Archive for the ‘Cruise & Ferry Info’ Category
Posted on December 1, 2006 - by Ralph Grizzle
Hello Down There
Cruise line executives have long contended that they compete not against one another but against the larger vacation market. That argument, in fact, allowed Carnival Corporation to pass regulatory and antitrust hurdles in acquiring P&O Princess in 2002. In a story that is now well known throughout the industry, Royal Caribbean Cruises Ltd. was left standing at the alter without a bride when Carnival Corporation made a last-minute hostile bid for Princess P&O.
What’s not as well known is that in an attempt to quash Carnival’s bid, RCCL argued in a letter to travel agents that, if approved, the newly merged Carnival/Princess company would control more than 50 percent of all cruise berths, hence imposing an effective monopoly on the market. Carnival countered that it, like all other cruise lines, competed in the overall vacation market, of which cruising represents less than 3 percent. U.S. Federal Trade Commission officials nodded in Carnival Corp.’s favor and approved the merger by a narrow margin.
It should come as little surprise then that cruise lines look to their competitors in the broader vacation market for inspiration and ideas to invigorate their own products. What is it that Las Vegas and Orlando do so well to attract vacationers — and keep them coming back for more?
“We see ourselves in the vacation market, not just the cruise market, so we look at the entire global vacation industry for inspiration,” Carnival Cruise Lines’ President and CEO Bob Dickinson tells Cruise and Ferry Info. “Las Vegas and Orlando are certainly the two most successful vacation destinations in the United States, but we also look at places such as the Middle East.”
Dickinson says Carnival is keeping an eye on tourism developments in Dubai. “There’s a lot of investment there, and a lot of new ideas in the process,” the Carnival chief says. “We look at how consumers react to what’s going on there and elsewhere. We’re just continually looking at trends worldwide.”
Rather than take a leadership role in developing innovative features to attract consumers, cruise lines often are followers. Carl Gustaf Rotkirch, vice president of sales for cruise at Aker Finnyards, characterizes the cruise industry as being “a conservative business” and one that approaches innovative ideas with caution.
“They are usually just applying technology that has become feasible on the landside first, then they think it could be interesting on a cruise ship as well,” he says. “Take the big movie screens on the Princess ships, for example. That was quite a small step, even though as a feature on a ship it turned out to be a very good idea. The rock-climbing walls on Royal Caribbean ships was also quite a good idea, but again it was something that was taken from a land-based activity to a ship.”
Rotkirch credits the cruise industry with doing a good job of “scanning the entertainment industry” to stay on top of trends but adds that many of the attractions on cruise ships only emulate what can be found at land-based vacation venues. Don’t cruise ship passengers deserve something better? Something new? Something they can’t get on land?
Flights of Fantasy
After all, designers are supposed to dream, aren’t they? While it’s true that designers take inspiration from external sources, in the end, it is their minds that conjure ideas of fantasy vessels and fantasy features on vessels. Fantasy, in fact, was the name that Carnival Cruise Lines applied to its early 1990 series of ships. Designed to revolutionize cruising, those ships were the brainchild of Joe Farcus, the industry’s most prolific ship designer.
Farcus, who lives in Miami, says he takes his inspiration for new ship design not so much from field trips to vacation destinations (after all, he lives in one) but from a lifetime of acquired experience. The experiences that influence his work today began to take form when he was 15 years old. It was then, during a summer job of cleaning the pool at the Deauville Hotel, not far from where he lives now, that Farcus acquired “a kind of vision, seeing lots of people in leisure-time activities and watching people sitting by the pool all day.”
The pool did not have a waterslide, the popular feature that Farcus conceived of for Carnival ships, but working at a hotel gave him an inbred intuition for what people are looking for in their vacations. In later years, that intuition was supplemented by travel and by everyday experience. “Every bit of it influences me,” he says. “The experience of the past, the experience of today, the experience of travel and of living — the mix of all of that influences the evaluation process that I use to go from the germ of an idea to the finished idea of a ship.”
Not all ideas germinate inside the mind, however. Some are wholly derivative of a specific place. No flights of fantasy; just replications of real place. And nowhere is that more apparent than on Holland America Line’s new — and newly refurbished ships.
Though the company has its roots in Rotterdam, inspiration for Explorations Cafe can be found just around the corner from its offices in Seattle, Washington. Installed fleetwide as part of the line’s Signature of Excellence program, Explorations Cafe was inspired by Barnes & Noble, says Pieter Rijkaart, director of newbuilds at Holland America Line. And indeed many reviewers have described Explorations Cafe, which features a coffee shop and an area to browse newspapers, books and the internet, as an upscale Starbucks (also headquartered in Seattle) or a Barnes & Noble.
Similarly, the line’s popular reservations-only restaurant Pinnacle Grill was inspired by restaurants in the Pacific Northwest. Surely, someone at the executive level visited these places and thought, “This would work on a ship.”
Captain Nemo, Where Are You?
It’s difficult to predict what may appear on cruise ships of the future. Cruise executives and ship designers are reluctant to talk about what they have tucked away in their minds or on the drawing boards for their own newbuilds. “I’m frankly not comfortable talking about what future ships could look like,” Dickinson says. “After all, why tip the hand to anybody else?”
His chief architect, however, has spoken of dreams of one day putting a roller coaster on a ship; other designers dream of ski slopes wrapped around the funnel.
The industry possibly could do with innovations that cannot be replicated — or cannot be replicated with the same degree of success — by land-based destinations. Cruise lines need only look to Atlantis, the popular resort on Paradise Island in the Bahamas, as testimony for people’s fascination with the underwater world. And exposing people to the underwater world is something the cruise lines could do better than land-based destinations.
