Cruise 2013: Will Rising Confidence Stem the Discounting Tide?
by Maria Lenhart and Andrew Sheivachman /If the cruise industry doesn’t have a banner year in 2013, it may have only itself to blame. That’s the case made by cruise executives who see excessive discounting as a bigger hazard in 2013 than either a sluggish economy or global unrest.
Despite the challenges, cruise line and cruise agency executives told Travel Market Report they are bullish on 2013. In particular, they cited rising consumer confidence and growing demand for exotic itineraries.
They were also optimistic that the cruise industry will regain the momentum it lost last year after the Costa Concordia tragedy in January.
Here’s a look at the challenges and opportunities that top executives expect to impact cruise results in 2013.
Challenge: discounting too deeply
“The sluggish economic recovery is a big headwind for the industry. Then there are the geopolitical crises, none of which are likely to end this year. In response to these problems, the cruise industry has created a bigger challenge by trying to discount itself into profitability. There is always something going on in the world to worry about, so when the cruise industry creates its own problems by discounting too deeply, there is no excuse. ” – Kunal S. Kamlani, president, Prestige Cruise Holdings (Oceania Cruises and Regent Seven Seas Cruises)
Challenge: continuing economic uncertainty
“Although consumer confidence is growing, global economic uncertainty continues to be one of the major challenges facing the cruise industry. This is why it's important to recognize the growth potential of new markets and to focus on continuing to educate the public about the extraordinary value that a cruise vacation offers.” – Ellen Bettridge, president, the Americas, Silversea Cruises
Challenge: getting fares back on track
“We’re all hoping fares will go up and demand will go up. But I don’t know if cruise lines will be able to get fares up as quickly as they want to.” – Geraldine Ree, senior vice president, sales and marketing, Expedia CruiseShipCenters
Opportunity: tapping the potential
“I see a continued good rebound, not only for the luxury end, but for the market in general. All the indicators are looking in the right direction. It’s not an election year. Consumer confidence indicators are at the highest level in a long time, so there is pent- up demand for people to get out and do things. It’s incumbent upon us to sell and market. Our penetration is still relatively low. There’s a lot of potential that hasn’t been fully tapped.” – Bob Lepisto, president, SeaDream Yacht Club
Challenge: convincing cruisers to book now
“For all those people who have been waiting to take a cruise, hoping to get a better deal closer in, we can and should offer them compelling reasons to book it now. People need to know that waiting has a cost, with cabin choices and other components becoming less certain. We’re trying to help people understand this through marketing.” – Mark Kammerer, senior vice president, Holland America Line
Opportunity: Big ticket destinations
“We’ve got to make sure we have a really strong Wave Season. Last year the Concordia put a blip in it, turning it very strongly. We’re doing well because people are buying well in advance. We have to keep focus on those bigger cruise itineraries and big ticket areas such as Europe and Alaska.” – Michelle Fee, CEO, CruisePlanners
Opportunity: cruise choices wider than ever
“The industry now has more choice for a wider variety of passengers than ever. Our opportunity is to talk to people about how that meets their needs, based on what we now have available. We need to really remind ourselves of how great the product across the industry has become and how competitive it is with other vacation types.” – Mark Kammerer, Holland America Line
Challenge: differentiating the many choices
“Because there are so many cruise choices, it’s harder to get people narrowed down to the choice that makes sense for them. If you are an experienced and well-informed cruiser, you probably know what is right for you. But if you just look on the surface and try to make your way, it’s challenging. The industry needs to better define and communicate what makes our brands different from one another.” – Mark Kammerer, Holland America Line
Opportunity: exotic destinations
“One of the key opportunities will be to leverage the increasing interest in cruising across all corners of the globe, especially to exotic destinations. Ports around the world are investing heavily to expand or upgrade their ability to serve the growing worldwide cruise market, opening the door to new and innovative itineraries.” – Ellen Bettridge, Silversea Cruises
Challenge: airfares to Europe
“I’m hoping Europe isn’t weak in 2013. A lot of cruise lines are trying to bundle air in their cruise price. They have done a really good job at pricing Europe as we got closer to the season, but many [consumers] were scared away by high airfare.” – Michelle Fee, CruisePlanners
Opportunity: delivering brand value
“The cruise industry should have trust in the power of their brands and what they stand for. If you provide value to consumers, they will pay for it. Pricing in the upscale market is only an issue in the absence of value. Our travel partners take it on the chin when we discount too much. We owe it to them to hold the line on price.” – Kunal S. Kamlani, Prestige Cruise Holdings
Opportunity: telling the cruise story
“The big opportunity is really to continue to tell our story about why cruising is the better vacation. We need travel professionals to articulate that to consumers. The story does need to be told – about 23% of North American population has taken a cruise. There are all these people who take vacations but haven’t taken a cruise, and that’s why we rely on the travel agent community to express why we deliver the highest customer satisfaction.” – Vicki Freed, senior vice president, sales, trade support and service, Royal Caribbean International
“It’s incumbent upon us to get out the word on the incredible value of cruising and get more new guests on board.” – Bob Lepisto, SeaDream Yacht Club
Opportunity: regaining lost ground
“All things are lining up for it to be a very positive 2013. It will be a great opportunity for agents to be proactive compared to last year. Last year was heading off to be one of our best years ever and then we spent the rest of the year catching up due to the [Concordia] incident in January.” – Geraldine Ree, Expedia CruiseShipCenters
Challenge: supporting travel agents
“We need to inspire the travel agents. We have a responsibility to help the travel professional succeed, since they don’t have the resources we have.” – Vicki Freed, Royal Caribbean International
Challenge: overcoming perception about Greece
“Issues such as unrest and security are always a challenge that we don’t like to address – especially in the Mediterranean, with all the talk about Greece and their economic troubles. It’s really a problem of perception. It’s actually a great time to go to Greece. I was there recently and I enjoyed seeing the Acropolis without a lot of crowds. The reality is different than the perception.” – Bob Lepisto, SeaDream Yacht Club
Opportunity: selling group cruises
“The group market continues to be robust for travel agents who want to make more profit and gain highly satisfied customers. The group market also helps bring in people who haven’t cruised before. That’s the reason the consumer is attracted to group cruises, and people are attracted to the travel agency as a result of the group being pulled to a cruise. – Vicki Freed, Royal Caribbean International
Next time: Make more money in cruise – advice for agents from cruise line and cruise agency executives.