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cruise3sixty Chatter: Cruise Executive PanelJune 7, 2010 By: Susan Young
“Don’t Stop Believing”
Strolling across the stage to upbeat “Don’t Stop Believing” music, Dr. Lalia Rach told agents attending a cruise3sixty General Session in Vancouver, BC: “You are proof of resilience.”
She also said “you are proof that people – regardless of how bad it gets – want to travel, see new things, experience what they’ve read about…. And then, they way to go home and boast all about it.”
That brought a chuckle from the audience, and set the tone for the upcoming cruise executive panel discussion entitled “A View from the Bridge.” Dr. Rach, divisional dean at Tisch Center for Hospitality, Tourism and Sports Management, New York University, fired questions to cruise presidents from Celebrity Cruises, Crystal Cruises, Cunard Line, Holland America Line, Princess Cruises and Windstar Cruises.
From "Terry’s Tweet Corner" on a side stage, Terry Dale, CLIA’s president and CEO, also asked a question sent in by one of CLIA’s Twitter followers. Carolyn Spencer Brown, editor in chief, CruiseCritic.com, blogged live on stage during the executive discussion with her blog comments appearing on big screens for agents to peruse.
Meeting Marketplace Challenges
“This has been a year that leaders get to show their stuff,” Rach stressed. “They show their tenacity, their fortitude, their passion. They show how well their vision and strategy works.” She asked the executives if the past year was their most challenging ever?
Peter Shanks, president and managing director of Cunard Line, acknowledged it had been a tough year, but said his firm and the industry were “focused” and had acted quicker, faster, and better in adapting than might have been expected. He also said it taught the industry a lesson that if it had been in even better shape going into a tough year, “we’d have … done even better.”
Diane Moore, president, Windstar Cruises, said the industry was familiar with meeting challenges, such as the terrorism of the 1980s, SARS, other recessions and other crises. But “we had to look at our business,” she said. “We had to say, ‘You can’t rely on one source of business because that might be gone tomorrow and find alternative sources of business.’”
Leadership crises come in all shapes and sizes, noted Gregg Michel, president, Crystal Cruises, who said: “We’re getting stronger every day.” He said most lined have responded to this latest crises by hunkering down, listening to guests and communicating with them. He also said it was crucial to stay in touch with travel agents and communicate with them – and to react to market conditions, such as changing the way the product is merchandised.
Stein Kruse, president and CEO, Holland America Line, acknowledged he was caught a bit by surprise – in terms of the speed of which the downturn occurred. In hindsight, he said things can change very quickly and as an organization and an industry it’s important to learn how to react quickly to change your behavior. “Life is about learning and organizational management is about learning and adapting,” he said, noting that his line is taking those lessons hopefully into a better year this year.
Dan Hanrahan, president of Celebrity Cruises, said the lines and agents learned some lessons they’re not likely to forget: “One is… we’re all pretty lucky that we are in the cruise business. There are a lot of people who were in different businesses who are out of jobs.”
He also told agents to have good people in your organization before you run into a crisis. “We certainly can’t do it ourselves,” Hanrahan said. “It’s smart to have good partners.”
Looking at it another way, Alan Buckelew, president of Princess Cruises, says his line fell back on its core values, the things that have sustained it for four decades. While the line, like others, trimmed costs, it continued to invest in three things -- employees, the cruise product and tools for travel agent partners. “You go back to what made you successful and reenergize those values,” Buckelew stressed.
Kruse agreed, noting that as the CEO “you’re always the chief worrier and always the chief cheerleader.” He said it was important that he not take on the appearance of doom and gloom with employees, but it also was a balance to portray things in a realistic fashion because “you really have to hunker down.”
Shanks said during tough times it’s good to talk with employees and crew members, always remembering: “Their job is not to worry – that is what we [are employed and paid to] do.”
Dealing with a Change of Mentality
Rach said the recession taught consumers the difference between wants and needs: “I want a red Mercedes to drive to work in, but I only need transportation so a [cheap car] would get me there.”
She asked the executives: “What changed for the customers?”
Michel said said no one actually needs a cruise – which brought laughter from the audience. But he said he does believe everyone needs a vacation and cruising is the best way to do that, whether it’s a desire for relaxation, to see the world or to have new experiences. “This is not the time to pull back on the product,” he stressed.
“This is when you prove your brand,” Michel emphasized, noting that “a brand is a promise.”
Looking at the Near Future
Will cruises continue to sell well during the rest of the year and into 2010, asked Rach? Will the market improve further?
“I don’t think we know right now,” said Moore. “All of us would agree, we’re a little more optimistic than we were a year ago.” While most lines had a great Wave Season, business still hasn't normalized, she said, citing the European financial crisis and the U.S. stock market's see-saw. “It’s up and down every day,” Moore stressed.