Imagine a ship where passengers board the elevator to the bottom deck where they emerge in an underwater lounge with exterior lights piercing the dark sea to cast light on marine life and reefs. Naval architects say it is possible to construct a partial glass-bottom hull to allow for a Captain Nemo-style lounge that would allow patrons to view underwater life.
“I think the sky is the limit,” says Aker Finnyards’ Rotkirch. “Going down to a glass bottom and looking at the underwater world is one thing to think about. An even better idea might be to have a small submarine that you launch from a ship to allow passengers to look at the underwater reefs. In many ways, we are only now waking up the possibilities of what we can apply to cruise ships.”
Sidebar: Ship Or Amusement Park?
In years past, cruising was only about soaking up the sun and having a great vacation, but increasingly ships are becoming entertainment centers. With ever larger ships overwhelming small ports, experienced cruisers often ask, “Why bother getting off the ship at all?”
And cruise lines are looking to provide more reasons for passengers to stay on board. Royal Caribbean International’s Freedom-class ships truly are self-contained entertainment resorts. The line’s Project Genesis will go several strides further, featuring “amazing experiences for people and so many options,” as one Royal Caribbean exec has said, adding that the new ship will be a “show stopper.”
Carnival Cruise Lines’ philosophy, however, takes a different tack. Though the cruise line’s President and CEO, Bob Dickinson, believes in the buzz created by innovative design features, he says that Carnival itself is not a “real push-the-envelope” company. His ship designer, Joe Farcus, adds that: “I would venture to say that most people who cruise buy into the romance of the sea. They want to be on a ship, not just another hotel. The idea of being on a ship has caught them in someway, and therefore the ship needs to be a ship.”
Posted on April 2, 2006 - by Ralph Grizzle
Wave Sends Mixed Signals
Will the 2006 Wave Season be recorded as a good sales period for cruises or a disappointing one? The answer depends.
“There are big Wave Seasons and there are disappointing Wave Seasons, but the Wave Season of 2006 might just go down as the least clear cut,” reads the industry trade Cruise Week. The Miami Herald took a more decisive stand in an article titled “Cruise Sales Off To Slow Start,” which painted a gloomy picture of cruise sales during the first quarter.Not all segments of the industry suffered from sagging sales, however. If there was a soft spot in this year’s winter Wave Season, it was the Caribbean. Reports from cruise sellers around North America indicated lackluster Caribbean sales, with reports ranging from “flat” to “just so-so” sales.
“Wave consists of two things,” says Ove Nordquist, of South Beach Cruises in Miami Beach, Florida. “It’s people buying summer cruises to Alaska and Europe, plus it’s people buying last-minute Caribbean. And the Caribbean wave just wasn’t there this year.”
Nordquist, whose high-rise condominium is just a few blocks away from Miami Beach’s famed Ocean Drive, adds that Florida hotels, by contrast, are as busy as ever. Indeed, the art deco hotels lining Ocean drive were commanding rates as high as $700 per night when we walked the crowded streets there in mid-March.
During the same time period, Nordqvist said he still had access to significant inventory for Caribbean sailings during March, even with only two weeks of the month left. “I haven’t seen last-minute Caribbean this weak for many years,” he says.
Three factors possibly affected Caribbean sales: The weather. “There was no winter,” Nordqvist says. The price point. “Prices were too high leading into Wave season,” he adds. And hurricanes.
“People don’t know there are no hurricanes in the winter,” he says. Travel agents fear that if Caribbean sales are lagging now, just wait until hurricane season blows in again this coming fall.
Prices may be the biggest factor. The Miami Herald article quoted a cruise seller who said that the average price of a cruise was up 9 percent over last year. Although that number could be disputed, what is clear is that Caribbean prices were holding strong through the first quarter of the year.
And for people looking for deals, high prices were a deterrent. “It’s important to get an extra $100 off air or cruise for those who have the impression that a cruise is expensive,” Nordquist says.
Soft sales were limited to the Caribbean, Nordquist says. Other warm-weather destinations sold well. “Hawaii was just incredible, Panama Canal sold out, and Mexican Riviera was fine,” he says.
And while mass-market Caribbean cruises lagged, demand for higher-priced Caribbean and demand for Alaska and Europe cruises exceeded expectations. Overall, the response to Wave was positive. When New York-based Cruise Lines International Association surveyed agents about how would they rated the 2006 Wave season, 70.3 percent responded that this season’s Wave was “good to excellent.”
Moreover, premium and luxury lines appear to be doing well. During Seatrade’s annual Cruise Shipping Convention in Miami this past March, cruise executives from the big public companies were tight-lipped about Wave season, citing disclosure regulations that prohibit them from discussing forward bookings. Smaller, non-public companies, however, were able to discuss forward booking. And those present at the Seatrade convention reported that call volumes, bookings and yields were up.
Oceania Cruises, for example, noted that nearly all of its 2006 inventory was sold prior to the March meeting in Miami. The company’s President and CEO Frank Del Rio said 2006 will be “a fabulous year for anybody who owns a rowboat” and 2007 will be “even better.”
Crystal Cruises and Regent Seven Seas Cruises reported bookings were up on a capacity-adjusted basis. Regent’s 2007 world cruise was already 80 percent booked in March. Likewise, Seadream Yacht Club reported that 85 percent of its 2006 inventory is sold. Even tiny Cruise West is expecting a record year, with more than $100 million in projected revenues.
Even so, there are soft spots among the small ship and luxury sector. Regent Seven Seas reported in early March that third quarter sales were “a bit slow, particularly in the Baltic,” usually a best seller for the line.
