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Cruises Navigate Into 2014December 31, 2013 By: Susan Young Travel Agent
U.S. home ports will continue to flourish in 2014. The new Norwegian Breakaway (pictured), for example, sails from New York year-round.
As the year draws to a close, “I’d rate 2013 as a good year — not the best — but with the unfortunate events that happened early in the year, we still managed to see strong growth in the luxury and premium markets,” says John Lovell, president of Travel Leaders Leisure Group and Vacation.com. Lovell says the overall luxury market was up a very healthy 18 percent, while the premium segment was up about the same level.
As long as there are no major seismic events moving into 2014 (aka Carnival Triumph or Costa Concordia), “we see a very robust booking environment with us beginning to feel the wind at our back again,” says Brad Tolkin, co-chairman/CEO, World Travel Holdings, the parent company for the CruiseOne and Cruises Inc. brands. It was still a very good year for those brands in 2013, but without the Carnival Triumph situation, Tolkin says, “it probably would have been the best year in cruising [industry wise] in last seven or eight years. We could have had — between capacity growth and increases in pricing — double-digit increases.”
While that incident was brand specific and not industry-wide like Costa Concordia, the fact remains that Carnival is a huge brand with a huge footprint on the industry, especially in the contemporary segment. Still, most agencies report it’s been a good year. Cruise Planners has had a record year all around, according to Michelle Fee, CEO and co-founder of Cruise Planners-American Express Travel. “In terms of cruise sales, we have seen an 18 percent increase in oceangoing cruise sales and expect 2014 to be another successful year.”
Similarly, 2013 was a record year for Avoya Travel. “At this point we have every expectation that 2014 sales will be even better — especially with what we are seeing in terms of advance bookings and trends,” says Scott Koepf, vice president of sales, Avoya Travel.
Prices on the Rise?: Many agencies report strong luxury and premium cruise sales, and even more revealing for the future, “we were also encouraged by the increase in overall yields across these segments, as well,” says Lovell, noting that bodes well for the coming year.
Tolkin cites the double-digit price increases at Celebrity Cruises, noting that its Solstice-class ships have finally allowed the line to get its per diems up to the level the brand has long strived for. In 2013, Tolkin also saw continuation of price premiums for the Oasis and Allure ships over the rest of Royal Caribbean International’s fleet, and “we continue to see very healthy pricing on Norwegian Breakaway and we’re now seeing it on Norwegian Getaway.”
Kevin Weisner, senior vice president, Cruise Holidays, says the future business on the books, as of November 30, was about 7 percent ahead of the same time last year and he also sees a trend toward “parsing the inventory,” or creating incremental price differentials based not simply on stateroom type and deck, but also location within the ship — mid-ship versus forward or aft.
Experts cite a growing interest in cruises that call at more exotic ports. Pictured in Antarctica is Hapag-Lloyd Cruises’ Hanseatic, which will visit southeastern Siberia twice in 2014.
Strong Overall Demand: Travel Leaders Group is currently in the midst of surveying travel agents and approximately 959 of the agents had completed the survey at press-time in early December. That’s about 95 percent of expected respondents. The group shared the preliminary results with Travel Agent; final results will be tallied and released publicly soon.
When the agents were asked to name the five top international destinations they’re booking for 2014, cruising categories (also listed as “destinations” within the survey) were faring extremely well in the list. In fact, perennially, Caribbean cruising had been the group’s number one international “destination” over the past several years. It remains so again this year with 43.3 percent of the agents saying it was the top international destination they’re booking. In addition, Mediterranean cruises came in at 25.4 percent and European river cruising also ranked highly at 21 percent.
Caribbean Capacity Challenge: While the Caribbean remains a popular region for cruising, Jackie Friedman, president of Nexion, a wholly owned branch of Tzell Travel Group, a Travel Leaders Group company, says that during her group’s annual planning meetings with the cruise lines, “there appeared to be considerable concern about the capacity growth in the Caribbean.”
She suspects that the increased competition year-round in the Caribbean will put pressure on the pricing increases that both suppliers and agents so much desire. Lovell’s belief is that the contemporary market has been flat year-over-year and any marginal passenger growth was accompanied by yield compression from strong consumer offers.
“With the increase in capacity in the Caribbean for 2014, we think that there may be some pricing softness next year,” acknowledges Koepf, but he does feel this also will provide chances for some clients to cruise at exceptional rates.
Some positive trending for Carnival Cruise Lines? While opportunities and challenges exist in the Caribbean, “we have started to see the past couple of months, a return in Carnival bookings, although at lower pricing,” Tolkin says.
The First Timer Issue: “The unique circumstances [Carnival Triumph and other mechanical issues on ships] that occurred at the beginning of the year did reduce the number of first time cruisers,” says Friedman. “We’re seeing stronger results with some of the contemporary cruise lines going into 2014.”
Despite that nervousness of first timers, Nexion had an “okay year” in 2013, according to Friedman, who reported year-over-year growth of more than 8 percent. Lovell agrees that first timers are a challenge, but like Friedman, he says “we’re starting to see a strong trend of advanced bookings from these consumers as we enter 2014.”
When agents from all Travel Leaders brands were asked in this year’s survey to compare cruise bookings from first-timers year-over-year, 84.6 percent responded that 2014 bookings from first timers are higher than they were at the same time last year. More than 5 percent said first timer bookings were up by more than 40 percent.
Right-Sized Europe: European capacity is now “right-sized” for voyages that attract North American clients. Previously, the lines went a bit too far in adding too much capacity, but this year, the lines moved to right-size capacity in the region. Lovell says his group’s 2014 Mediterranean sales are performing well ahead of expectations.
