Posted on April 2, 2002 - by Ralph Grizzle

Awash In Wave Season

At an industry gathering in late November of last year, Norwegian Cruise Line CEO Colin Veitch advised travel agents to prepare for a tidal surge of new cruise bookings. His optimistic note fell on deaf ears for some, who wondered if the traveling public would ever venture from their homes to board cruise ships again. “I can’t tell you when it [the recovery] is going to come,” Veitch said. “But it’s going to happen, and it’s going to happen fast. Whatever you do, don’t let yourself be stranded in the rapidly rising tide.” Veitch’s apt metaphor prophesized exactly what has come to pass in the North American cruise market.

The tidal surge began in early January, the beginning of the crucial sales period once known as “Wave Month” and has continued at least until mid-March, when this article was being prepared for press. The intensity of the current sales period has been one of the most sustained in recent memory. For the past two years Wave Month has been followed by a slowdown in sales for February.

But this year the tidal surge has shown no signs of ebbing. Wave Month has morphed into Wave Season. “Here it is March,” says Christopher Tichy of Monroe, Connecticut’s Cruise & Vacation Center, “and we’re smokin’ wheels.”

Travel agents told us that their agencies were breaking new sales records every day. Their agency sponsored cruise shows drew record crowds. One agency owner said that the workload was so intense that his staff threatened to quit unless he hired more agents right away. Travel agents, understandably happy to be busy again, are giddy with delight.

But the rising tide has not lifted all ships. While booking volumes have been strong, they generally have been so for “close-in” bookings only. The books on summer sailings, even this late in the season, show gaps where ships are by no means full.

Moreover, ships that are sailing full are sailing with passengers who paid lower rates than in years past. Accordingly, cruise line yields are expected to remain down for the remainder of the year. “When we got prices down to $399, if people didn’t want to fly they drove, they walked, they pogo-sticked to get on the ships,” Carnival Cruise Lines’ President Bob Dickinson said during a panel discussion at the annual Seatrade Cruise Shipping Convention in Miami last month.

Though Carnival Corporation’s three largest brands – Carnival Cruise Lines, Holland America Line and Costa Cruises – all reported record booking days during Wave Season, the company estimates that net revenue yields for the first quarter of 2002 will be down approximately 8 percent. Royal Caribbean Cruises Ltd., which also reported record booking days, projects similar yield losses.

The good news is that once booked, travelers appear to be sticking with their plans – resulting in fewer cancellations than in previous years Ð at least on the luxury lines. Radisson Seven Seas President Mark Conroy says that last year bookings that held during Wave Season were about 40 percent; this year they are at 61 percent.

Also not riding the crest of a full recovery are West Coast travel agencies. “We’re at about 80 percent of what we were last year,” says Pat Webb, owner of GalaxSea Cruises and Tours in Pomona, California. Webb says booking trends are much stronger in the East than in the West primarily because when cruise lines redeployed their fleets to “drive-to” markets on the East Coast and along the Gulf of Mexico, they neglected the West Coast, which has only one ship doing seven-day cruises, Carnival’s Elation.

Exorbitant airfare has further exacerbated the recovery effort on the West Coast. “Rates are the highest we’ve ever seen,” Webb says. “They’re more than double what we saw two years ago. From Los Angeles to San Juan runs about $800. Even with reduced cruise fares, when we add air packages, cruise passengers are paying about 25 percent more than they did a year ago.”

Security threats that have shutdown LAX on multiple occasions haven’t helped to steady West Coast travelers either. That may explain, at least in part, why Cruise Holidays of Pasadena (California) has not received “a single call about cruising in Europe,” says the agency’s Don Payne.

But across the country, Cruise & Vacation Center’s Tichy says the fast pace of cruise bookings delivered his agency its best season ever. The resilience of the traveling public – or at least the fact that the public resumed traveling so quickly – surprised Tichy and others in the industry.

One sign of the times: Travelguard, the largest travel insurer in the United States, reports that its sales were up 118 percent in January, when compared to the same period last year. The traveling public, it would seem, knows you cannot be overly prepared for the unexpected – or in the case of what Colin Veitch was trying to tell travel agents last year, the expected.