Wave is important, because it is estimated that up to 35 percent of all cruises in a year are booked during January, February and March. In late March, too late for inclusion here, the big public companies will release their earnings’ reports, providing a better picture on how this year’s Wave shaped up. We’ll have a better picture then of how Wave performed, but even then the picture will not be entirely clear.
“What happened during this year’s Wave,” Nordquist says, “depends on what segment you looked at.”
Posted on March 2, 2006 - by Ralph Grizzle
Surprise From Seattle
The surprising news from Seattle earlier this year came not from cruise giant Holland America Line but from tiny Cruise West. The Seattle-based company announced that it not only had acquired Clipper Cruise Line’s 138-passenger Yorktown Clipper and 102-passenger Nantucket Clipper but also expects 2006 to be its best financial year ever.
Projecting $100 million in 2006 revenues, Cruise West President and COO Jeff Krida says careful management allowed the family-owned cruise line to strengthen its balance sheet so that it could purchase the two Clipper vessels outright. Cruise West now has a fleet of 10 ships, each carrying between 70 and 138 passengers, with capacity being a key ingredient to the market position for the small ship operator. “Every time 3,000 people get off a huge ship, at least 200 of them decide they want a different experience — more intimate, more outward looking, where they can be a participant in the destination, not just the audience,” Krida says. “That’s where we come in.”
Because of its dedicated following of small ship enthusiasts, Cruise West can chart new destinations (and purchase ships to sail to those destinations) with little risk initially, Krida says. For example, 45 percent are repeat passengers on Cruise West’s first-ever South Pacific and Japan cruises, which commence in March.
Cruise West began to offer cruises between Seattle and Juneau in 1991 before expanding its reach along the West Coast as far south as Panama and across the South Pacific. The two Clipper ships will sail 2006 itineraries published by Clipper, enhancing Cruise West’s reach on the East Coast, Great Lakes and in the Caribbean. “Our new ‘bigness’ will give us efficiencies, but what we stay very drilled down on is the ‘personal’ in our ‘Up-close, Casual and Personal’ operating philosophy,” Krida says. “That’s what our guests treasure and are willing to pay for.”
Posted on September 2, 2005 - by Ralph Grizzle
A Princess In Her Prime
Celebrating 40 years of operation, Princess Cruises awaits its new crown.
Ten years ago, Princess Cruises was gearing up to introduce the 1,950-passenger Sun Princess. The new ship, which made its debut in December 1995, trumpeted not only the start of the race to build ever bigger cruise ships (Sun Princess would be the world’s largest cruise ship to date) but also the dawn of a new era: the birth of the balcony stateroom.
While other cruise ships could boast balcony staterooms (after all, Princess pioneered balconies with the introduction of 150 on Royal Princess in 1984), never before had cruise ships seen balconies in such abundance. On Sun Princess, 70 percent of its outside staterooms featured cruising’ newest luxury.
The line’ ground-breaking efforts reinvented balconies as an affordable pleasure for many passengers instead of a luxury for just a few. By the end of 2006, the company’ worldwide fleet will feature more than 8,000 cabins with balconies (more than 54 percent of the fleet’ total outside cabins).
While some might argue otherwise, some key executives say that Princess’ introduction of balcony staterooms was the greatest thing the company ever did. “The greatest advantage we ever had is we started the balcony revolution,” P&O Princess CEO Peter Ratcliffe told Cruise Week last August. “It’s the best thing Princess ever did. And with the Sun, we started this idea of having alternative dining and small spaces. So we don’t need to spend anything on retrofits, because the ships are very consistent. Literally, you can go from ship to ship, and they have the same theme. There’s always that small ship feel.”
A Princess Is Born
Princess Cruises’ modern balconied fleet is a far cry from the cruise line that started life with a single 6,000-ton ferry chartered from the Canadian Pacific Railway. During the winters of 1965 and 1966, Princess “Pat” operated cruises to Mexico’s West Coast. Those proved wildly popular, despite a few hiccups. On the ship’s inaugural cruise, for example, passenger laundry went shoreside in Acapulco, because the ship wasn’t large enough to have its own laundry on board. The laundry left the ship carefully tagged and bagged but was returned in bulk with only one name on it: “Princess Patricia.” The crew had to set up tables in the lobby to display the laundry so that passengers could claim theirs.
Princess Cruises’ Founder Stanley B. McDonald had chartered Princess Patricia and liked the name so much so that he named his fledgling new cruise company Princess Cruises. The run to Mexico proved to be popular, and after two seasons, Princess chartered an Italian newbuild (the builder went bankrupt; Princess chartered from the controlling bank), naming the ship Princess Italia. Business chugged along, and Princess chartered another ship that it named Princess Carla in 1968.
All the while, Princess was establishing a brand identity, at least on the U.S. West Coast. The logo for the company – a character with a sombrero painted on the stack – fitting for the Mexico focus of the cruise line but not for a focus that would soon include the Panama Canal (1967) and Alaska (1968). So in 1968 McDonald commissioned an artist to develop the seawitch that still characterizes the Princess brand today.
Barely a decade old, Princess was attracting attention when in 1974, the company entered into negotiations with London-based Peninsular and Oriental Steam Navigation Company, the world’s largest and oldest shipping company. Those negotiations culminated in P&O’s acquisition of Princess.
The Love Boat
Much of the company’s success, however, – and indeed the cruise industry’s success – can be attributed to a single event in Princess’ history: the long-running television series, The Love Boat, a moniker that today is still synonymous with the company.
