While publicly, industry associations and cruise line executives speak of great increases in demand and new and innovative marketing trends, privately, they paint a more realistic and cautious picture of the future. Inside, a round-up of some of their comments, provides an overview of the marketing challenges cruise lines will face in the next decade.

Growth Rate

Estimates for the industry’s annual passenger load growth rate range from 5.5 percent to 30 percent. However, a growing number of cruise line executives are saying that a realistic evaluation may be closer to the 5.5 percent.

In light of the strong sales incentives and discount programs being offered, some executives question whether the 5.5 percent rate is even accurate. When you literally give a product away, they reason, shouldn’t all the ships be filled to the brim? Yet, despite the incentives, many ships are sailing at much less than full capacity. In addition, the 5.5 percent rate also includes the growing number of repeat passengers.

Marketing Costs

Marketing costs are rapidly accelerating, with many executives saying the cost of cruise line marketing already exceeds 20 percent of the price of each ticket sold.

The mass market cruise lines are faced with the heaviest marketing costs because they usually target first time cruise passengers, and when they succeed they may later lose them as repeaters on more upscale ships.

The luxury market has relatively lower marketing costs, with a more defined market and higher profitability to offset costs. If they succeed, they also tend to retain their own passengers as repeaters.

Joint Promotions

While there is a trend toward more joint promotions between the cruise lines and airlines and other participant companies, there has been little if any joint consumer promotion between the cruise lines and their home ports and ports of call. According to marketing executives, this is just one of the many untapped sources for funds and joint programs.

Travel Agents

The cruise lines are overly dependent on independent travel agents to sell their products. As a result the same travel agents are likely to be approached by all the cruise lines.

This seems like a difficult proposition at best, as agents have to work with extremely voluminous brochures from some lines, stay up-to-date by reading several trade publications, attend sales seminars and ship inspections, and take fam cruises.

Concurrently, most of the agents have to sell other travel products and service clients.

Recently, there appears to be increasing friction between some agents’ groups and cruise lines trying to exercise more control over the sales of their product.

Overcapacity – Discounting

According to many executives, the cruise lines may have brought on the biggest problems themselves by growing faster than the market and discounting their product extensively. As long as there is overcapacity, most agreed, there is likely to be discounting, and in light of the number of newbuildings recently announced, overcapacity will be a factor for the foreseeable future.

New Products/Newcomers

New entries in the market face an uphill struggle. The hardest part, executives said is obtaining the capital to hang in for the long term. New lines need a product that is attractive and salable, and a strong, carefully targeted marketing plan to distinguish themselves. Most of all, they need good market research to identify their market(s), refine their product, and sharpen their sales tools.

Club Sea is one line that executives say did not do any market research; and American Hawaii’s withdrawal from Tahiti demonstrated the difficulty of selling a new cruise destination and of servicing conditions in the region.

Uncontrollable Variables

Some factors are beyond the control of cruise lines. Among these, terrorism has the strongest negative effect on the market. Political instability is another element, and public perceptions of safety and health also affect some areas.

Other costs not controlled by the cruise lines include air, fuel and berthing. Crew costs are controlled through registry of convenience.

Future

The key to the industry’s future may depend on the sophistication of the cruise lines’ marketing, as they compete against each other, and other segments of the travel industry.

The biggest challenge is breaking through the marketing clutter, and convincing travellers to take a cruise instead of an alternative vacation, according to many spokespeople. More emphasis must be placed on establishing cruises in the public eye as offering the most pleasure and best value, they said.