Photo by Unsplash+ in collaboration with Jörg Angeli
Editor’s note: Bryce Sanders is a longtime columnist with Rethinking65. Read more of his columns here.
Bryce Sanders
When you’re on vacation, spending in one area can torpedo plans for spending in another. Let’s consider a story a friend shared about dining with a large group in a fancy restaurant on the French Riviera.
A woman sitting across the table said she desired a fur coat and her husband agreed to buy her one. During the meal, the waiter asked her if she’d like truffles shaved on top of her entrée. She said yes. The waiter shaved some, paused and looked at her. “Keep shaving,” she commanded. This happened a couple of times. When the bill came, her husband looked at her and said, “You just ate your coat!”
Advanced Planning
So, how can you help clients control spending when they’re having fun? Cruises are a perfect example because travelers often forget the extra expenses that can add up. And since cruise industry data suggests that almost 38% of cruise ship passengers are age 55-plus, this could include some of your clients.
Cruise pricing tends to fall into three categories: ultra-luxury ($1,000 per person per day), luxury ($500 per person per day) and mass market. ($200 per person per day.) A lot depends on the destination. Antarctica has become popular, although there are many restrictions on tourism; $1,000 per person for day is not unusual on the smaller ships designed for this market.
Now for some good news: Discounting in the cruise industry is common and in many cases you can chop 50% off cruise prices. Some websites such as vacationstogo.com let you input criteria like month and region, then show discounted fares available. Cruisecompete.com takes a different approach: You enter a specific cruise and dates, and a network of travel agents bids for your business. Your local travel agents will probably also have fares in the same general range.
Getting Ready
Like the truffle-shaving example, your client needs to be aware of where their money is going when they do basic things like getting to the ship and buying drinks onboard. Let’s consider several expense categories and how you can advise your client to be proactive.
Jetting to the ship
Taking a European cruise involves getting to Europe. Vacations often take place during the high season when airfares are expensive. Encourage your client to plan ahead. Strategy: Some cruises include roundtrip airfare. They can buy airfares in bulk, so their prices are often very good. You can shop around. But using your air miles with your favorite airline may be the most cost-effective way to get there.
Getting to the ship
If the ship sails and returns to a city near your home, you skip the inconvenience of flights. You might assume driving and parking at the pier makes sense. This can be prohibitively expensive. The Brooklyn Cruise Ship Terminal charges $45 per night. Your seven-night cruise now costs $315 more. Your 14-night cruise costs $630 more. Strategy: Can your client’s adult child drive them? What would an Uber or Lyft cost? Does a commuter train or bus stop at the pier? Luggage is always the issue.
Hotel before the cruise
Ever hear the expression “Time to spare? Go by air!”? The old saying was updated to “More time yet? Go by jet!” In other words, you have to build in a lot of time for possible air-travel delays. You can’t assume that a flight will arrive on time in the morning and give you enough time to get to the port for a same-day sailing. Weather is always a factor. You need to arrive at least one day early and stay at a hotel. This adds to the cost of a vacation.
Strategy: Some cruise lines include a hotel stay beforehand. This can tie into their hotel-to-ship transfer service. These cruises are usually expensive. This is when you want to use the free hotel night that comes as an annual perk with your credit card or use your hotel points.
Onboard credits
Some cruise lines do not want to aggressively discount fares because it’s a “race to the bottom.” They prefer to give you spending money for use during your cruise. This is an onboard credit, or OBC. Any unspent money vanishes when your cruise is over.
Strategy: Ask your travel agent about this. They will check with the cruise line if they don’t already know. Some travel agents even give a credit to their clients as a perk. And cruise lines that are part of a listed company may also provide shareholder perks. For example, Cunard passengers who own 100-plus shares of parent company Carnival Corp, may receive a $100 onboard credit for cruises six to 12 nights or $250 for cruises 13 nights or longer. Other cruise lines should have similar perks.
Drinks packages
If you are sailing in the luxury or ultra-luxury category, drinks might be included with your (expensive) fare. If you are sailing on a moderately priced cruise line, drinks might be billed as you buy them, but an inclusive drinks package is available. Strategy: Your client should be content with buying drinks one at a time. The unlimited drinks package might be $80, but there are caveats. You usually need to buy it for all the remaining days of your cruise. You order one drink at a time, meaning you cannot order two and share with a friend. There is usually an upper limit on the number of drinks and a threshold price, meaning your free drinks must be below a certain posted price.
International phone service
There are no cell towers at sea. Ship-to-shore telephone service is nothing new. It first arrived in 1929. (FYI: 1929 was the first year a stock brokerage office was opened on an ocean liner – Cunard’s Berengaria.) Today, ships have satellite-based internet access, but it comes at a price. You can still pick up the phone in your cabin and call your office back home, but it will cost you.
Strategy: Unless you must be in touch, avoid “at sea” phone plans. They will be expensive. If you buy internet access onboard, you should be able to make Skype or FaceTime calls. When you set foot ashore, your phone might switch to a roaming mode, working with the local land-based carrier. You should get an alert indicating what this will cost. T-Mobile usually sends me a text starting, “Welcome to Ireland …”
Shore excursions
Do not pass up the opportunity to explore someplace you might see only once in your lifetime. Work under the assumption that the ship wouldn’t stop there if it wasn’t interesting. The more expensive cruise lines include a shore excursion in each port. Take advantage of what they offer.
Strategy: Decide what you want to see as early as possible. Your cruise line’s website will showcase the shore excursions they are selling. Some have few seats and sell out quickly. Ask your travel agent if they have a list of shore excursions that can be booked directly, at a lower cost. They should be the same trips, without the cruise line as the intermediary.
Health insurance
Your coverage ends at the U.S. coastline. Medical evacuation helicopters are expensive. Big ships often have big onboard hospitals, but they charge big prices. Strategy: You want to buy medical travel insurance before you board the ship. This will be an additional expense. The travel agent or you as their financial advisor (if you are insurance licensed) might be able to help in this area.
A vacation should return your client home rested and refreshed. They should not be anxious about what all this has cost and where the money went. As their advisor, you can help them be proactive in their planning.
Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, “Captivating the Wealthy Investor” is available on Amazon.
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