The series began when television producer Douglas S. Cramer, who had created the popular television series Love American Style, decided to transfer his popular comedy vignette series from its studio setting to a cruise ship. The weekly hour-long series was launched on September 24, 1977 and aired every Saturday night until 1986.
At the height of the original Love Boat’s popularity, Princess built Royal Princess (1984), with all-outside cabins and an unprecedented 150 balconies. Two years later, the addition of P&O’s Sea Princess expanded the Princess fleet to five ships. That number would surge when in 1988, Princess acquired Sitmar Cruises and with it, Fair Princess, Sky Princess and Dawn Princess.
In 1989 Star Princess, which was originally under construction for Sitmar, joined the Princess fleet, and in 1991, the line’s Sea Princess was returned to parent company P&O to serve the European cruise market.
The introduction of two new 70,000-ton “superships” — Crown Princess in 1990 and Regal Princess in 1991 — launched yet another era of sea-going innovation, with their distinct dolphin-like exteriors designed by the renowned architect Renzo Piano, of Pompidou Center fame.
This new spate of shipbuilding ushered in a modernization program that saw a number of changes to the fleet, including ships that were retired or reassigned. In 1993, the chartered Golden Princess joined the Princess fleet, replacing the retiring Dawn Princess. Its sister ship, Fair Princess, left the Princess fleet following its 1995 Alaska season and was repositioned to P&O Australia. Golden Princess was retired from the Princess fleet in 1996. In fall 1997, the line’s popular Star Princess was renamed Arcadia and turned over to P&O for British market cruising. In Spring 1999, Island Princess was sold to enter the Asian cruise market, and the original Pacific Princess left the fleet in 2002.
Bigger, Better, New & Improved
In 1995 the line entered a new era of innovative ship design. A new concept in cruising, introduced as Grand Class Cruising and subsequently named Personal Choice Cruising, redefined the idea of a cruise vacation by offering passengers a greater range of dining and entertainment options, introducing the concept of 24-hour dining, and making the luxury of a private balcony an affordable amenity for all.
Beginning with the 77,000-ton Sun Princess, the company began introducing ships featuring multiple dining and entertainment venues and hundreds of balcony staterooms. The shipbuilding program continued with a number of sister ships, including Dawn Princess in 1997, Sea Princess in 1998, and Ocean Princess in 2000.
The most dramatic step in the line’s newbuild program came with the 1998 introduction of the 109,000-ton Grand Princess, which debuted as the world’s largest and most expensive cruise ship. The ship featured three main dining rooms and entertainment lounges, a greatly expanded number of alternative dining venues, and an array of new features, including a wedding chapel, a dramatic nightlclub 15 decks above the ocean and more balconies than on any other cruise ship. This ship proved popular and spawned a new class of ships that incorporated these features — Golden Princess (2001), Star Princess (2002) and Caribbean Princess (2004).
The Princess fleet expansion continued with the introduction of two new ship designs based on these models but on smaller vessels that could transit the Panama Canal: Coral Princess (2003) and Island Princess (2003) were conceived to offer many of the Personal Choice features of Grand Princess. The Grand Princess design also inspired Diamond Princess (2004) and Sapphire Princess (2004).
Princess’ fleet also saw the addition of two smaller vessels, Tahitian Princess and a new Pacific Princess, which were purchased in 2002. Formerly sailing for defunct Renaissance Cruises, these 670-passenger ships diversified the Princess fleet.
During this period, several Princess ships, including Sky Princess, Crown Princess, Sea Princess and Ocean Princess were moved to other companies within the P&O corporation, giving Princess its current fleet of 14 ships. In 2005 another ship, Royal Princess also moved to P&O Cruises and Sea Princess returned to the Princess fleet.
In 2003, Princess’ corporate ownership changed with the merger of parent company P&O Princess Cruises, plc (which had de-merged from the Penninsular & Oriental Steam Navigation Company in 2000) and cruise giant Carnival Corporation. With this new chapter, Princess joined the ranks of the “World’s Leading Cruise Lines.”
Looking Ahead
Celebrating 40 years of operation this year, the Los Angeles area-based company ranks as one of the largest cruise lines in the industry. Highlights for 2006 include a new ship, Crown Princess; a new embarkation port (Red Hook, Brooklyn), a new Caribbean port of call (Turks and Caicos), and new itineraries.
For the first time, Princess will offer 10-day roundtrips from San Juan, nine-day cruises from New York, and 11-day cruises from San Francisco. 2006 also sees Princess largest deployments ever in Asia and in the Caribbean.
A new generation of ships isn’t on the horizon until at least 2010, but don’t expect anything too dramatic. The company has gone on record saying that Princess will not compete in the battle to boast the biggest ship. Expect an evolution, not a revolution. Why change ? Princess is in her prime.
Posted on April 2, 2005 - by Ralph Grizzle
Full Sale Ahead
Last year in this space, our article was headlined “Tsunami!” The story focused on Wave Season, the first-quarter period of intensified North America cruise sales and marketing efforts. This year, the word tsunami has a bitter ring, as it conjures memories of the tragedy that struck so many nations bordering the sea in late December.
Its immediate concerns being those affected by the natural disaster, the cruise industry contributed to relief efforts and pitched in where possible. The cruise industry itself was affected by the tsunami, with some ships having to cancel itineraries. Cruise piers and docks in Sri Lanka were damaged so badly that the future of cruise tourism in that country appeared uncertain.
Our use of the word tsunami last year was meant to emphasize the colossal surge in cruise bookings. We would not use the word this year, and in fact, it would not properly characterize the current market trend.
