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Michel Says Revenue Up, Fuel Problematic

May 19, 2006 By: Susan Young Travel Agent


Gregg Michel, Crystal Cruises president, spoke to an audience of top producing travel retailers and media—including Travel Agent magazine—on Friday about Crystal's "State of the Industry." Michel said revenue for 2005 was up 29 percent over 2004, with a 22.5 percent occupancy increase and a 6.5 to 7 percent price increase. When adjusted to take into account the line's reduction to a two-ship from a three-ship fleet, advance sales were up 22 percent up for 2006, versus the same time last year, and up 29 percent for 2007, again compared with the same time frame a year ago. As the ship sailed from Amsterdam to Hamburg, Germany, Michel's presentation in the ship's theater also showed agents the challenges of the cruise business. Fuel increased by 45 percent last year, even after an offset of a fuel surcharge, with Michel calling fuel hikes "really the home wrecker of the 29 percent revenue growth. But despite challenges, he said 2005 was a very good year for operating results. In 2004, Michel said there were 337,500 luxury cruises sold by all cruise lines to passengers 55 and older; in 2007, he projects there will be 512,000 cruises sold, a nearly 15 percent compound growth rate from 2004. He sees tremendous growth in the boomer segment of that market and told the agents that three cornerstones of Crystal's product that will help them sell to all customers are consistency, execution and constant innovation. "It's really innovation that reinforces our product and innovation that keeps us in the hunt," Michel said. What influences a Crystal customer to book? First, he said, it's the cruise line's reputation, then the destination, then the cruise date and length, all followed by value, price, and recommendations of friends and travel agents. In 2007, he pointed out that Crystal has designed many "career friendly" voyages that begin or end on a Friday, Saturday or Sunday, many voyages with overnights in port, and 11 voyages of seven days or less to appeal to working professionals. He gave the audience a sneak preview of the 2008 World Cruise, and while the itinerary is not yet final, he said Crystal was looking at probably departing from Los Angeles, then sailing to the South Pacific and Southeast Asia, perhaps back to India for the first time in four years on the world cruise, and then sailing through the Suez Canal and probably finishing up in Southampton, England. As far as a new ship, Michel said the line is still planning to build one, it does have a shipbuilding team, it has talked with yards, but it wants to "expand in a smart manner and buy right." He said the slippage of the dollar doesn't bode well, but the line will eventually add to its fleet. Right now, he said, the line has more than 2,000 luxury berths and is poised to capture a bigger share of the baby boomer market moving forward.


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