Posted on March 2, 2004 - by Ralph Grizzle

Tsunami!

This year’ wave season produces record swells.

What a difference a year makes. Regular readers of this magazine may recall that last year at this time, we were reporting that the traditionally accelerated North American cruise sales season, known as “Wave,” produced barely a ripple for the cruise industry. Cruise execs and travel sellers alike bemoaned the disappointing realities of their high expectations. That was then.

This year, cruise sales surged during Wave. Cruise execs says sales exceeded their expectations, thus returning some stability to pricing and yields; cruise sellers report robust sales — if not their best years ever.

At a press conference celebrating the launch of Princess Cruises’ Diamond Princess in Nagasaki, Japan, Carnival Corp. Chairman Micky Arison said his company had recently announced that year-to-date bookings were up 59 percent over 2003 — on a capacity increase of only 17.5 percent. Among the key Carnival Corp. brands, Cunard Line reported booking activities tripled in the first few days following Queen Mary 2’s inaugural and that call volume remains at an all-time high.

Arison added that while there were many factors contributing to the surge in bookings across all brands, the primary reasons were the relatively quiet geopolitical situation and pent-up, deferred demand that caused those who put off vacations to enter the market again. Because of high performance figures across all brands, Carnival Corp. raised net-yield guidance, which was from 2 percent to 4 percent, to 5 percent to 7 percent for 2004.

“It wasn’t long ago that people were saying, ‘Well, maybe there will never be a wave season any more because of close-in bookings,” Arison says. “Well, clearly there was — and is, and it continues. We’re seeing a very, very encouraging and strong wave period where ‘pleased’ would be an understatement on how it’s been going.”

Bookings still trend toward close-in sailings (reservations made within 90 days of the cruise departure date), but cruise sellers say they are beginning to see some return to booking far in advance, particularly in the luxury cruise sector. “I already have multiple 14-plus day cruises booked for South America in 2005,” says Nona McCown, of Admiralty Cruises in Pittsburgh, Pennsylvania. “This indicates to me that people are at least moderately comfortable with the direction in which the economy appears to be moving.”

But close-in bookings represent a good portion of the volume at Radisson Seven Seas Cruises, according to Mark Conroy, president and chief executive officer of the cruise line. His company is seeing “great activity for the summer programs in Europe, Bermuda and Alaska.”

Who’s Going Where?
Destinations are benefiting from the resurgence. Perhaps surprisingly, cruise sellers report strong interest in South America as a cruise destination. South America, in fact, may be stealing business from the Caribbean. “I have been in the cruise business for seven years, and I did not have as many bookings as I have had in the past for the Caribbean during the time frame,” says Julie Taggart, of East Town Travel in Milwaukee, Wisconsin. “However, I have seen a huge jump the amount of people looking to go to South America. That seems to be a very popular destination with the client base here at East Town. It would appear that people who wanted to escape the winter here had done the Caribbean multiple times, and they were looking for something different, which appears to be South American or the Mexican Riviera.” She notes that bookings for Alaska cruises were also very strong in January and February.

Reports on Europe are mixed. While the majority of cruise sellers who we talked with report strong interest in Europe, some say that Europe cruises, among the North American market, are not rebounding as expected.

“I have only two European cruises in place for the entire year,” McCown says, “and those are for the Western Med. I have several people considering Baltic cruises for 2005, but nothing for the Eastern Med. People are still not comfortable with the safety in this part of the world, given its potential for sudden violence, and they are also not confident of how Americans are being welcomed in these areas.”

But it’s a different story for Alan Rosen of Boynton Beach, Florida’s Sand & C Travel, where sales are running 60 percent ahead of last year’s. “Europe cruises have gone crazy,” Rosen says, “and there have been significant price increases by the lines.”

Even small ship operators are riding the wave. Viking River Cruises reported its strongest booking month ever in January. Overall sales increased 65 percent compared to January 2003. As of late February, Viking River Cruises, which operates a fleet of 23 river ships worldwide, had booked more than 65 percent of its 2004 capacity.

A Return To Stability?
With sales no longer anemic, cruise sellers across the board say that Wave 2004 represents either a significant increase over last year or a record year altogether. One cruise seller reporting record sales figures is Christopher Tichy, of Cruise & Vacation Center in Monroe, Connecticut. “While the calls are not out of control, the clients are serious about booking,” he says. “Prices are generally higher than last year, and clients aren’t happy about that, but they are paying the higher fares. People are booking in advance again in fear of rising prices. March generally is our best month, and if it is anything like January or February, we will have the best wave season in all my years of business.”

But waves characteristically roll and crest before petering out on shore. The challenge for the cruise industry is to sustain the wave. Cruise sellers say their biggest concern is whether the industry can sustain sales and yields over the course of the year — not just during wave.

“Knock on wood, wave season has been wonderful,” says Don McCann of Cruise Escapes in Dallas, Texas. “January and February were our best in years — if not forever. The booking patterns are back to what they were prior to 9/11. We’ve even seen some ‘05 bookings. I don’t know how long it will continue, but at this point, it feels good.”