Wave has been strong, but, say some, not quite as strong as the previous year, 2003. “Bookings are strong, way up from 2003, but not quite as strong as 2004,” says Phil Swartz, owner of Cruise Holidays in Tallahassee. “Profit margins are holding strong, however, slightly up from 2004.”
Profits during the Wave period likely are up for many cruise sellers, primarily for two reasons: Cruise fares are about 15 percent to 20 percent higher than they were last year during the same period, with vessels sailing at capacity (even so, Carnival President and CEO Bob Dickinson maintains that even with the increased pricing, cruises are still underpriced).
Also, at least a couple cruise lines put the quash on rebating, which initially meant a level playing field for agents. “The no-rebating policy that Royal Caribbean instituted in August of last year has stabilized the price picture,” says Ove Nordqvist, of South Beach Cruises in Miami Beach. “Not only have we been selling Royal Caribbean and Celebrity with no rebate, but there was also a marked decrease in in the marketplace of commission-based rebating during the fall and into this year.”
Lately, however, large cruise sellers have come up with creative ways to circumvent the cruise line policies against rebating. Travelocity.com, for example, was offering cruise consumers who book at its site gift cards to large U.S.-based Target stores, with up to $600 value, plus a $100 bonus for using Mastercard. So while cruise sellers can no longer rebate commissions for some cruise lines, they can apparently give away color TVS, clothing, groceries or anything else sold by Target and other stores.
Agents were challenged by the fact that coming into Wave quite a lot of inventory appeared to be booked for 2005. But this could have been little more than the cruise lines saber-rattling. Cruise lines responded that there was still space in Europe, and agents appeared to respond accordingly. “Europe has been selling early like never before,” Nordqvist says.
Many cruise lines emphasized — and continue to emphasize — that Europe this year is a better value on ships than on land-based tours. A recent Windstar Cruises press release reads: “With the US dollar versus the euro, Americans traveling on land-based vacations are spending considerably more to visit Europe these days. A better option for exploring Europe is to sail aboard Windstar Cruises . . . ” (clutching Target store gift cards, no doubt).
Sales in the luxury sector have been riding a cresting wave. Crystal Cruises reported that for the week ending January 10, call volume was up 45 percent over 2004 and bookings were up 62 percent over last year. Even world cruises are prospering. At Crystal’s Century City, California headquarters, Bill Smith, senior vice president of sales and marketing, told us that world cruise bookings on Crystal were running 60 percent ahead of last year. Indicating that the world cruise market is attracting newcomers, Smith said 26 people who had never cruised on Crystal before booked a world cruise this year.
As in past years, Wave is extending into early April. “Wave used run from about mid-January through mid-February,” Nordqvist says. “It was absolutely crazy for three to four weeks. We have seen a gradual change to a longer and longer period, with much less of a peak. To some extent I believe this has to do with relatively less inventory in the Caribbean market compared to other markets. The Caribbean market – and Mexican Riviera – created the peak in January, when cruise lines always sold out their remaining winter inventory. Add that to sales for other cruise regions for sailings throughout the year, and we had a Wave.
“The past couple of years the Caribbean market has not had the same effect, because of healthier advance bookings for the winter season,” he adds. “This year the warm weather across the U.S. winter also meant that remaining inventory has been sold over a longer period. There were no snowstorms in January to make the phones go crazy.”
Nordqvist adds that sales for the short cruise market, 3 to 5 days, has been slower than last year. Of course, no one complains about cruisers opting for longer cruises — including world cruises — or about a protracted Wave extending well into the spring. Sales are healthy, the industry appears poised to raise rates and perhaps add inventory. All in all, this year’ wave has been smooth sailing — make that, smooth “selling.”
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.”
Posted on November 2, 2003 - by Ralph Grizzle
The Advent of Active Shore Excursions
I have few friends who express an interest in cruising. Too boring, say some; too confining, say others. I understand their concerns. I know many perceive cruises to be, in the words of that old industry cliché, “for the newlywed, the nearly dead and the over-fed.” But I also know that those perceptions are greatly skewed. Sailing on the Golden Princess recently, I watched passengers sign up for lessons in web site design, workshops to develop computer skills and classes for snapping better digital photos. On sea days, passengers painted ceramics; master chefs shared tricks of their trade; and retired Princess Cruises’ Commodore Mike Moulin mesmerized audiences with his stories a life spent at sea. Cruise ships today practically buzz with intellectually stimulating activities to keep boredom at bay — on the ship.
Off the ship, however, I, like many others, crave physically stimulating activities. I disdain the thought of joining inert clusters of groups to board a bus and press my nose against a window to watch the passing scenery. I long for invigorating activity in port: bicycling, walking and kayaking — something to get the blood flowing and spirit soaring. That’ why I have been happy to find with increasing frequency, the active shore excursion — a genre that barely existed a few years ago but one that holds great promise to win over my skeptical friends.
“It’ a great opportunity for the cruise lines to attract another segment of the market that does not perceive cruising to be as active as it really is,” says Matt Cervone, owner of Clinton Township, Michigan-based Just Cruises. “There’ a whole adventure market out there that is totally unaware that these activities exist. They don’t realize they can come on a cruise and get this great land-based excursion.”
Three years ago, in fact, Royal Caribbean International passengers disembarking in Copenhagen were presented with but a single choice: to bus or bust. If they wanted to see something of this land of castles and kings, they had to climb on a bus. Even those who wanted only to see the city center, a mere 30-minute stroll from Langelinie Pier, were encouraged to board busses instead of walking along the picturesque waterfront past Copenhagen’ best-known tourist attractions.
“There were no active shore excursions in the whole [Baltic] region three years ago,” says Craig Milan, president of Royal Caribbean International’ cruise-tour division. “But the demographics and mindset changed.”