“In 2013, we saw a continued improvement in Americans traveling to Europe on cruises and we continue to see that on advance bookings for cruises in 2014,” says Tolkin, who noted that “Americans are loving the opportunity to pay in U.S. dollars.”
Continued Home Port Growth: Another opportunity for sales growth in 2014 comes with the success of North American home ports. Tolkin cited the Norwegian Breakaway being home ported at New York, increases in New Orleans and Texas home porting, and the positioning of Royal Caribbean’s new Quantum of the Seas, also to be home ported year-round from New York, when it debuts in fall 2014.
Greater Focus on Luxury: When Travel Leaders Group asked its agents about the region of the world generates the majority of its luxury travel bookings were focused, 18.4 percent indicated luxury cruises, regardless of region. Roger Block, president of Travel Leaders Franchise Group, says that luxury cruising has shown the most growth for his group this year, followed by growth in upper premium.
“When looking forward, we’re already seeing robust growth for 2014 bookings in the same segments,” Block says. “In the luxury segment, we’re up 21-34 percent depending on the vendor, and we are seeing strong performance in the double digits for the upper premium segment.”
Greg Nacco, vice president, Cruise Specialists, Travel Leaders Group’s wholly-owned luxury cruise agency, reported a trend of luxury lines, and even some of the deluxe-end vendors, creating more in-port experiences to capture a greater essence of the destination. He cites Silversea Cruises, Regent Seven Seas Cruises and Tauck, among others. “While sales are up modestly across all luxury lines, Azamara seems to be skyrocketing, with growth well over 200 percent,” Nacco says.
New or Newly Renovated Ships Create Buzz: “When looking ahead to 2014 trends for the oceangoing cruise industry, we can see that new ships will continue to have a tremendous impact from a consumer interest point,” says Koepf. Many agents say the 2014 game changer, while coming later in the year, is going to be Quantum of the Seas, the latest Royal Caribbean International “wow” ship. Other new ships to debut in 2014 are Regal Princess, launching in summer, and Costa Diadema, launching in fall.
New ships can also help bring in new business that can help offset capacity increases in the Caribbean. Tolkin cites the recent debut of Royal Princess, sailing from Port Everglades, FL; MSC Divina, sailing from PortMiami; and Norwegian Getaway, which will begin year-round cruises from Miami in February 2014.
Enhanced Travel Technology: Using technology to work smarter and more efficiently is a big opportunity for agents heading into 2014. “New smartphone applications make it easy for all travelers to stay connected,” says Fee. “From booking travel easily online to checking social media sites through Wi-Fi to streaming movies on airplanes, the travel industry continues to improve communication methods for travelers.”
More Quick Getaways: Cruises of two to four nights typically have been operated by older ships. Not anymore. Even new ships join in, such as Norwegian Breakaway, which launched in 2013 and will offer some two-day sailings. A recent CruiseCritic.com survey found that short cruises are especially popular with local residents looking for a short break or last-minute deal, and new-to-cruise travelers; 46 percent of respondents said they’d consider a short cruise.
Increased Value for Personal Travel Agent: “Additionally, in 2014 we will continue to see the consumer move back toward the necessity of using a personal travel agent, rather than attempting to book online or through large travel agency call centers,” says Koepf.
Agency and channel support for agents is also on the rise, some executives tell us. “It seems that more of the lines are rethinking their distribution costs and seeing very strong value in what a professional cruise consultant does in terms of delivering customers at a very modest cost of sale,” says Weisner.
Fee says there are many positive things happening within the cruise industry this year, including new ships to help agents sell more cruises; increased consumer satisfaction that brings more repeat business for travel agents; “and the stock market is up, which is always a good sign that people will continue to spend money.”
Both Fee and Lovell say they’re very optimistic about 2014. “We are turning the year up over 10 percent versus the same time last year, and these numbers continue to improve weekly,” Lovell says.
The Hottest Destinations
Remote, Exotic destinations are hot with cruisers, and industry leaders like Roger Block and Michelle Fee are taking notice. “We’re seeing growing interest in cruises for more exotic ports of call,” says Block, president of Travel Leaders Franchise Group. Fee, CEO and co-founder, Cruise Planners, concurs, saying that while some might think of the Caribbean as a primary cruise destination, “today’s itineraries are truly global.”
Michelle Fee, CEO and co-founder, Cruise Planners
She cites the plethora of still remote destinations available to entice “been there-done that” travelers — everything from Iceland to Antarctica to the Galapagos. One up-and-comer is the Russian Far East. Expedition ships, in particular, are increasingly traveling to this region. For example, Hapag-Lloyd Cruises’ Hanseatic will visit southeastern Siberia twice in 2014.
With the hoopla surrounding Sochi and the 2014 Winter Olympics in this seaside Russian city, it’s no wonder that Black Sea voyages are also increasing in frequency and appeal. Mainstream and luxury lines call at Black Sea ports. The beauty of this region is the diversity of ports in Turkey, Ukraine, Bulgaria, Romania, Georgia and Russia.
With the 100th anniversary of the Panama Canal set for 2014 as well as a wider canal and a new visitors’ center, agents may have more to entice clients onboard such a cruise. In the tried-and-true Caribbean, a new cruise port, Banana Coast, along the coast of mainland Honduras is now attracting several lines, while St. Croix is also seeing a renaissance in its ship calls.
CruiseCritic.com says two regions to watch in 2014 are Japan, as travel by land can be both tricky and expensive, making cruising an ideal way to see the country, and Australia, with an increasing number of cruise choices by North American lines.