Silversea – Improperly Discounting Its 15% Pre-Pay Discount?

One of my readers asked my opinion on Silversea’s now discounting a cruise he purchased long ago so much so that the 15% discount he received for pre-paying many months early is now no discount at all…but rather a significant cost (due to loss of his income on his money).  Is there enough “discounting” in that sentence?

Back in November 2008 I wrote a blog entry Silversea – Lost at Sea? wherein I discussed a number of issues concerning my about Silversea. One of my biggest concerns was every…and I mean every…indication that cash flow was being coming a very real concern. This was further discussed in my blog entry Silversea – A Call From The Captain.

The fact is that when a cruise line is giving you a very significant discount for early payment you really have to know that it is not manna from heaven. It is, without question, a way to get your money earlier then the cruise line (or whomever) is actually entitled. I find this in my legal world as a “red flag” when done by a contractor (yacht, commercial or residential). There is no question that YOUR money is going to be used to pay the line’s (or contractor’s) OTHER obligations.

Now, I don’t believe it is the same, but it is not dissimilar to a Ponzi scheme where the next investors pay the prior investor’s “income” because the prior investor’s money wasn’t actually invested…or not as it should have been. Cruise Value Center failed a few months ago when new bookings stopped coming in at the same rate they had been. As a result the NEW money was insufficient to pay for the OLD obligations.

I do want to pause and note that Crystal Cruises has, for quite a while, offered a slight discount for early payment (around 3.5% versus Silversea’s 15%). Crystal’s figure is essentially consistent with giving a guest a slightly better return than they would get from a safe investment. To me this is a good marketing tactic because it emotionally and financially vests their guest in the upcoming cruise (less thought of canceling an already paid for cruise) while being logically related to normal finances.

So, do I believe Silversea is going to go to bat and provide some additional benefits for those expecting a true 15% additional discount since its inability to attract sufficient passengers required a further discounting of its fares? Probably not. And that is not because Silversea wants to treat you like you were just scammed, because it was not its intention! It probably will not respond because it can’t; either directly because of its own cash demands or it then runs down yet another slippery slope of further discounts. Hopefully it will consider at least a couple of complimentary dinners in its extra charge restaurants…but that will eat into its onboard revenue (assuming the restaurants are running at full capacity).

It is not a pretty picture.  I wish I could find something good to say.  Silversea has been a very good product until recently.  Most of my clients, possibly in part because of my philosophy (a caveat), just are not willing to book Silversea.  There are other options out there.  For luxury, there is no question from anyone that Seabourn is either as good or better.  For itineraries, Seabourn and Oceania (and Azamara – should we not forget this line!) are suitable or better alternatives.  So many are left with little motivation to find logic in risking their cruise, if not their money, on Silversea.

Hopefully…and I am hopeful…this will change.