And so Royal Caribbean contracted with inbound tour operator Copenhagen’ Your Best Destination Partner (BDP) to add walking and bicycling tours to the lineup of bus tours. In the three years since, increasing numbers of cruise passengers come wanting to stroll the sidewalks or straddle a saddle.
“When we started three years ago, only about five people would participate in the bike tours,” says Charlotte Raun, BDP’ sales and project manager. “Now that number is tenfold. It’ the same with the city walking tours. We used to have 25 people from a cruise join in. Now we typically have 150.”
In Stockholm this past summer, an affable young bike messenger launched the eponymous “John’ Bike Tours.” Bicycling is the best way to see European cities, John told me as we and four others pedaled through Stockholm’ city center. “You don’t have to be Lance Armstrong to enjoy a tour,” he added, alluding to the physical prowess of the five-time Tour de France winner. “I had a 77-year-old lady who rode with my tour this summer.”
On Golden Princess this past October, my wife and I signed up for tours that promised similar soft adventure ashore: kayaking in St. John, New Brunswick; bicycling at Bar Harbor, Maine’ Acadia National Park; and cycling the city highlights of Boston. Of course, the majority of passengers still opted for bus tours, but joining us on each of our shore excursions were at least a dozen eager passengers.
None of the tours proved to be overly strenuous for the variety of age groups represented. Nor did any of the tours prove to be too staid for the physically fit. On some excursions, in fact, we were encouraged to go at our own pace and stop at specified points to allow others catch up.
Moreover, active shore excursions generally provide richer travel experiences than passive ones experienced from the seat of a bus. The beauty of the active shore excursion is that you not only travel at just the right pace to absorb the passing scenery but also conclude the trip — a bit tired perhaps — but certainly invigorated by the experience.
Cruise lines have been quick to respond to the emerging consumer desires of active travelers. With its rock-climbing wall and “Get Out There” advertising that shows passengers pursuing all sorts of active experiences, Royal Caribbean is leading the charge to change the way that people perceive cruise vacations. Because of the emphasis on active lifestyles, in fact, Royal Caribbean says the average age of its passengers is now 42 years old, one of the industry’ youngest passenger sets.
In early September, the company also broke with a policy that prohibits passengers from bringing bicycles aboard to do just that. Several dozen passengers wheeled their bikes up the gangway of Majesty of the Seas to participate in a triathlon, held in the Bahamas. The publicity garnered from the event underscored Royal Caribbean’ “Get Out There” campaign. The intended message to consumers was that cruises not only satiate and pamper but also offer opportunities to play and sweat — and that is exactly what many passengers are looking for.
“Three years ago, you wouldn’t have caught me dead on a cruise ship,” says Craig Milan, president of Royal Caribbean’ cruise-tour division and third-place finisher in the triathlon’ male, 40 to 44 age group. Milan says before joining Royal Caribbean, he perceived cruising as an experience where “all you do is eat and lounge by the pool.” Milan’ job has been to help crush that notion, and Royal Caribbean now offers more than 300 active excursions in addition to its on-board facilities that allow passengers to have an active cruise experience.
Before joining Princess Cruises a few years ago, Tori Benson spent her leisure time hiking the hills of Portland, Oregon. “I never thought I would be singing the praises of a cruise line,” says Benson, now manager of the company’ public relations department. But she found herself impressed with the standards of service, the fact that you pack and unpack only once to visit several destinations, and the convenience of not having to worry over the little things — like who is going to pick up the tab for dinner. But she’ also been impressed with the quality of active shore excursions. On a recent Princess cruise, she spent time kayaking in Alaska, an activity she had not associated with cruise ships before joining Princess.
One challenge for the cruise lines, in fact, is to strongly convey that the active lifestyle cruise extends beyond the ship. “So far the perception is that the active experience is on the ship itself whereas the reality is that there are these outstanding active shore excursions,” says Just Cruises’ Cervone.
If the cruise lines can convey the message that they offer active experiences ashore as well as on board, Cervone says, they will open up a whole new market to young, adventure-seeking cruisers.
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Ralph Grizzle is editor of Porthole Cruise Magazine.
Posted on March 2, 2003 - by Ralph Grizzle
Wave Produces No Tidal Surge
This year’s Wave produced barely a ripple on the collective shores of the North American cruise industry. Unlike the last few years, one-day booking records went unbroken. Keyboards in the cruise line public relations departments heralded no headlines such as this one last year: “Carnival Cruise Lines Breaks One-Week Reservations Record Two Weeks In A Row.”
Cruise executives told their stories by repeating words like “uncertainty” and “disappointing,” and prefacing their remarks with phrases like “the challenges we face.”
“Clearly, this has been a more disappointing Wave period than any of us had hoped for right now in this period of uncertainty,” said Royal Caribbean International Chairman Richard Fain in early March. Other cruise execs echoed Fain’s remark. “Our second quarter is shaping up to be a challenge,” Carnival Cruise Lines’ President Bob Dickinson said.
The report from travel agents, however, was mixed. While one North Carolina retailer lamented “the weakest February we’ve had in 10 years,” we talked to several retailers whose businesses ““ or at least, whose bookings – were thriving.
Just Cruises in Michigan reported cruise bookings were up 35 percent over last year but that actual earnings were about the same as last year due to lower prices.
Connecticut’s Cruise and Vacation Center told us bookings were up 100 percent first quarter but that most of the activity has come from an unexpected source: resorts. Why not cruises? “I can’t explain it,” said owner agency Christopher Tichy. “Maybe it’s all the talk of Norwalk virus or people worried about the security of cruise ships. I just don’t know.”
