Industry Direction

“The industry continues to reshape and reform, and the big continue to get bigger while even the small operators are consolidating,” said Rod McLeod, senior vice president of marketing at Carnival Corporation, speaking with Cruise Industry News one day after attending his first board meeting at Carnival.

The recent developments come as no surpise to McLeod, nor does the industry’s accomplishment at charting passenger gains in 1996. In fact, McLeod firmly believes that passenger growth will continue “in line with the growth of capacity.”

“What is in question, however, is whether revenues will grow at the same rates, although a positive sign is that the industry has generated more passengers and at the same time increased its yields over the past year, ” McLeod noted.

McLeod termed the Carnival group as a huge potential database that can be capitalized upon to the benefit of individual brands. “Look at the four million people Airtours handled last year. If we can work with them to mutual benefit and tap into these four mill ion customers, the possibilities are huge… “

McLeod also addressed the globalization of North American lines, a stride taken with Carnival Corp. at the forefront. “Today the cruise industry has a wider, more global perspective – there is a Western Hemisphere as well as an Eastern Hemisphere, whereas previously there was a West Coast and East Coast -­ and operators are looking farther afield.”

Using Carnival Corp. as an example, McLeod noted that the organization has a range of brands to appeal to practically every demographic segment in North America and also has access to passenger markets on a virtually worldwide scope.

It is this global presence that will serve as the foundation of McLeod’s marketing responsibilities.

“I’ve always felt that one of the greatest potentials for Carnival Corporation was the coordination of the various ‘fingers’ of the company to come together to achieve greater leverage in the marketplace,” said McLeod. “Broadly, that is what I will explore.”

One focal point will be the potential of passenger sourcing from Europe. In this vein, McLeod will interface with all Carnival brands to identify “what opportunities we have in order to leverage the various brands and work together to increase passenger numbers from that region.”

McLeod regards Europe as a rich source of future cruisers. “Europe is a very well-established travel market. Europeans travel with a level of commitment that Americans haven’t approached yet; they have more vacation time and more disposable income allotted to traveling. Plus, Europeans view travel differently – as an entitlement rather than a privilege.”

Good Indication

In fact, McLeod views the recent fast-paced growth of European lines – which will coincidentally tap the same audiences for business – as a clear indication that there is a market. “I regard the growth of European lines with new players as positive. Yes, they do provide competition for North American operators, but if you’re in business, you have to be competitive. Besides, maybe we’ll learn a few things from them and they’ll pick up a few items from us,” he added.

McLeod also had some general observations about how the industry positions its products. “An important factor in promoting a cruise product is how one positions that product in relationship to the marketplace and what consumers believe your cruises to be. Is brand awareness based on hardware? Or on price? I tend to think it is a combination of all facets that, in total, communicate a style,” noted McLeod.

He continued: “On a vertical plane, there are discernible differences between the brands, such as Carnival Cruise Lines and Holland America Line, in the type of audiences they attract, and I believe travel agents understand them.

“I think some people look at mergers and consolidations as steps toward homogenization, but I don’t think so… I believe it was more confusing 20 years ago.”

What is in store for Carnival Corp.? McLeod indicated that an unlimited number of possibilities exist, with some possibly slated outside of the cruise industry.

A Sure Bet?

“I would be amazed if there weren’t future growth at Carnival Corp., ” he noted. “However, instead of whether we will make future acquisitions, the questions become ‘What do you buy?’ and then ‘What is for sale?’

“Also, of course, is the strategic value of a purchase, what the company gains. For example, Costa is Europe’s leading cruise line, that’s strategic value… We’re not in the market to buy ships…”

The possibilities are wide-ranging. “I don’t think there is any other travel segment that requires as many skill sets to succeed as in the cruise industry. We do a lot: we’re hoteliers; we operate restaurants, casinos and bars; we produce entertainment venues; and we have ongoing relationships with other leisure segments as well as with the trade. Plus, we have sales organizations in North America as well as on an international basis.

“We can apply all those resources to other leisure travel segments,” he said.

As for the future role of the agent distribution network, from his new platform McLeod is decidedly optimistic that savvy retailers will prosper.

However, the way of doing business is changing. “The way travel is being sold is changing and alert travel agents already understand that There will be more direct bookings in the cruise industry, but there is a lot more direct business in the other travel segments.

“Retailers should realize that what is driving the change (by cruise operators) is consumers – the change is not to ‘yell’ at agents, but to relate better to consumers, and it is up to retailers as to how they will relate to those very same buyers,” explained McLeod. In this respect, he noted that agents must begin to explore how consumers want to buy travel, not merely research how many people use agents to purchase travel.

Meanwhile, McLeod will remain actively involved with the retail network. “I personally plan to continue to be active in terms of the trade and my involvement given the importance of the distribution system to Carnival Corp.,” he said.

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