After two quarters of growth, “the great American economy is about to roar,” Brad Tolkin, co-CEO and owner, World Travel Holdings (WTH), told an audience of 1,000 travel agents attending the 2017 National Conference of CruiseOne, Dream Vacations and Cruises Inc.
Calling the 2018 outlook, “the perfect sunrise,” Tolkin believes "the economy is a great tailwind."
He cited the Consumer Confidence Index being at a 17-year high, the unemployment rate being at 4.2 percent (versus 10 percent a decade ago) and unemployment claims being at a 44-year low.
Cruise Sales Numbers
Speaking on Royal Caribbean International’s Harmony of the Seas on the conference's final day, Tolkin revealed cruise sales numbers for CruiseOne, Cruises Inc. and Dream Vacations. They're based on departures sold, which is how WTH recognizes revenue.
"Cruise sales prices are up 4.5 percent overall and this is very very good news," he said. Non-cruise sales pricing, such as resort vacations and everything else that travel agencies sell, are up 4.2 percent.
For non-commissionable fares (NCFs), Tolkin said they're "down (-0.7 percent) as a percentage of the selling price." While NCFs themselves are up, because the fares are also higher, "this is the third year in a row that NCFs have fallen as a percentage of the commissionable price of a cruise price, so we are making more money."
Certain lines, including Viking Cruises, don't have NCFs, he noted, and agents clapped. He doesn't see NCFs going away for most other lines but some competitors are monitoring the situation closely as "they do want a healthy distribution system."
Those lines competing with Viking are paying particular attention as agencies make a great commission on the Viking product. He also believes there is no indication Viking will change its policy.
Booking Window Intel
More good news? The average booking window -- the time between booking and departure -- is up 13 percent to 6.5 months, which Tolkin called "phenomenal."
He believes the cruise lines have probably taken that out about as far as they feel comfortable with, as it impacts their ability to yield manage. "So I don't know how much this is going to grow," he said.
But even with the booking window being more than a half year out, there is still a huge percentage of close-in bookings. Almost 30 percent of the business for all three brands is taken within 90 days of sailing.
One benefit to close-in bookings? They help with cash flow, he added, "because you almost get paid immediately. So even though the booking window is growing substantially, do not dismiss the close-in booking market."
The Perfect Sunrise
Tolkin mentioned those two lines and also said that Disney Cruise Line -- for the first time in many years -- has new ships on order, which will double the size of its fleet. “They would not be investing in this industry if they did not sense great momentum, great consumer desire,” said Tolkin.
Other factors for the perfect sunrise? Tolkin said Millennials have travel as part of their DNA. They also have more disposable income than past generations, they're buying homes later in life, they're getting married later and they're having children later in life.
"They just value things differently than [others] did in decades past, and it's giving them that disposable income to travel more," he said.
In addition, “the perspective of the cruise industry is at an all-time high," according to Tolkin. Shipbuilding is unprecedented for the next six yards, and China, Cuba and Europe are proving to be strong.
In terms of China and Europe, “we want these source markets to be successful, because if they are successful as source markets for the cruise industry, the parade of new ship builds with continue and North America will get its fair share of that new product,” he said.
Cuba, he said, is important because it helping raise the price of a Caribbean cruise.
While seeking to avoid being “political,” he cited “The Trump Effect.” Constant coverage by news media about President Trump simply doesn't leave any room in the newspapers for coverage of norovirus or the Zika virus, he said, bringing a lighter moment and laughter from the audience.
But, above all, he told retailers the perfect sunrise is about “the renaissance of the travel professional. It is you."
Hidden Value in Short Cruises
Addressing short cruises of five nights or less, Tolkin urged the agents to look to long-term opportunities for both a new customer and, ultimately, higher priced bookings. "So often I hear [from agents] that I do not want to take a short booking," Tolkin said.
But he stressed two points. Short cruises are often chosen by first-time cruisers, who may book again and again. Plus, many of those who choose a short cruise for their first cruise vacation book a longer mainstream voyage or specialty cruise for their second and subsequent bookings.
WTH research shows short cruise bookers do this on later sailings:
Second Cruise Booking: Nearly 55 percent (of those who originally booked a short cruise) book another short cruise, but nearly 36 percent book a longer mainstream cruise and 9.3 percent book a specialty, luxury or river line product.
Third Cruise Booking: Forty-four percent still book a short cruise, but at this stage, another 44 percent book a seven-night mainstream cruise and nearly 12 percent book a specialty cruise.
