Cruise 2012: Uncertainty at Home and Abroad Dampens Outlook

This is part two in a three-part series examining opportunities and challenges for the cruise industry – and cruise sellers – in the year ahead.

The coming year may be full of opportunity for the cruise industry and cruise sellers. But the 2012 outlook for cruise is not all rosy. Uncertainty – economic and political – clouds the future, especially in an election year and especially given Europe’s debt crisis.

With global markets still fluctuating and the ever-present possibility of violent flare-ups in many destinations, consumers may be hesitant to commit their money to leisure travel this year.

These are the worries and challenges that temper cruise line executives’ optimism for the year ahead, they told Travel Market Report.

Dealing with today’s reality
“On everyone’s mind is the economic situation and the uncertainty that just keeps coming, whether it’s out of Washington, what’s going on with the Euro, or what’s going on with world peace. The volatility of the market scares people. We’ve had a litany of things in the last 12 months that have scared consumers: earthquakes, hurricanes, no electricity, snowfalls. But that’s the world we live in; we’re going to be getting body punches forevermore. It’s a matter of eyes wide open. We need to be ready to overtake any of those challenges. So from a macro standpoint, (the challenge is) being aware of what’s happening, being thoughtful about it and not just reacting.” – Kevin Sheehan, CEO, Norwegian Cruise Line

Hoping for stability
“Historically, election years can be a challenge. Uncertainty is not the best friend of travel. How the election goes determines a lot of things, including the stability of the stock market. So that is the wild card. Also, a lot will depend on what is happening in the Middle East and Europe. Consumers have become more resilient, but they do react when things happen. Right now, there is a lot of negative press coming out of Europe. And, after the Egyptian rebellion, we had a lot of cruise cancellations there, but that business is coming back. If things stabilize overseas, it will be a big help.” – Mark Conroy, president, Regent Seven Seas

Offering reassurance to clients
“Some parts of the world will continue to make headlines because of socioeconomic and/or political situations. As always, cruise lines will never visit ports that pose any risk of danger to guests, crews and staff. Travel counselors will need to be effective at convincing clients that although, for example, they have seen demonstrations in Athens on the 6:00 news, it’s still safe to travel on Eastern Mediterranean cruises. The cruise lines need travel counselors to articulate their appeal and safety to overcome the negative perceptions of that region that clients may have.” – Michael Hirsch, senior vice president of sales, Oceania Cruises

Addressing global markets
“You have to keep an eye on global markets, because as an industry we’re sourcing a lot of passengers from European markets. Whether you’re a European cruise line or an American cruise line, you’re still depending very heavily on European source markets like Spain, Italy, the U.K., France. Given that those markets have some sensitivity right now economically, we need to keep an eye on that and hope that those economic concerns wane and don’t cause any apathy in the consumer’s mind about booking their holiday.”– Rick Sasso, president, MSC Cruises N.A.

Satisfying consumer desires
“Personalizing the cruise experience will be a key challenge. Conformity is out today, and individualized and customized travel experiences are the future. Cruise lines will need to put greater emphasis on giving experiences and access to places and people guests wouldn’t be able to secure or even know about on their own. The more the cruise industry can personalize the travel experience for guests and offer the most choices to customize their vacations to their desires, the more successful we’ll be.”  – Tracy McSorley, director of national accounts, Silversea

Dealing with Europe’s economy
“Tough economic conditions, which vary by market (are a challenge). The euro zone is the most talked about economic challenge at the moment. But the U.K. market still grew by 6% in 2011. So the message of value for money and quality and innovation is working in the U.K. market, but because we’re in the euro zone there’s a great deal of uncertainty with regards to the economy.” – Peter Shanks, president and managing director, Cunard

Worrying about fuel costs
“In addition to continued competition from land-based vacations and the current economic climate, the cruise industry is faced with rising fuel costs, which obviously has a wide-ranging impact on our business.” – Gerry Cahill, president, Carnival Cruise Lines

Please see related story: “Outlook 2012: Value, Pricing & Growth Market Favor Cruise Sales,” Jan. 9, 2012.

Next time: Cruise executives share sales advice for travel agents.