Low Prices, Need for New Markets Are Holding Cruise Lines Back

FORT LAUDERDALE, Fla. – The cruise industry’s inability to price its product realistically and to penetrate new markets amounts to a serious failure and is bad news for cruise lines and travel agents alike.

That was the message cruise executives drove home during the opening session of the 10th annual Cruise3sixty conference here.

Low pricing is holding back the cruise industry, with too much value offered to cruisers at reduced rates, said several executives.

“We have to get better value for the great value we give cruisers,” said Arnold Donald, president and CEO of Carnival Corp.

“The reality is that our prices have to be more reflective of the value we deliver. The only way that happens is to understand guests so we wow them every time.”

The right stuff
The cruise lines are not attracting the right vacationers from the right markets although more people than ever are cruising, the executives said.

Cruise lines need to penetrate deeper into valuable markets, said Kevin Sheehan, CEO of Norwegian Cruise Line.

“The [market] penetration has really not moved to where it should have,” Sheehan said. “We have not had real pricing power in this industry for quite a long time, and that is not a good thing for us – or for commissions and your paychecks.

“If we have another 10 years in which the [market] penetration doesn’t move, the guys up here have failed,” said Sheehan, gesturing to the other executives on stage.

New-to-cruise
Bringing first-time cruisers into the fold is critical to attracting new markets, the executives said.

“New-to-cruise is clearly what we need as an industry,” said Donald. “We are capacity-constrained, but we are the greatest value there is in vacation travel.”

Agents’ key role
Travel agents are a key part of attracting those new cruisers, the executives added.

“The agent is paramount for us,” said Pierfrancesco Vago, CEO of MSC Cruises. The line announced a new agent loyalty program along with increased North American sales staff earlier in the day.

“The trade has been the link for the repeater and the newcomer to understand what our brand stands for,” he added.

Vago also hinted that MSC plans to unveil a prototype for a new ship. He called its upcoming new vessel, “the iPhone of prototypes.”

New resources
CLIA too discussed its commitment to agents which includes an unprecedented expansion of agent resources.

“CLIA has decided to wrap our arms around the way we can do things for you and on your behalf,” said Dwain Wall, CLIA’s senior vice president of agency and trade relations.

The association is considering giving member-agents preferential access to fams, more seminars at sea and more invitations to inaugurals, according to Wall.

A new agent-facing website, special cruise guide and more focused training modules are already available online.

Going global
Wall also announced the rebranding of National Cruise Vacation Week to CLIA Cruise Week. The event is set for Oct. 6 to 13.

And for the first time CLIA will go global with its annual sales push, with offers being extended in Australia, New Zealand and Europe.

Christine Duffy, CLIA president and CEO, said the group is forecasting that 21.7 million people will cruise in 2014.

“The global population of cruisers is now nearly the size of the entire population of Australia,” said Duffy.

Cruise line capacity will, for the first time, surpass 500,000 staterooms in 2015, she added.