Seven Seas Cruise Vacations Inc.
Pamela Homesworth, Director of Operations – Yield Management for Seven Seas Vacations looked
across her desk and let out a sigh. She looked exhausted and not a little bit frustrated as she removed
her glasses and started to speak.
“It’s Tuesday, the worst management day of my week” she said. “Today is the day I have to decide what
to do with our remaining occupancy for a week Saturday to ensure we sail with a full complement of
passengers. When I first came into this business, you made your profit from the last twenty percent of
travelers, now you try not to lose your shirt to keep the ship at capacity for each sailing. I blame ...view middle of the document...
Pamela and her associates had conceived of the idea for Seven Seas Cruise Vacation after studying the
resorts of Mexico, the Caribbean and southern Europe and they felt they have a novel offering to attract
a new class of vacationing families, couples and singles to their line. To preserve the positioning and
pricing of their main offering, Seven Seas had elected to create a new brand to test market under, and
thus the Seven Seas Cruise Vacations was born.
This case has been prepared to provide material for class discussion; it is not intended to illustrate effective or
ineffective handling of a managerial situation. Names and events may have been alte red to protect confidentiality
or to aid in illustration.
Seven Seas Cruise Vacations – Occupancy Management – © 2012 M. Sparling, All Rights Reserved
Pamela had developed what she felt were several strategic differentiators that would support the Seven
Seas Cruise Vacations business plan:
Through a business associate, Pamela was able to negotiate a fixed fee deal with a major air
carrier to transport passengers from any of her target markets to the cruise terminal in the port
of Miami for a per person cost of $450 for adults and $250 per child;
Pamela had studied marketing in her MBA and was a strong believer in the internet as a
marketing channel, though cautious of the pricing erosion that often took place through
electronic marketing. Testing the internet as the sole marketing and booking channel was the
primary focus of Pamela’s present assignment;
Pamela brought a sound accounting background as well as an analytical mindset to her daily
The last few winters had been particularly cold throughout her target market and this had
allowed Seven Seas to raise prices throughout their fleet and build up a cash reserve that they
felt could sustain them through a period of slower occupancy as a result of experimenting with
different inventory management techniques.
The Seven Seas Mermaid
The Seven Seas Mermaid was a midsize ship in the Seven Seas fleet. Originally commissioned for the fall
1992 season, while not state of the art compared to other ships in the fleet, the Mermaid was
comparable to competitor’s ships in terms of amenities, maximum occupancy and passenger services.
The Seven Seas Mermaid had undergone a refit and maintenance cycle prior to returning to service for
the past summer season, working the Alaskan cruise itinerary and allowing Pamela to refine her
vacation program offering. One of the big changes made in refit was the rationalization of unit types
across the ship. While many vessels were designed to maximize the number of passenger cabins,
through the creation of various layouts and sizes to accommodate the geometry of the ship, with the
Mermaid Seven Seas elected to move common services to the more difficult to use spaces and to create
standard size and layout cabins that were identical...