Travel pricing psychology

[braumeister]

I'm sure someone here can explain this to me.

I recently got a travel brochure in the mail for a guided trip. It looked interesting so I sat down and read it. As I read, it got more and more intriguing. A part of the world I've never been to, a great itinerary, and a tour operator I trust.

So, just as i'm getting to the last page of the brochure, I see the prices, and after adding up everything that would be involved, I calculated the total to be around $50K for two of us.

OK, that's so far out of my price range it isn't even funny, but certainly reasonable for many people. What I can't understand is that the brochure made mention of all kinds of little perks, like a subsidy for your airfare, free bar tab, etc., etc. if you signed up before a certain date.

In my mind, little perks like that would be so insignificant to the total trip cost, that they are meaningless. Why would a trip operator include those tidbits? Surely the folks who would be borderline on affording it are a very small subset of those who might sign up?

 

[REWahoo]

Maybe one of our more affluent members can explain it. My guess is everybody loves a freebie.

 

[Chuckanut]

My guess is that many of the people who can afford to pay 50K per couple to take a trip, got that way by pinching some pennies earlier in life - LBYM. It's a habit that's hard to break.

A buddy and I used to meet for a beer at a place that offered $3 beers at HH. We just found a place that offers $2 beers for HH and we switched. We can both easily afford the extra $1 but getting a good deal is still the mark of a money-wise person.

There are times to Blow That Dough, but this wasn't one of them.

 

[flintnational]

With a $50k price tag, the perks need to include a free car.

 

[athena53]

Way out of my price range but FWIW- I just came back from a memorable trip to India and Nepal. The guide picked up a lot of little costs- tips at bathroom stops (sometimes a bus was the only way to get someplace and hygienic potties are a Big Thing), bicycle rickshaws, and other small things that saved us having to ask prices and forage for small amounts of money. I really appreciated it even though the amounts were small. It's also the principle of the thing: if I pay premium prices, don't nickel and dime me for small stuff. Include it already.

 

[OldShooter]

Pricing travel is no different than pricing any other good. The offer must be attractive and apparently the seller here has found that "perks" increase his lead generation. I'm sure they have tested this, as they have also tested various advertising venues.

Viking Cruise Lines seems to be the king of this. We traveled between Moscow and St. Petersburg with them maybe 5 years ago and we still get multiple catalogs and mailing every week. Virtually every one includes some perks, like BOGO air fares or even free air. I don't think its possible for a buyer to ever know whether they got the best deal from Viking or not; the prices are always changing. Personally, I find that to be very annoying. A shell game, basically.

One thing the internet has brought us, IMO, is broadly higher quality in travel. In Olden Times, restaurants and other tourist attractions could get away with low quality experiences because they never got repeat customers anyway. Now, with places like TripAdvisor and Yelp, everyone is in a sense a repeat customer, benefiting from other customers' reports.

I think that will be the case with this tour company too. If they are not delivering experiences worth $50K, converting leads into customers will be very difficult for them. And A Good Thing, too.

 

[Chuckanut]

One thing that has always amazed me is how people will go through all sorts of manipulations and often great inconveniences to save $100 on airfare, and then spend many extra dollars due the consequences of that savings.

 

[ivinsfan]

Probably 7 years ago. I was on the Oceania site asking a few questions about a South America cruise...we ended up not booking anything with them.

To this day we get mailings at least twice a week and it's impossible to figure the best deal. I've tried to get off the list, but can't seem to make it happen. Some weeks half our mail is from these knobs. I've emailed, I've used the online please don't send me S%^t option and still it comes. It's really starting to tick me off.

 

[JoeWras]

Some weeks half our mail is from these knobs. I've emailed, I've used the online please don't send me S%^t option and still it comes. It's really starting to tick me off.

You need to mention this on the pet peeve thread.

 

[ivinsfan]

You need to mention this on the pet peeve thread.

It's not really off topic it is about travel mailings and pricing...

 

[flintnational]

Probably 7 years ago. I was on the Oceania site asking a few questions about a South America cruise...we ended up not booking anything with them.

To this day we get mailings at least twice a week and it's impossible to figure the best deal. I've tried to get off the list, but can't seem to make it happen. Some weeks half our mail is from these knobs. I've emailed, I've used the online please don't send me S%^t option and still it comes. It's really starting to tick me off.

We have never sailed with them or made an inquiry. Yet we also get their mailings. I guess Celebrity or Princess gave us away. Kind of crazy what Oceania wants for a cruise. I guess I secretly wish I had enough money that their pricing seemed reasonable. (I need to reread my own signature line)

 

[HI Bill]

With a $50k price tag, the perks need to include a free car.

