Author: Chu, Mai Chi Angela
Title: Joint studies of cruise revenue management and the customer’s selection criteria and motivation
Degree: DHTM
Year: 2020
Subject: Cruise lines -- Management
Ocean travel -- Management
Revenue management
Hong Kong Polytechnic University -- Dissertations
Department: School of Hotel and Tourism Management
Pages: [19], 331 pages : color illustrations
Language: English
Abstract: The cruise industry is blooming over the past decade. The worldwide passengers grew from 3.8 million in 1990 to 26 million in 2018 (CruiseMarketWatch, 2019e). Cruise is relatively new to Asia. China ranked second after America which represents 10.5% of the 2018 global source market (CLIA, 2019b). Many cruise companies see the significant opportunity and expect that China will become one of the largest markets (Sorrells, 2019a). Because of this, Norwegian Cruise Line has built a ship specially designed for China market but was unsuccessful and left China within a year due to misreading the Chinese market (Everington, 2018; Xie, 2018). Revenue management (RM) is known to be a successful tool to improve a company's revenue and bottom line. With the exponential trend growth in the cruise industry and scant academic research on cruise revenue management, this study intends to explore and fulfill this gap. It begins with a fundamental discourse to identify the cruise's characteristics and the extent to which revenue management is applied to this industry. It further investigates how it is different from other hospitality and tourism industries (i.e., airlines, and hotels). RM navigates the sales and marketing to set the 'right' strategies concerning its brand positioning for price-setting and distributions ('right product' to the 'right' customer) which is based on the market demand, aiming to maximize its revenue. Hence, the second objective is to understand the consumers' buying criteria and trade-offs that they are willing to make between different cruise attributes to address the concept of 'right' products and customers. Finally, it is to segment the customers based on their motivations and preferences of cruise attributes. This study focuses on repeated cruisers from Hong Kong (HK) and Shanghai (mainland China).
This study uses a mixed-method that combines the strength of both qualitative and quantitative measures to fulfill the research objectives by connecting both suppliers' and customers' viewpoints. Several stages are involved. Firstly, content analysis is conducted from past studies to understand cruise characteristics and how they are different from those of other industries. At the same time, 100 online cruise packages are reviewed to identify the cruise attributes and levels. Both cruise management and travel agents (TA) are interviewed to validate and expand the RM characteristics and attributes. Results reveal that cruise (similar to airline) is moveable so that they manage to follow the predicted demand (time-variable demand) through the various itinerary. Capacity is fixed, and the inventory is perishable. When the ship leaves the port, it loses the opportunity to sell their cabins (displacement of revenue) and is dependent on the duration of the trip. Cruise has a relatively higher fixed cost than the hotels, mainly because of its maintenance and fuel cost. Therefore, their pricing strategy is more cost-based, particularly during the low-demand period. They aim to cover the cost through occupancy so that the revenue can be generated through onboard activities. Interviews reveal that the cruise industry is relatively in the early development of RM, particularly in the distribution channel (i.e., TA) and pricing structure (which is fixed). Other key findings are that there is no revenue management system; no alignment in terminologies, definitions, and reporting; and no standardized benchmarking company to provide market insights (e.g., in the hotel industry, STR provides the standard). Products are often made-up of options that have conjoint features (Paczkowski, 2018a). Conjoint analysis is conducted to evaluate the trade-off among choices and infers preference through utility score (i.e., enjoyment) (Diener, 2008; Hensher, Rose, & Greene, 2015). Duration, shore excursion activity, and cabin price are the three key attributes. The result shows that there is no significant difference between the respondents from HK and mainland China. Shore excursion has the highest important value for both samples, followed by cabin price and duration. As a follow-up step, cluster analysis is conducted to segment the cruisers based on their preference, socio-demographic characteristics, and psychological characteristics (i.e., motivations). Four clusters are identified. In sum, this study provides a 'holistic RM' knowledge and reveal how RM is evolved from airlines to other hospitality and tourism industries. The research designs to incorporate a complete understanding of both the supply (revenue attributes) and demand (customers' perspective when choosing a cruise vacation). It provides practical significance and valuable contribution to the cruise management from reporting alignments, designing the cruise ships and itineraries, understanding their customers' perspective, and developing the right strategies to uplift their financial results. Recommendations are provided to the Chinese tourism organizations, policymakers, and cruise companies to develop cruise tourism. Limitations and future studies are also discussed.
Rights: All rights reserved
Access: restricted access

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