Industry trade publications also told the story. Cruise Week kept pace of Wave week-by-week: Its headlines: “Agents: Spotty Wave Season” (January 22, 2003) and “Slow February for Travel Agents” (February 26, 2003).
Analysts talked of price erosion, shrinking yields and poor performance.
Why all the glum news?
Cruise executives cite the primary reason being the prospect of war with Iraq leading up to ““ and continuing through – Wave. ”Uncertainty is the great enemy of our business,” said Norwegian Cruise Line President and CEO Colin Veitch.
As Carnival Corp.’s stock plunged to a 52-week low last month, execs accused the uncertainty of crushing theirs and other businesses. Cruise leaders feel some sort of resolution with Iraq will mean a rebound in business. “Get it over with, get it done or get out,” said Larry Pimentel, chairman and CEO of Seadream Yacht Club.
But perhaps Pimentel should have sent a similar message to the traveling public: “Get on with it.” Rather than wait for certainty to return, American travelers and businesses may just have to learn to live in a world that is a little more uncertain than was the case during the past couple of decades, when America was isolated from ““ or chose to ignore – world events.
A resolution with Iraq likely will not solve the persistent threat of terrorist attacks and the pervasive fear among some American travelers who still shun airplanes and trips abroad. A sense of certainty guarantees nothing anyway. As they set out on a ship thought to be unsinkable, those cruise passengers who left Southampton, England, April 10, 1912, had little to fear. Frozen water, not war, not a terrorist attack, not some biological or chemical agent, caused those ill-fated passengers to meet their icy demise.
There is an odd note of irony in this year’s dismal news. In 2003, CLIA member lines will introduce 14 new ships. And despite a disappointing Wave season for cruise lines, 2003 could prove to be yet another record year, thanks to the additional capacity and the drive to fill ships at any cost (Costa reportedly was offering seven-day cruises for $140 in February).
“By maintaining our current occupancy levels we will have the opportunity to welcome 1 million more guests on board in 2003 – a potential of 9.6 million passengers worldwide, including 8.3 million from North America,” said Bob Sharak, CLIA’s executive director and vice president of marketing.
There is hope that the coming tide will bring with it a new surge in business. “These are the toughest times we’ve seen as an industry,” said David Drier, CEO of Intrav Inc. and its subsidiary Clipper Cruise Line, “But I think we all agree that it’s temporary. It certainly will get better at some point in time.”
Sidebar: Ship-Building Blues
The somber mood among cruise executives gives shipyards little to cheer about. “Shipyards recognized some time ago the [building] frenzy was over,” said UBS Warburg Leisure Analyst Robin Farley. She noted that ship orders by North American cruise companies are down 70 percent from the peak years. In 1999, for example, 13 new ships were ordered; in 2001, only two ship orders were placed; and in 2002, four new ship orders made the books.
“We have an awful lot of capacity that we’re having to digest over the next few years,” said Carnival Corp. Vice Chairman and COO Howard Frank. “In my mind, we will see a slowdown with new capacity from the standpoint of shipyards. New ship orders will be at a much slower pace than in the past.”
Despite the current gloom, industry fundamentals remain strong, and the long-term outlook remains optimistic for shipyards. Tony Peisley, author of “Global Changes in the Cruise Industry 2003-2010,” cited strong pent-up demand that will drive worldwide cruise capacity from 241,000 to 400,000 berths between 2000 and 2009,
While he acknowledged that exchange rates between the Euro and the U.S. dollar were a stumbling block that made new orders less attractive than during times when the dollar was stronger, he noted that “slots are open, shipyards are anxious to build “¦ discounts already have been offered and accepted.”
Posted on March 2, 2003 - by Ralph Grizzle
Jumping Ship
Now more than three decades old, the North American cruise industry is attracting many fresh faces, some to fill newly created positions, others to replace the old guard. High profiles executives, such as Holland America Line’s Linda Ehlenberger and Royal Caribbean International’s Mike Applebaum, recently resigned their long-held posts as vice presidents of sales for their respective companies.
Holland America Line was conducting an “internal and external” search to replace Ehlenberger, who resigned after 10 years with the company. Royal Caribbean International does not plan fill the void left when Applebaum stepped down earlier this year.
As with Royal Caribbean, Carnival Corporation’s executives tend to have been with the company for “many, many years,” says a Carnival Corp. spokesperson. “And we typically promote from within.”
That said, recruiting new talent from outside the cruise industry tends to be one of the more active segments within the hospitality sector, according to Karine Gill, who leads the Hospitality & Leisure Specialty Practice group for Coral Gables, Florida-based Spencer Stuart, a leading management consulting firm specializing in senior-level executive search and board director appointments.
As the industry matures, Gill says, it is looking increasingly to the outside to fill executive positions. “It’s a trend we’ve seen for the past five or six years,” she says, adding that the search outside the industry serves to broaden available talent.
“In its initial phases, the cruise industry was a very small, very networked group of people,” she says. “Now as it has become a more mature part of the leisure industry, we are now at a point where we’re looking outside. At Spencer Stuart, we do all levels of functional expertise, from the supply chain to operations to culinary to human resources, and for most of these cases, we tend to go outside the cruise industry.”
CFI recently talked with three executives who came from other professions to begin their careers in cruising.
Edie Bornstein, Vice President of Business Development, Cunard Line
Edie Bornstein got her job because of Queen Mary. Not the former British monarch, mind you, but Cunard Line’s $800 million new-build.
Bornstein stepped aboard in the newly created position of vice president of business development in February 2001. She was charged with developing co-branding relationships for Queen Mary 2.
