Royal Caribbean Revises Crown & Anchor Society Benefits For Diamond Level Members (Again)

Last month I told you about revisions made by Royal Caribbean to the Crown & Anchor Society Benefits For Past Passengers.

Subsequent to the changes, one particular group of past passengers caused a virtual firestorm over a specific "lost" benefit. I'm referring to Diamond level members (those with ten Royal Caribbean cruises under their belts), who literally flooded Internet message boards to bemoan the loss of Concierge Lounge privileges. I was really shocked at their DIS-loyalty to the very cruise line to which they were supposedly so loyal. Some stated they would cancel booked cruises and "never sail on Royal Caribbean again!" Of course that's often the response when something happens to irritate message board groupies.

Which perk was it exactly that they were going to miss the most? The letter below that was sent to Diamond level Crown & Anchor Society members on April 13th outlines three. I've suspected all along that the "social" aspect of the Concierge Lounge wasn't their top priority. Neither were concierge-type services. While a colleague felt the "Diamonds" were most ticked off at their loss of bragging rights, I've felt all along that it was the free happy-hour-style drinks every evening. A brief look at posts in response to the letter has proved my contention to be the most accurate. Free or reduced-cost drinks trump ice show tickets every time.

Dear Crown & Anchor Diamond Plus, Diamond, and Platinum Members,

I am writing to provide you with an update regarding the recent changes to our Crown & Anchor Loyalty Program. Let me begin by thanking you for being loyal customers of Royal Caribbean. These are remarkable times - economic challenges, new modes of communication, amazing new ships and so many other changes that impact our lives at every turn. Especially in these times, we appreciate your loyalty as Crown & Anchor Society members.

As you may know, we recently announced a number of changes to our Crown & Anchor Loyalty Program. Many of our Diamond Members have expressed considerable unhappiness about the change in eligibility for access to our Concierge Lounges. While we knew the reaction would be negative, it has been more negative than we anticipated. This underscores how phenomenally passionate our most loyal customers are about their Royal Caribbean experiences. We believe one of our strengths that inspires such loyalty is our ability to learn from others and especially from our Crown & Anchor customers. With this in mind, I will comment on the change in eligibility regarding our Concierge Lounges and also inform you of some new enhancements that will improve your experience onboard our ships.

Our decision to limit access to the Concierge Lounges was based on the unfortunate but inescapable fact that we cannot deliver an acceptable experience in lounges that were never designed to handle so many people. We regret that the crowding in our Concierge Lounges prevents us from delivering the experience we intended. It also prevents us from being able to grandfather in Concierge Lounge access for existing Diamond level members. We deeply regret having to restrict this access, but we are committed to delivering an exceptional Concierge Lounge experience. Having said that, we realize we should have provided more notice of our decision, which carries such consequences. To that end, we will delay the implementation date for the change in eligibility from July 1, 2009, to Sept 1, 2009.

Before I address the additional initiatives we will implement, I would like to summarize the physical or "hardware" status of our fleet as it relates to Concierge Lounges and Diamond Lounges, taking into account all 22 Royal Caribbean ships that are now open for sale.

• Five ships (Freedom class & Oasis class) have both Concierge Lounges and Diamond Lounges. We are excited about the Concierge Lounge overlooking the Boardwalk and the Diamond Lounge overlooking the Royal Promenade on our forthcoming Oasis of the Seas and Allure of the Seas.
• Five ships (Monarch of the Seas, Majesty of the Seas, Vision of the Seas, Grandeur of the Seas and Rhapsody of the Seas) have no Concierge Lounges and two ships (Splendour of the Seas and Legend of the Seas) have limited Concierge Lounges.
• Ten ships have Concierge Lounges but no Diamond Lounges (Enchantment of the Seas, as well as the ships in our Voyager class and Radiance class). While we don't currently have plans to add Diamond Lounges to these ships, we will look for opportunities to invest in Diamond Lounges as we go forward.

The strong response from our Diamond members regarding our recent changes demonstrates how much the Concierge Lounges are valued and we clearly should honor that response. The feedback we have received from Diamond members falls primarily into one of the three following categories:

• Preserving the social aspect - the ability to meet and mingle with other members
• Maintaining free or reduced price drinks
• And, access to concierge-type services for ice show tickets and other activities

In order to address the first two interests for Diamond members, outside the Concierge Lounge, effective Sept 1 we will offer them a dedicated VIP private party in one of our bars or lounges. This may be held in the Viking Crown Lounge, or any other bar or lounge designated by the ship. In this dedicated area, from approximately 5 to 8 p.m., we will offer complimentary wine and champagne and a happy hour discount of 25 percent off all other beverages. This will be offered every day of each sailing and will replace our recently announced one-time per-cruise special Diamond party.

Additionally, we will offer a new continental breakfast from approximately 8 to 10 a.m. in one of the rooms adjacent to the main dining room onboard. During these morning hours, a crew member will be present and will provide services such as obtaining ice show tickets, and other assistance. We believe these changes will address the primary desires our Diamond members have expressed. These enhancements will be instituted on all our ships that don't have a Diamond Lounge today.

A number of Crown & Anchor members have placed the Concierge Lounge issue in the context of a perceived sequence of "cutbacks" that taken together have reduced the quality of the product we offer. We take these comments seriously. I am pleased to inform you that in 2009 we are seeing one of the most meaningful year-over-year improvements in our guest satisfaction ratings in memory. Apart from the obvious - Independence of the Seas entering the fleet, Empress of the Seas and Sovereign of the Seas leaving the fleet and Oasis of the Seas soon to join - systemic improvements such as My Time Dining, our suite enhancements, the new debarkation process, and numerous smaller initiatives are being very positively recognized by guests, travel agents and the media.

While we understand not everyone is happy about every change taking place in our fleet, we appreciate your loyalty to our company and we sincerely hope you will continue to choose Royal Caribbean. It gives us no pleasure to hear from aggrieved Crown & Anchor loyalty customers. Our goal is to earn your advocacy and your return to our fleet by providing you with truly memorable vacations and by recognizing and rewarding your loyalty. Our mantra at Royal Caribbean, besides delivering the "Wow," is "continuous improvement." We constantly strive to find the right balance, so our product evolves in ways that our guests, especially our most loyal guests, are comfortable with. Our ratings and most communications we receive indicate that the balancing is working. However, occasionally we stumble and when we do we try to react quickly. This may be such an instance. We are committed to earning the faith you place in us. I hope the additional enhancements explained in this letter demonstrate our commitment. These changes will be reflected on our website in the next 48 hours.

Thank you very much for being our customer and for your loyalty to Royal Caribbean.

Sincerely,
Adam M. Goldstein
President & Chief Executive Officer
Royal Caribbean International