Cruise Planners Forum: Del Rio on Why Boomers Rock for Luxury

Frank Del Rio, president and CEO, Prestige Cruise Holdings, parent of Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises, delivered the keynote address at Cruise Planners' first Luxury Forum at the Broward County Convention Center, Port Everglades, FL.

Selling luxury travel is critically important to an agent’s business, but the level of success a travel agent or agency owner achieves depends greatly on “how you interpret the customer’s view of luxury,” Frank Del Rio, president and CEO, Prestige Cruise Holdings, told Cruise Planners’ agents last week. 

As the keynote speaker for Cruise Planners’ first Luxury Forum at the Broward County Convention Center in Port Everglades, FL, Del Rio stressed that luxury is "nearly impossible to define in a neat little package." Instead he said success in selling luxury travel is all about focusing on the customer's needs, wants and desires and, most importantly, what the client considers luxury to be.

Cruise Planners agents who attended this Luxury Forum keynote address were seeking to earn more by selling luxury, and were welcomed to the inaugural year program earlier in the day and offered cruise sales insights by Michelle Fee, the co-owner and CEO, Cruise Planners.


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Del Rio heads a major cruise company with three distinct brands -- Norwegian Cruise Line in the affordable, contemporary segment, but also with The Haven, an upscale ship-within-a-ship enclave; Oceania Cruises, which he founded, in the upper premium segment; and Regent Seven Seas Cruises in the luxury segment.

Laying out the mission for getting more luxury clients, he asked the audience: "How [do you] deliver it in a way that not only satisfies your clients but exceeds their expectation and makes you more money than if you sold a non-luxury equivalent?"

Most importantly, agents need to figure out what degree of luxury the customer is comfortable with, Del Rio stressed, because "one man’s trash is another’s man’s treasure, as the saying goes.” 

He told the agents that if someone booked them at a week-long stay at a "motel something or another," most wouldn't consider that a luxury experience: "But for someone who lives in a tiny fourth floor dated apartment in the center of a crowded city or in a single-wide trailer on the outskirts of nowhere, this motel-something-or-another is likely to be perceived as a luxury experience." 

Boomers Rock for Luxury 

Where should agents look for luxury clients? Boomers have taken a back seat to Millennials, he said. But while Boomers may not be in vogue, "we in this room and in our industry, we rely on the Boomer Generation for the bulk of our business. Don't be mistaken."

Boomers have the two most important factors for luxury travel -- the time and the money. "Don't forget the Boomers," Del Rio stressed.

Both Boomers and Millennials yearn for the authentic and want local experiences and Millennials are now entering their peak earning years. But while Millennials may have the money, they don't have the time, Del Rio stressed: “So on balance, focus on the Boomers."

Still, Millennials, who are 23 percent more interested in going abroad than older generations, are reshaping what travel looks like. They want to see the world not as something they wish for, but as an intricate part of their lives, he said.

"They’re perhaps more emotional than the previous generation," and Millennials make up 20 percent of international tourists, according to Del Rio. "Someday they are going to be the Boomers of today...but today, for the travel business and the luxury sector, it’s Boomers. 

He asked the audience what the average age would be of an ocean cruise traveler. The average age of guests on luxury Regent Seven Seas Cruises is 67, while the average age is 65 years on Oceania.

Even on Norwegian Cruise Line with affordable, Caribbean and shorter sailings, the average age is 50, without counting children in the equation.

In an age of Instagram-worthy moments, people may ask themselves what luxury experience will look best on social media.

Yet, the core values of luxury still apply, he stressed: "Luxury travelers value meaningful experiences. Personal service is also a rare phenomena that is more sought after by those seeking luxury than by the 'Average Joe.'"

He noted that Baby Boomers crave an evolved type of luxury -- exclusive, private, special personalized experiences. Del Rio cited a private tour of the Vatican, having dinner with a famous person or checking off a bucket list item such as running a marathon.

Once of Del Rio's most personal luxury experiences was the painstaking process of designing and building Regent’s new Seven Seas Explorer, with such ultra-luxury features as designer bathroom fixtures, tons of marble, one-of-a-kind Versace china, luxury linens and an $8 million curated art collection, which Del Rio acknowledges he went “a little overboard” on.