My honeymoon stay was about $25K, but that included a private beach cottage for 4 nights, all meals, boat diving, shore diving, and 4 days in a private cabin on a luxury liveaboard dive boat with two beds and a private bath, and two closets.

It was the most expensive trip of my wife, but the service was excellent, and we added on stops in Taipei, Sydney, and Bali (at extra cost). You only live once!

 

[Sunset]

We got a brochure for a cruise company. All I remember is it had "American" in the name, but there is more than one using that in part of the name.

So the brochure was pretty , a booklet really, with photos and nice write ups. Told me all the benefits, etc. But NO PRICE...

It looked comparable to Viking which we have done and enjoyed, but it was pricey at $5K each.

So I phoned them, to find out it was as special for me only $25,000 for a 2 week river cruise..

No wonder they don't put the price on the booklet

 

[Sunset]

My honeymoon stay was about $25K, but that included a private beach cottage for 4 nights, all meals, boat diving, shore diving, and 4 days in a private cabin on a luxury liveaboard dive boat with two beds and a private bath, and two closets.

It was the most expensive trip of my wife, but the service was excellent, and we added on stops in Taipei, Sydney, and Bali (at extra cost). You only live once!

Freudian slip...

 

[Scrapr]

Probably 7 years ago. I was on the Oceania site asking a few questions about a South America cruise...we ended up not booking anything with them.

To this day we get mailings at least twice a week and it's impossible to figure the best deal. I've tried to get off the list, but can't seem to make it happen. Some weeks half our mail is from these knobs. I've emailed, I've used the online please don't send me S%^t option and still it comes. It's really starting to tick me off.

junk mail folder? Or is it physical postcards? Those don't even make it back from the Post office. Straight into the recycle there at the PO. (I have a PO Box that I route a lot of potential solicitations)

We are attending a black tie auction Saturday as a benefit. They have a week in Italy as an auction item. I bet that goes for $5-10k. I looked up the villa (apartment) on line. Rack rate was about $1000 for a week. And the traveler photos were under whelming. Good enough for $1k...not good enough for $10k. While searching i found a company that provides these villas to non profits for an auction item. That was interesting. They had several in this same little town.

 

[Nemo2]

...to find out it was as special for me only $25,000....

Never undercount the number of people who will pay far more than necessary because they have been led to believe that others will see them as 'exceptional' if they purchase/use a particular product/service.

 

[sengsational]

I had done an inquiry with Viking and started getting stuff in the mail. I piled it up without reading it. One day, the pile fell over and almost suffocated me. After the paramedics left, I started building a spreadsheet to see what the prices were doing over the 1.5 years of data. So I had to tease out all of the freebies to make apples to apples comparisons. The high season is already priced higher in the brochures, of course, but the shoulder seasons might not be priced low enough. That's based on my observation that as those dates approach, there are additional perks offered. What each perk is worth varies by individual. For me free air is worth a lot since we have a more monopoly like airport, and the high prices that go with that situation. Free bar tab doesn't mean much to me. Then they have the $500 per room or free gratuities, which are just annoyances ... they should just reduce the price. Anyway, I finally went on a "last minute" shoulder season cruise with free air and a few other little perks. Still way more money than an ocean cruise, and more like a bus tour than I'd have liked. But I do think I got a reason price, even though the analysis was trying.

 

[Sunset]

I had done an inquiry with Viking and started getting stuff in the mail. I piled it up without reading it. One day, the pile fell over and almost suffocated me. After the paramedics left, I started building a spreadsheet to see what the prices were doing over the 1.5 years of data. So I had to tease out all of the freebies to make apples to apples comparisons. The high season is already priced higher in the brochures, of course, but the shoulder seasons might not be priced low enough. That's based on my observation that as those dates approach, there are additional perks offered. What each perk is worth varies by individual. For me free air is worth a lot since we have a more monopoly like airport, and the high prices that go with that situation. Free bar tab doesn't mean much to me. Then they have the $500 per room or free gratuities, which are just annoyances ... they should just reduce the price. Anyway, I finally went on a "last minute" shoulder season cruise with free air and a few other little perks. Still way more money than an ocean cruise, and more like a bus tour than I'd have liked. But I do think I got a reason price, even though the analysis was trying.

Just so others have a price reference.
Last year in June we went on a cruise with Viking.
Free air, free tip gratuities, and the cheapest cabin was $4900 ea, so $9,800 in total.
This was for the 14 day Grand European Tour along the Rhine/Danube.

I felt it was cheaper than the previous number of years of offers they mailed us.