Fifth Cruise Booking: Here's the pay-off. Nearly 49 percent book a seven-night mainstream cruise, while nearly 16 percent book a specialty cruise. So that's approximately 65 percent. Only 35.5 percent booked another short cruise.
"So please don't dismiss this short booking as an unprofitable booking as you are building a customer for life," he told the agents.
Obsessive Customer Service
Stressing the need for proactivity, he told the agents to “follow up [with clients]. Don't hide behind an email," he said, imploring them to talk to customers, send birthday cards (not birthday emails), send personal notes and be genuine.
He also talked about a pet peeve he has -- urging agents not to rely on a cruise line or someone else to provide them with information about a future cruise credit or booking. “You should be calling every customer upon their return trip," Tolkin said.
Agents should engage clients in conversation and ask questions about the trip. Certainly, agents should ask, "How was Greece?” and what they enjoyed doing, but he also said: “Never get off the phone without asking if they put a deposit for future cruise. Don’t rely on everyone else [such as a cruise line].”
In a pep talk that focused on what can come out of failure, Tolkin said too many people say "oh we tried that" and it didn't work.
"Just because something didn’t work yesterday does not mean it will not work today or tomorrow," he noted, pointing to Snapple, which for 15 years tried repeatedly to be successful but it took awhile to succeed. They ultimately became a household name.
In terms of referrals, "never forget, you are the brand," he told the agents. "It is all about you and the people you work with -- your associates, your employees...you are the brand."
Agents also should get excited and motivated by the service they provide. "Be confident, be excited and transmit that to your customer," Tolkin said. Also, ask clients to post good comments about the agent/agency on social media.
This is critically important because the agent can post all day long on social media but if he or she has a customer who says something about the agent's fabulous service or arrangements, that really tells the story.
Expressions to Remember
Serving up advice he's given his children, Tolkin related one expression he learned from his grandfather, which speaks to how one lives his or her life: “The tallest crown a man could wear is a good name."
The other expression he likes is this: “If you never hear ‘no,’ you’ll never hear ‘yes.’"
That means ask for the sale...ask for the credit card to hold the booking for them. Tolkin said agents who ask for what they want will have a better chance of receiving it.
Today, many customers in their early 30s are high earners but not rich yet. These are people in their early 30s with a household income of $300,000. They exist in every community, he said.
Entrepreneurs looking for more business also need to go after those potential travelers. Tolkin said being an entrepreneur means being nimble, scrappy, hungry, not afraid to take risk, moving with velocity and never forgetting the customer.
He says when agents make a decision, they must also think of how it will be received. He cited Norwegian Cruise Line (a Norwegian ship is shown above) and its Partners First program as having that focus.
Next year's 2018 National Conference will be on Norwegian Bliss, sailing from Los Angeles in October.
Not every decision by every agency is going to be well received by customers, but he said it's important to make "collaborative decisions" and in "a much more disciplined way.” Above all, Tolkin urged agents to stop looking at the outcomes and following a process without enthusiasm.
Agents must be “obsessive” about their customer focus, accept failures, plant seeds, protect saplings and double down when seeing obvious customer delight. And if agents see a powerful tailwind, Tolkin says: "Embrace it."
Headwinds & Tailwinds
Yes, the headwinds of terrorism, Mother Nature and self-imposed mistakes are out there, but agents need to recognize them and don't stop taking risks. "Embrace the powerful trends and you have a tailwind,” he stressed.
Referring to the cruise industry’s response to Hurricanes Harvey, Irma and Maria and the aftermath and recovery efforts, Tolkin continued: “I continue to get goosebumps and feel really good about how our industry, and specifically, how the three major cruise companies took the lemons that Mother Nature dealt us and turned it into lemonade.”
He recalled that former Senator Jay Rockefeller (D-WV), who retired last year, “had a career of bashing the cruise industry” during his Congressional service.
“I only wish Senator Rockefeller would have stood up when he saw [what the industry had done in the hurricane aftermath] and said ‘well done,’” he said. (See photo above from Royal Caribbean).
Tolkin also thanked Vicki Freed (shown below right), senior vice president of sales, trade support and service, Royal Caribbean International, who was onboard for the entire week of the conference and served as the official trade host.
"Vicki has been in this industry a long time....Vicki has never waivered from her support of the travel agent,” he said. “Never.” That drew a standing ovation from the agent audience.
In closing, he again talked about the strength of the U.S. economy and that tens of millions of customers want to take a cruise vacation and want to take a resort vacation.
"They are seeking the advice of a travel agent to help them plan their dream vacation," Tolkin said. "It is up to you to deliver that remarkable experience.”