May 18, 2007

QM2 gay crossing not a success? Hits organizers profits..

Here is an extract from an article from tallks about how PlanetOut (the holding company of the group that chartered the QM2 for an all gay crossing on the QM2 this year) is not doing well in part to having to discount cabins, penalty charges ($700000 is the hit it is taking so far) as bookings are not that good. For me, not a surprise - it seemed a strange idea

"It warned shareholders that while revenue is expected to increase this year, operating losses will continue to accrue due to additional expenses for the development and expansion of its Web site properties; increased market research and marketing campaigns; and the discounting of cabin prices combined with occupancy-related penalty charges on its transatlantic cruise aboard the Queen Mary 2, set to sail from New York to London on May 29.

The cruise portion of its business continues to be a drain on the company's bottom line. It has already taken a $700,000 hit on the QM2 cruise in costs that executives have determined will exceed the anticipated revenue of the event.

It recorded more losses as a result of greater than expected cabin price discounting of a Caribbean cruise this winter, due primarily to the late initiation of marketing activity for the event, executives said.

"RSVP is responsible for the most significant variance of our profit," said Magee. "Our marketing efforts have been too little too late and we underestimated the challenge of booking a transatlantic ship."

The company has invested $7.2 million as down payments for its upcoming cruises, with deposits from customers at $6.6 million. It has brought on Rob Pritchard to be director of operations of RSVP Vacations. But Magee said if the cruise business does not show signs of improving by the fall the company would halt its 2008 cruises.

While Magee acknowledged that "we bit off too much too soon" in regards to the cruise business, she remained bullish on the purchase increasing PlanetOut's revenue stream.
"This should not be a hard business to manage well," she said. "I am confident RSVP can be a solid profit and cash generator for PlanetOut."

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