 

[Bamaman]

I know European river cruises are very popular, and they get great customer ratings. But I can fly to Europe and take a self guided tour three times for the cost of one Viking River Cruise. And they are far from the most expensive river cruises.

I like to move a little faster than 10 mph, and I have already seen most of the cities Viking visits.

 

[Koogie]

A guy on another forum I am on booked a cruise with "Prestige Cruises" and included a link to the cruise in his post.

I was curious so I clicked on it. Looked good so I hit book it, just to see what the prices were like. They asked for an email address and tel # to proceed and Google autopopulated their online form for me and like an idiot I proceeded on.

I have gotten three emails from them already and one phone call !! That is in about 7 hours..

Aggressive doesn't begin to describe it.

p.s. the cruise company offices are in Las Vegas... because all good cruises start in the desert....

 

[Nemo2]

Quite some time back we booked an inside cabin for our Fall Westbound Repositioning cruise with VTG @ $493 US p.p. (with a $50 p.p.OBC)..............today's posted rate $1,193 p.p. (with OBC).

And no fancy brochure.

 

[YVRRocketSurgery]

Pricing travel is no different than pricing any other good. The offer must be attractive and apparently the seller here has found that "perks" increase his lead generation. I'm sure they have tested this, as they have also tested various advertising venues.

Viking Cruise Lines seems to be the king of this. We traveled between Moscow and St. Petersburg with them maybe 5 years ago and we still get multiple catalogs and mailing every week. Virtually every one includes some perks, like BOGO air fares or even free air. I don't think its possible for a buyer to ever know whether they got the best deal from Viking or not; the prices are always changing. Personally, I find that to be very annoying. A shell game, basically.

One thing the internet has brought us, IMO, is broadly higher quality in travel. In Olden Times, restaurants and other tourist attractions could get away with low quality experiences because they never got repeat customers anyway. Now, with places like TripAdvisor and Yelp, everyone is in a sense a repeat customer, benefiting from other customers' reports.

I think that will be the case with this tour company too. If they are not delivering experiences worth $50K, converting leads into customers will be very difficult for them. And A Good Thing, too.

+1 to so many concepts in your post.

We like sailing on Celebrity. Apparently they had some really good success with their 1, 2, 3 perks where you get to choose various perks like free internet, drink package, OBC, etc depending on the cabin and sailing you book. They offer the perks during a window but for cruises that don't sell, you'll see them on their discounted sailing without perks but at a price where it would be cheaper to add the perks manually. It's kind of based on what incetivizes you.
I also don't get half price deposits. Sure, you have less money tied up but you're going to have to end up paying for the cruise eventually.

 

[Scuba]

My honeymoon stay was about $25K, but that included a private beach cottage for 4 nights, all meals, boat diving, shore diving, and 4 days in a private cabin on a luxury liveaboard dive boat with two beds and a private bath, and two closets.



It was the most expensive trip of my wife, but the service was excellent, and we added on stops in Taipei, Sydney, and Bali (at extra cost). You only live once!

Sounds like an amazing trip!

 

[ivinsfan]

Quite some time back we booked an inside cabin for our Fall Westbound Repositioning cruise with VTG @ $493 US p.p. (with a $50 p.p.OBC)..............today's posted rate $1,193 p.p. (with OBC).

And no fancy brochure.

This is where experienced cruisers can have a big edge. They start looking earlier and are sensitive to price change up or down. That's my beef with Oceania constantly sending stuff saying save this, save that, 2 for 1, which is double price so big deal. Free airfare from 5 cities but add on if you live anywhere else and take our crappy flights. You can get a better flight for more money of course. I wouldn't know a great deal for one of their cruises if it bit me in the A$$...I would like to have the money they have spend sending us literally hundreds of brochures( really fancy ones too) in the last 7 years.

 

[Chuckanut]

. What I can't understand is that the brochure made mention of all kinds of little perks, like a subsidy for your airfare, free bar tab, etc., etc. if you signed up before a certain date.

In my mind, little perks like that would be so insignificant to the total trip cost, that they are meaningless. Why would a trip operator include those tidbits? Surely the folks who would be borderline on affording it are a very small subset of those who might sign up?

It's really right there - sign up early. Perhaps they get a better rate on hotel rooms, transportation or whatever if they can book the stuff early. Or maybe they just want to lock in a non-refundable deposit.

Just curious, did they lock in the price when one signed up, even if the dollar weakens against the local currencies? I ask because a friend signed up last year for a trip in 2018. Back then a Euro cost $1.06, today it's $1.23 - a hefty 16% increase. Thankfully, the tour company guarantees the price once you put down the deposit.