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cruise3sixty: Cruise Execs Discuss Opportunities, Challenges and the Role of AgentsApril 7, 2014 By: Susan Young
Cruise3sixty Conference Panel Includes Donald, Sheehan, Fain and Vago
|Left to Right: Arnold Donald, CEO, Carnival Corp.; Richard Fain, chairman and CEO, Royal Caribbean; Kevin Sheehan, president and CEO, Norwegian Cruise Line; Pierfrancesco Vago, executive chairman, MSC Cruises // Photo by Susan J. Young|
Getting new North American cruisers onto the gangways of ships remains a big industry challenge, four top cruise executives told travel agents attending the 10th annual Cruise Lines International Association's (CLIA) cruise3sixty conference at Port Everglades, FL, on Friday.
Putting it bluntly was Kevin Sheehan, CEO, Norwegian Cruise Line, who said cruising’s penetration of the U.S. market has not really moved the way it should: “It’s incumbent on us as leaders of the industry to figure it out. We’ve had no growth in pricing in this industry for a long time…It’s critical that we are on the leading edge, not the bleeding edge. If we have another 10 years and [the needle] doesn’t move, then the team up here has failed.”
Also addressing the new cruiser challenge were Arnold Donald, president and CEO, Carnival Corporation.; Richard Fain, chairman and CEO, Royal Caribbean Cruises Ltd.; and Pierfrancesco Vago, executive chairman of MSC Cruises. Christine Duffy, CLIA's president and CEO, moderated that session.
Getting New Recruits
“In terms of new recruits – clearly that’s what we all need as an industry,” Donald said. He said everyone fills their ships every year and there isn’t more industry growth because the lines are capacity restrained and can only fill berths available.
But Donald also stressed that cruising “is the greatest value there is in vacation travel but most people don’t know that. He said the new-to-cruising people “have all types of misperceptions about our industry and about cruising,” such as being afraid of water, being on a ship with 3,000 others or being regimented in activities.
“The idea here is to get the right people on the right brand,” Donald stressed, noting that the industry collectively can promote that diversity, the safety aspects, and cruising as a “happy joyful vacation.” Using guests for testimonials and having travel agents screen prospective guests to be sure they go on the right brand are important, he said.
“When they go on the wrong brand, [they’ll return saying] ‘well cruising is okay,’ and that doesn’t help us, or ‘I had a terrible time’ and that really doesn’t help us,” said Arnold. “We have to really understand our guests, because that’s our future.”
The agents helping clients pick the right cruise, according to Sheehan is “marrying that right relationship and if it is right, it becomes a lifelong situation. He said agents are invaluable when they understand the markets, all aspects of the shipboard and shoreside cruise experience and all the things that make each line different.
Sheehan also said agents also must have passion for the industry and “successful travel agents are not afraid of the technology change” happening rapidly across the globe.
|Arnold Donald, CEO, Carnival Corp.|
Agents and Customers
Do the lines still need agents and will they in the future? That’s a given said Sheehan: “It will never be different…It’s just loud and clear to me.”
Fain stressed that the key to the industry's future -- from both the cruise line and travel agent perspective -- was really understanding the experience of what customers want: “They will give us the answers for what they really want so you’re not leading them to a place where they wouldn’t go.”
“We need to wow guests every time,” said Donald. “That’s our collective task and that’s why we can be chummy up here, because rising tides lift all boats. I want these guys’ ships filled and I want them filled early and they want the same for me.”
Otherwise, he said the lines incentivizing potential guests to travel. “And that’s why you end up with lower commission, and we don’t end up with the rate [we need],” emphasized Donald.
As the new kid on the block and a fast growing line, Vago said MSC Cruises, which is a Mediterranean brand expanding into North America, definitely needs agents who “can pass on a message about what a brand is all about.” He stressed that he flew a long way “just to meet you guys,” with the audience clapping at that comment.
The Role of Innovation
Innovation is the key to getting new guests onboard, stressed Fain who said it's primarily to give guests a better time but also to help erase those old myths about cruising.
But it’s a team effort, he said: “It’s just not the cruise lines but also the travel agents who have had to innovate. You’ve all changed and we’ve had to change as well…We’re innovating as an industry.”
Fain cited the addition of rock climbing walls, onboard surfing and rope courses as innovations but “also, part of that…is to help convey what cruising is,” as only a small percentage of guests actually do the activities, he acknowledged. Fain quipped that he personally had never personally made it to the top of rock climbing wall, but he wanted the agents to know he’d tried.
New types of entertainment such as Blue Many Group and Rock of Ages are also helping innovate and deliver new cruisers. “To just get that halo effect, all of us are doing different things to try and get consumers to see and say ‘oh, that’s interesting,’” Sheehan said. It’s important for travel agents to communicate those changes to entice first timers.
Has the ship itself become “the destination”? The executives' opinions varied. Vago said yes and he'd come to North America to “show our commitment to the growth of our brand.” He said agents will be excited by the line’s new prototype ship just announced, as “it’s the iPhone of the prototypes for cruising.”
Fain doesn’t really concur with the philosophy that the ship is the destination. Destinations still matter immensely he believes: "What’s so special and amazing about cruising is...we bring them to wonderful places and we do that in a wonderful way.”
|Richard Fain, chairman and CEO, Royal Caribbean|
Looking to the Future
When asked about the potential for growth in Asia, the officials said the opportunities are great but it's important to proceed slowly as the market has both rewards and risks. Challenges include populations that know nothing about cruising and the need to deal with many governments and to learn their regulations/processes.
Donald said that moving forward cruise lines must do a better job in educating the news media. For example, norovirus is now called "the cruise virus," he said, despite that fact that annually 6 percent of people on land get it, while only .007 percent of cruisers do.
Most people bring the virus onboard a ship from a restaurant or other public facility, he said, bemoaning that lines must report it unlike hotels and other industry segments.
Overall, though, Donald and other executives were bullish on the industry’s future. Delivering a bit of humor, Donald said that in 10 years, he envisioned that the newest additions to the Carnival Corp. fleet would be the Carnival Airship and the Princess Constellation, with hyper-warp drive propulsion and zero emissions. That created a stir of chuckles from the trade audience.
Fain, in discussing his years in the business said: “What other industry could you be in and be as excited as you were 25 years ago? That’s where I am.”