The goal was "to wow the guests at every turn, because when you charge $11,000 per night for one suite, you better deliver on all fronts,” he stressed. That suite has sold out on all voyages, and he added that, “we have not yet had a sailing where that suite has not gone out at full price.”

But not only is the ship itself luxury, so is the full experience from the time people board the plane in business class to the limo and beyond. “For the vast majority of people, the Regent experience does ooze out luxury...and people don't have to open their wallets at every turn," he said, noting it’s a product that appeals to customers who own their own private jet or private yacht.

They want the peace of mind that everything is taken care of for them and the customer pays a hefty premium. Again, though, he came back to client desires. For even some of those high-end customers, the Regent experience may not be the right match, as they could easily shell out the bucks for an even more intimate, exclusive private journey.

For other clients, even if they earn $500,000 annually and think they'd love Regent, they simply might not have enough net worth for the Regent experience, he said. 

So agents must carefully sort out the exact type of luxury customer a luxury product is best for. “Luxury has a price and it’s relative," said Del Rio. "Your job is to find out how relative it is."

A New Experience

So how does one define luxury? Is it a new experience, something out of the ordinary, something you save up for, something outrageously expensive or something that's considered special, unique, aspirational, exclusive and so on?

He noted that someone who must have 20-year-old scotch whiskey every night probably sees that as a necessity. They probably could live without it, but it’s something they want, that makes them feel good and makes them feel better about themselves,

“Luxury is something that by definition is rare," he said. "It’s something that not everyone has, something that supports one's status or position in society. Luxury typically carries with it a very high emotional value."  

It’s more important than “stuff” or physical products. It could be as simple as time, solace, space, peace or just spending quality time with friends or family. 

"But luxury is a lot like love," Del Rio believes. "It's very personal. It's very private. You know it when you see it. You know it when it happens. And it's very, very relative."

While luxury as a concept does have certain standards such as expensive materials, great service or exclusivity, delivering it also goes back to the client's specific concept of luxury.

His personal definition of luxury, for example, would mean enjoying something outside of his norm -- such as stealing a few hours on a relaxing weekend with no meetings, no conference calls, no business proposals to review, no reading of financial reports and no thinking of ship operations.

Instead, he'd spend a few hours to relax, probably by the ocean, and perhaps even be surprised by his wife with a cold drink and a sandwich. Del Rio quipped: “I’d pay big money for that luxury.”

Cruise Planners Luxury Forum Photo by Susan J Young editorial use only

Luxury has many different tiers, he stressed, and for many a BMW is luxury, but if people are accustomed to driving a BMW, luxury might be better defined as a Rolls Royce or Bentley

“Business class air is considered a luxury, but for those who typically fly business, then flying [in a private jet] would be a luxury," Del Rio noted. "It's something you're not used to....In other words, it's a treat." 

Today’s luxury is also in the midst of what some experts term "a seismic shift," said Del Rio, meaning clients are moving away from the status of luxury goods and toward entertainment and travel -- choosing "experiences over the continual accumulation of stuff.”

He recently read that "75 percent of the world's personal storage facilities -- the places people rent to put their 'stuff' -- are in the United States, because Americans accumulate more stuff than anyone else." It must be that those bins are all full, he said, noting that people are also walking away from stuff.

"That's good for us in the travel business, because we don't sell stuff," Del Rio said. "We sell experiences...and luxury travel is now the fastest growing segment of the travel industry, outpacing the rest by quite a wide margin." 

He cited a recent Amadeus report that said that over the next 10 years, luxury travel will grow one third percent faster than the overall travel segment with North Americans and western Europeans accounting for 64 percent of global outbound luxury trips.

The affluence in North America and western Europe is still growing. Increasingly too, luxury travel is curated and experience-led. It provides experiences that give the traveler an emotional tie to whatever they're doing -- and usually that's not what others are doing.  

For 2017, clients are seeking luxury adventures in less explored areas and craving customized local experiences wherever they look. "The world is a big place, geopolitical disruptions have been calm, at least in the last 12 months, and folks are willing to explore the nooks and crannies around the world and not just the typical areas," Del Rio said. 

