Advance booking pricing strategies: A comparison of the pre- and post- Covid-19 situation in the cruise industry

Abstract

This article analyses advance booking pricing strategies in the cruise industry before and after Covid-19 was declared a pandemic. To provide a complete picture of the booking process, booking information for departures from the date of data collection up to two years in advance has been analysed. This resulted in an extensive database of more than 1.6 million cruise prices from February 2019 to March 2021. The hedonic approach was used to estimate 121 regression models. Other price determinants considered in the study include the number of nights on the itinerary, cabin type, cruise company, place of departure, ship capacity, ship rating and month of departure. The results show that, in general, the earlier the booking, the more expensive the itinerary. This was accentuated by the uncertainty following the declaration of the Covid-19 pandemic. However, heterogeneous and selective pricing strategies for advance bookings were found, depending mainly on the cruise line and the place of departure. It is therefore possible to find cases where booking in advance is cheaper.