Still, she said many people who took a break from travel last year are now desiring to travel – but in a more cost effective way. So she asked: “Are they going to take two or three vacations and are they going to spend the same amount of money [that they spent in the past]? I don’t think we’re quite back there yet.”
Hanrahan said if you look back a decade, and saw you what happened after 9-11, SARS, and various wars. “There’s always going to be something.” He says lines and agents must continue to market as people need a vacation. “I think it’s a lot easier to go home and say ‘We aren’t going to remodel the bathroom. We aren’t going to buy the Nano. We aren’t going to buy the red Mercedes," he said. But I don’t think you’re going to go home and say ‘we aren’t going to take a vacation.’”
Educating and Informing Consumers
Shanks says cruising delivers the ultimate value. He urged both lines and agents to go back to the basics as “the experience of a cruise is unbelievable.” Don’t fight the price battle, he counseled the agent attendees: “Just remind people of this incredible [vacation] experience,” he said.
He said Cunard is spending more with travel agents, spending more on talking directly to customers on behalf of agents, and spending its funds more clinically. In marketing, Shanks says agents should focus on value, quality and experience.
“We sold cruises in 1982 at prices more than where we are selling them today,” noted Kruse. ” He stressed that if one goes back and looks at any kind of consumer goods, and look at prices today, those prices have even tripled or quadrupled in price. Yet, the cruise product is also superior to where it was back then. “The product has manifested itself in an incredible array of options… at incredible prices,” Kruse said.
Looking at Yields
Rach asked if the industry was back to 2007 or 2008 yields. A simple “no,” was the answer from Buckelew. “When do you think you might see yield improvement,” Rach asked?
Buckelew said all the gyrations with the stock market in the past month or so have rattled customers, particularly those buying premium products like Princess, Holland America or Celebrity. As customers’ equity has basically evaporated for no reason, Buckelew says it’s not surprising that the last month or so people have become more cautious.
Michel said generally speaking, “the economy is coming back” and people can look to the future with some hope. He again stressed that “every day we’re making – as an industry – millions of people happier than they are at most any other time. That value also multiples when they come ashore, tell friends and family, and people at work.”
Keeping the Customer Engaged
What are cruise executives and their lines doing to keep the customer engaged and coming back for more? Kruse and Hanrahan said lines are adding new ships and continuing to enhance the product. “Getting that word out” is important, said Hanrahan.
Hanrahan also said it’s true that many baby boomers consider themselves the smartest generation that ever lived, and very knowledgeable about everything. “If you’re a travel agent, they’re calling you – and telling you more about what you do,” he said, referring to many boomers’ perspective that they absolutely know best.
He said boomers – himself included – can be a difficult group, but also comprise a generation that’s thirsty for information. With that in mind, Hanrahan said the Internet is becoming more and more important, stressing that Facebook has become a much more powerful tool for lines and agents to use in reaching these customers.
Leading into the social networking discussion, from his perch in “Terry’s Tweet Spot” on a side stage, Terry Dale, CLIA’s president and CEO, read a question from a CLIA Twitter follower: “First time cruisers, we need em, you need em, how we going to get them?”
Moore said Windstar’s product really appeals to people who don’t want a large cruise ship experience; it appeals to anti-cruise clients. She said her lines looks to find people who love resort stays, different destinations or affinity travel, such as for food and wine lovers.
“That’s where I’d challenge all of you because you’ll find success in that,” she says, noting that these potential clients may never have cruised but they all have a love of the same thing. So, agents must find a way to pull them together and that’s how you get newcomers.
Spending part of his career as a travel agent, Shanks says “the magic word is conversion, because travel agents come into contact with so many people in their experiences. He got a jovial reaction from the audience when stressing there are two types of people – “Spice Girls or Martinis.”
“The Spice Girl customer would [look for] ‘what you want, what you really, really want’ … and the Martinis [customer] was ‘anywhere, anytime, any place,’” said Shanks, to raucous laughter from the agent audience. Yet, cruising appeals to both types of clients, he said. Get over the first hurdle, appeal to their desires, and hook them.
“Travel agents have so many clients out there that are curious about cruising, they sure know about cruising in one form or another,” noted Michel. He said some clients think they don’t like cruising, and, yet, many would match up really well with a cruise of some type. “You have to be confident and match your clients with the product,” he said.
Kruse said once the industry and an agent gets first timers aboard, those clients will sail again – whether it’s to the first line they sailed with or another line. “There is an overwhelming tendency to cruise again, usually within the next three years,” he said. “I am hard pressed to think of a destination, where the cruise experience to or in that destination is not superior to a land based vacation," citing Hawaii, the Baltic, Alaska the Caribbean and other destinations.