“Cunard Line’s president at the time recognized that Queen Mary 2 was going to be an anomaly in the cruise industry,” Bornstein says. “He felt there would be tremendous co-branding opportunities. He [Larry Pimentel] called and said, ‘Edie, I’ve thought about this with you in mind, and I’d like for you to talk with Pam [Conover] and Debbie [Natansohn] and see if we can work this out,’ We did. Pam and Debbie hired me, and I’ve been here two years.”
After graduating with a bachelor’s degree from Nova Southeastern University, Bornstein worked as a travel consultant for Liberty Travel in New Jersey. She later took a position with System One, the Eastern Airlines entity that became Amadeus. Bornstein remained with Amadeus for nearly 14 years, serving as vice president, cruise and specialty sales & marketing.
Bornstein had an early baptism into the cruise industry. Her role at Amadeus required that she attend ship inaugurals, where she rubbed elbows with cruise line executives. And because she loved to cruise, Bornstein spent all of her vacations on ships. Today, the single mom cruises with her son, who, at age 13, can claim having been on 26 cruises.
Cunard Line possibly could have looked within to fill the new business development position, but Bornstein says she had the experience that Pimentel, Conover and Natansohn were seeking. “They certainly knew my background and the kind of person I was and what they were looking to achieve with this division,” Bornstein says, “They really felt my personality fit the position.”
Since coming on board with Cunard, she has forged co-branding relationships with Canyon Ranch, operators of the award-winning health resorts. Canyon Ranch has designed and will operate the QM2’s spa. She also engaged four-star chef, Daniel Boulud, whose New York restaurant has been rated one of the 10 best in the world, to create signature menus exclusively for Cunard.
Rick Abramson, President, Delta Queen Steamboat Company
As the former director of the Kennedy Space Center Visitor Complex, Rick Abramson has seen more rockets launched into space than he has ships pushed out to sea. “I’m a real new kid on the block,” Abramson says. “But while the cruise industry itself and the marine aspects are certainly new to me, hospitality and tourism aren’t.”
With more than 35 years of hospitality experience, Abramson says he will incorporate acquired management techniques to transform the Delta Queen Steamboat Company. Abramson’s long-time employer, Delaware North Companies, rescued venerable DQ from bankruptcy last year.
Charged with managing America’s oldest continuously operating cruise line and its three paddle wheelers, Abramson says he will employ some of the strategies he brings to the job from other positions he has held. In fact, just as he did at the Kennedy Space Center, he thinks of himself as the steward of a “special place.” Delta Queen’s historic ships, he says, are indeed special places and should be marketed as such.
With that in mind, he says he will steer Delta Queen away from the rest of the cruise industry. One of the company’s biggest challenges, he says, is to avoid being identified with the larger market. “One of our boats is a 75-year-old wooden boat on the historical registry,” Abramson says. “The experience we provide is so much different than a cruise. That’s the challenge, trying to get identified as something different than the blue water cruise experience.”
Abramson does plan to glean from industry models. He will attend industry conferences, and he confesses to wanting to meet some of the “legends” in the industry. “I also need to get on a couple of the big boats to see the programs and what people are gravitating to,” he says.
His course is clearly charted, however. “I’m not worried about how many umbrella drinks we sell,” Abramson says. “I want to make sure we distance ourselves from the rest of the industry and create a really unique experience that people talk about. I don’t have huge advertising budgets, so my advertising is really on the backs of my passengers, and I have to show them a fantastic time so that they say to their friends, ‘Hey, this is really something you need to do.’ ”
John Meszaros, Vice President, Supply Chain Management, Carnival Corp.
Talk about a greenhorn. John Meszaros had never even been on a ship when he took the helm as Carnival Corporation’s vice president, supply chain management. Never been on a ship, but now he’s responsible for the world’s largest fleet of cruise ships.
His charge is to negotiate, contract and partner with the hundreds of vendors that supply Carnival Corp.’ six cruise brands. Until he joined the company, Carnival Corp. had four autonomous companies with four purchasing groups. There was some interaction, he says, but no formal strategy to pull it all together in a single supply chain.
Consolidating the groups under one umbrella made sense, Meszaros says, particularly with regard to helping Carnival Corp., which purchases more than $1 billion in supplies annually, to achieve greater economies of scale.
Meszaros says by consolidating purchases, his department has been able to cut cost while improving quality. “Since I’ve been here, we’ve basically focused on food and beverage,” he says. “We’ve done a great job in taking cost out and improving quality in food and beverage.”
Meszaros’s biggest challenges thus far have been bridging the cultural differences between Carnival Corp.’s different brands ““ Costa and Cunard, for example – and coordinating between the port of calls and Carnival Corp’s ships.
“It’s a little different from land-based supply in that our customers [the ships] continually move,” Meszaros says. “So the challenge is making sure that we have a worldwide supply of services that meet the needs of the ships no matter where they are.”
A resident of Miami Beach, Meszaros served eight years as supply chain vice president for Dallas-based AmeriServe Food Distribution (formerly PepsiCo Foods Systems), a food service distributor for several national chain restaurants, He also spent four years as a consultant with Systems Modeling Corporation, a leading provider of computer simulation software, and three years in operations at Frito-Lay Inc.
“In my old world,” he says, “I did very similar things and there was very similar integration, but I had very defined customers in very defined locations. If we missed a delivery time, the customer was still there. We could be an hour late. But if I am an hour late now, the ships are gone. I’ve never been in a position where the supply chain timing was so critical.”
A tough job, no doubt, with lots of stress associated. We know just the cure: a cruise.
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 à 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.
