Filling the Ships

The basic message is a value proposition, added Drever. “The price today is down from where it was 20 years ago and the quality is significantly better.” “We are filling the ships, although not quite with the yields we would like. But consumers are recognizing the value, and we are doing OK,” said Vicki Freed, senior vice president of sales and trade support for Royal Caribbean International.

The ships are going out full, agreed Steve Hattem, vice president of marketing for CruiseOne and Cruises Inc., which claims to be the largest seller of cruises in North America, with a market share of 5 percent. “We are seeing a lot more transactions, but at lower average cost per booking, so our agents are making it up in volume,” he said.

But sales are not even across the board; longer and exotic cruises are suffering, and the booking window has shrunk, he said.

At press time, Seabourn Cruise Line announced savings of up to 65 percent off the published brochure fares for its 2009 European season.     Hattem said they are upselling suite passengers from contemporary lines to the luxury lines, which have become more affordable.

At Cruise Planners/American Express, Vicki Garcia, senior vice president of sales and marketing, said she is seeing discounting in the luxury market the likes of which she has never seen before. Cruise Planners, which is franchised, has 720 agents across the country.

“The phones are ringing and the pace of demand has picked up,” said John Lovell, vice president of industry relations, sales and revenue management for “The demand is there, but we are behind with business on the books because of the soft fall.”

At the Travel Franchise Group (Travel Leaders, Cruise Holidays, Results! Travel, SeaMaster Cruises, Cruise Specialist and President Roger Block said the companies have started to see a pickup in phone activity, which “is a huge difference from last October and November, but pricing per person is less than last year, so our sales revenue will hurt.”

The year started well for Chris Russo, too. He is the owner of Travel Partner in Broomfield, Colorado and president and chairman of the American Society of Travel Agents.

Things look better north of the border. Vancouver-based Expedia CruiseShip Centers saw its cruise sales go up 18 percent based on revenue in 2008 over 2007. But 2008 was like two different years rolled into one, said Michael Drever, president. The first year was from January to September and the second from October on. Business came off in the fourth quarter, he said. Toward the end of the year, transactions picked up, but the average value went down.

“We have been able to increase both bookings and prices by selling longer cruises and balcony cabins,” Drever said.

Analysts seem to have fallen into two camps: Those who recommend investors get out of cruise stocks, and those who see low stock prices as buying opportunities.

At Stifel Nicolaus, Vice President Steven Wieczynski told Cruise Industry News that the recession can help the industry because the low prices may attract passengers who otherwise may not have cruised. “And once you know that the retention rate is 70 to 80 percent, it can only be a good thing to get more first-time cruisers. In the near term, it may hurt profitability, but in the long term it will be positive.”

And it is time to be aggressive. “Don’t stick your head in a hole,” said Garcia about travel agents. “Get out there and shake hands and kiss babies. This (economic situation) will turn around.”

The basic message is a value proposition, added Drever. “The price today is down from where it was 20 years ago and the quality is significantly better.”

Excerpt from Cruise Industry News Quarterly Magazine: Spring 2009

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