Tapping into New Technology
Executives also addressed what their companies are doing to use technology to reach the non-cruisers. Kruse said the lines have adapted, they’ve constantly innovated in how they promote. “It’s a great new world we live in,” he said. “The online technology is changing so fast, but we are there.”
Hanrahan says it’s important to keep believing in the value of the travel agent, to use technology to the fullest, and to satisfy customers, first and foremost. “I’m amazed at the number of our guests who move from travel agent to travel agent,” Hanrahan told the agent audience.
“Some of them do it for price reasons [as] they’re shoppers, but some do it because they think they can get better service,” noted Hanrahan. He says, however, that once customers find a strong relationship based on great service they’ll stick with that agent because that’s what they want.
Buckelew says his line encourages guests to book onboard and that gets the agent the second cruise and commission with that client.
Concerns for the Agent
Asked what the executives felt would be their greatest concern for agents in these tough times, Michel took the lead. “I don’t know about concern, but I’d stay in touch with your clients, and stay in touch with them especially during times like these.”
He said clients are looking for advise of all kinds from experts, whether that be financial, diet, home improvement or travel consultants: “Don’t be an order taker. Technology has taken care of that. Man yourself with education and be that source of information for that client. And I think that goes a long way. That’s the future.”
He also said that the more technology focused agents become, on the other hand, the more service focused they must be.
According to Kruse, “travel agents have always faced this market thinking that “is the distribution system really that important to the cruise industry and the answer to that 30 years ago, 20 years ago, 10 years ago and today is ‘yes, it is.’”
But Kruse urged agents to not fall into the trap of selling only on price. Look at what the product is, sell up and sell longer voyages, he said.
Fostering Client Loyalty
Shanks urged agents to proactively recommend to clients what types of accommodations provide the best value and satisfaction. “For all those first time cruisers coming in [to the industry], I don’t know why anybody buys an inside cabin,” emphasized Shanks.
“You can’t see out,” he stressed emphatically. That elicited giggles from the audience, but he drove home the point further by saying: “An inside cabin is dark.” And, he added that often a balcony cabin often doesn’t have that much of a price differential.
“A machine can’t do it,” he said noting that consumers in a recessionary environment increasingly believe that human interface between agent and client is invaluable. They may shop around online for information but, they desire expert advice.
Reaching the Younger Traveler
How are you going to reach that younger generation who will hopefully want to cruise over the next few years? That’s the question Diane Moore, president of Windstar Cruises, asked agents.
“Very honest, if I were in your shoes, that would be my concern, because they think they know everything, right?” Moore said. She said she too has children in their 20s, and understands the mentality. These potential clients think they can find everything out on the Internet. She asked the audience: “So how are you going to attract them? How are you going to get them to come to you and show them your value?”
She noted that the lines are relying on agents, but “if you can’t attract this new generation then I think we’re all in trouble.” She characterizes the new generation generally as 40 and under, people who grew up with the Internet, people who think they can find all those answers online.
“What’s incumbent upon all of you and all of us is to know more than that,” Moore said. “It’s more personal experience [that the agent has first-hand] with our product that will help sell it. You’re going to know something they don’t know and that they can’t find out on the Internet. That’s really what it is but how do you reach them first?”
Kruse pointed out there are 60 million potential new cruisers that were born between 1979 and 1992. That’s a lot of future customers, he said.
Getting a good laugh from the audience was Dan Hanrahan, president of Celebrity Cruises, who said his kids have grown up on the Internet and they don’t understand why they can’t find the dishwasher.
He said, “My point is that they need help. They don’t think they need help but they do need help.” But he said if someone can show them a better and easier way – “and I think easier is really important to that generation” – they will use an agent.
Dr. Rach told the agents that younger clients have to be reached in a way and method they want to be talked to, or “otherwise, you’re never going to reach them.”
Protecting the Environment
The younger generation, in particular, also cares deeply about the world’s oceans, the environment and impact, so Rach also asked the panelists: “When you look at your companies, what are you doing to ensure the health of the oceans?”
“I think what travel agents need to do is be part of getting the word out [on environmental issues], said Hanrahan. He noted that his line and others have environmental stewardship and sustainability reports online and agents should take the time to review those and glean talking points from those to help with client discussions.
“We take the environment very seriously,” he said and “we’re much much better than [what we’re given credit for],” said Hanrahan.
Buckelew said the ships of Princess Cruises and Holland America, are plugging into clean shore power while docked in ports from Alaska to Los Angeles including Vancover and Juneau. “They no longer run their engines while they’re in [those ports],” Buckelew stressed.
“Safety is job one at Crystal and at CLIA,” said Michel. He said safety and environmental management systems are entrenched in the cruise companies’ operation. He says good training, being ready for unexpected issues and leading by example are ways the lines preserve the future of the seas for the next generation.”