and this was an anniversary celebration so we chose the Ultimate Beverage Package (UBP) as a perk, since the UBP means free unlimited drinks, maybe. This was the first time we’ve taken the package in quite a while, because it’s never really been worth it for us – I don’t drink that much, although nobody believes that, and Virginia has maybe two or three drinks in a cruise. It’s cheaper to just pay for each drink.
The UBP is not actually free, since you pay a 20% gratuity on the cost of the package. That’s why it’s not worth it to us because “free” is really over $100 each. I can probably come close to that in drinks in a week, but there’s no way Virginia will ever come close, and the package rules say everyone in the room has to take it. (20% of $99 per day times two people for a seven-day cruise is $277. So, you pay $277 for “free” drinks.)
I do like unlimited options because then I don’t have to think about it – anything I want is covered. That’s the only reason I would choose it – not because I drink that much, but because then I don’t have to keep track. I just don’t choose it, because if I take it, Virginia has to take it, and then I’m paying $138 for two or three BBCs or Bailey’s.
The major issue with the UBP is that the rules are somewhat fluid. Just before we sailed, Norwegian changed some of the rules, which is their prerogative, but it managed to stress everyone out – and the one thing a vacation is not supposed to have is stress (at least from the vendor.)
Usually, Norwegian had just changed the price per day for the package – I think it started in the seventies and now it’s $99 per day. I don’t think many people actually pay $99 per day for the package, but people who take it as a “free” perk pay the 20% gratuity, so if the retail price goes up, the gratuity goes up. If nobody really buys the package, it can be priced astronomically, since you’re really just raising the “free” price. $277 for two people to drink whatever they want for a week is not that bad. Paying $1660+ retail price is probably insane.
So, you can raise the price per day at will because nobody pays it, and if they do, it just makes a lot of money.
The other way to raise prices is to reset the base price of drinks covered. You can’t actually have any drink with the UBP, you can have any drinks $15 or under. Otherwise, you pay the difference. So, a $20 drink costs $5 (plus 20%) with the UBP.
If you don’t want to reset the base price and cause a rebellion, you raise prices of specific drinks above the $15 threshold and only offend a percentage of the people. That’s what Norwegian did just before we sailed.
(Of course, the other way you save money is to water down the drinks. It’s interesting how much “rum punch” I’ve consumed on excursions without a buzz. It’s also interesting that Norwegian premixes many of their frozen drinks now.)
Raising individual prices didn’t affect me, because I drink relatively cheap booze. It did affect one of our friends, who drinks Patron.
Norwegian changed the prices of a whole host of brands (including Patron) which pushed them out of the UBP and into “extra fee” territory.
First of all, the UBP is a marketing ploy that assumes everyone that has it didn’t actually pay retail because retail is $99 per day plus 20% gratuity. So, when they raised drink prices above the $15 per drink package price, they were assuming everyone had the UBP, because otherwise people would be paying $19 per shot for some liquor that’s not really worth that. With the UBP, the $19 drink would be $4.
“Wow! I can get a drink for $4!”
Now, Norwegian marketing probably thought that people would think $4 is a good deal, but only if they had forgotten that they already paid for the package or at least the gratuities.
I’m not sure what millennial MBA came up with this, but people do not forget paying almost $300 for “free” drinks.
Worse, we were traveling with someone whose drink of choice (Patron) was suddenly $4 extra per drink.
So, the cruise started with a cloud, and even though the change for many of the brands was rescinded (“it was a glitch”) and Patron went back to the previous price and was covered by the UBP, every time I asked for something more interesting than Captain Morgan and Ginger Ale, I had to wonder if the drink was going to be on the upcharge menu. (I had Grand Marnier one night and expected to pay extra, but the menu was apparently not updated.)
I also had to think about our future cruises, where we won’t take the package, where I could end up paying $20 for a drink just because it was priced so people with the package would pay $4.
I don’t like thinking on vacation.
So, this was a breach of trust of sorts – even though it didn’t affect me, I had to start thinking “what are they going to do to us next?”
That is not what you want your customers thinking, unless you’re a monopoly or the government.
Norwegian needs to stop screwing around with their “freebies” because people understand they’re not really free.
As a stockholder, I’m happy to see positive results on the stock price. As a traveler with 18 Norwegian cruises, we’re sailing on MSC at Christmas.