So he urged the agents: “Make sure you cover the entire planet, all those areas may not come to mind immediately as luxury but for that high-end consumer who is done accumulating ‘stuff’ those exotic far-away off-the-beaten-path places are very much in demand...Elite travelers value experiences over tangible ownership.”

Photo courtesy of Cruise Planners

Del Rio acknowledged that the term, luxury, is “quite possibly the most overused and abused word” in the English language, maybe next to "love." 

“Again, there are degrees of luxury,” he said, noting that money is clearly important as an attribute for the luxury traveler, but how much money is another story.

He gave these examples. Some think a Kia at $50,000 is luxury, but then what’s a Mercedes, Jaguar or Aston Martin? Women love their Coach handbags, but luxury for many is Chanel, Hermes or Louis Vuitton

"It depends on your style view,” he stressed. Not all champagne is the same, either. One can order a $100 bottle or a $1,000 bottle. “The important thing is to find out that important balance between what your clients want to pay and can pay," Del Rio told the agent group.  

He also noted that luxury scares many people. It’s like a forbidden fruit, something for which clients often they’re not worthy of. Sometimes they may consider it ostentatious.  "But no one should be afraid of luxury," he said. "Luxury is often more affordable, it’s like ‘love,’ it’s very much a matter of degree."

But seldom is luxury associated with value, he stressed, "and that's a mistake. There is true value in luxury that is sometimes hidden and it comes in different ways, which you as a travel counselor must ferret out."

It could mean spending time with loved ones, lots of space and more. “Luxury branding means customers are getting more and a better value for their dollar," he said. 

Talking about the private, exclusive Haven complex on Norwegian, he said that a family of seven could stay there and spend about $10,000 a week. But guests could get that elsewhere, certainly, so luxury in that case is about the experience and the value.  

Guests in The Haven relax in more space with their large suite with balcony. They have a butler and a private concierge. They receive unlimited free drinks, dining in all the specialty restaurants and shore excursion credits. “In short, they get more for their dollar…and value,” said Del Rio.

In selling any form of luxury, “you have to explain to your regular customers why something that appears to cost more is worth it,” he noted.

He also noted that agents make more commission on higher value-added products with components like drinks or shore excursions. "At the end of the day, you have to look out for yourself as well, right?," he said. 

The audience laughed as he chastised the media for calling every new ship a luxury ship, which is “not true and our version of fake news,” he said. "But depending on one’s definition of luxury and status in life, every ship could be a luxury ship to the right audience," he acknowledged. 

Luxury clients also seek different experiences, depending on what type of trip they're taking -- a romantic journey with a spouse or family vacation with kids and grandchildren. He said the same guest who chooses a Regent-type vacation to Europe or Asia with a spouse also might look to Norwegian's Haven complex for a Caribbean or Alaska cruise with the family.  

Del Rio recently took his family on Norwegian Joy, the line’s new China vessel, and now his grandkids don’t want to do anything else – given the new race track concept on that ship. “Guess where I’m vacationing [next]?” he asked.

So why should agents sell luxury, Del Rio asked?: "Simply because you can make a lot of money. And isn't that what we're all here to do."

A realtor would have to sell four $250,000 homes to make the same commission as that earned from selling only one million-dollar home. He said the same concept applies in travel: “It’s four times more work for the agent for the same amount of money."

In the cruise industry, an average fare for a 10-day European cruise for two might cost $2,000, but on Regent, a suite on a 10-day cruise could run $20,000. “It’s one tenth the work, versus 10 times the work for the same commission,” Del Rio said.  

In the past, clients would walk through an agency's front door and spend face-to-face time in conversing with their travel agent. Today, it’s more tricky with doing business on the phone or online. "You have to do spend more time with a luxury customer," he stressed. 

But, “I think there are more people out there who want to experience a luxury product and just don’t know about it,” he said.

Urging agents to go for it in selling luxury, he said he was happy to meet the people who "are the engine behind our growth." He also closed with these tips. 

  • “Sell value over price, because if you don't no one in this room would ever sell a $25,000 Regent cruise," he stressed.

  • People who can afford luxury goods are often very smart and more likely to be more conscious of value than someone making less money. “Don’t be fooled," said Del Rio, as the "the rich, the wealthy, the well to do [appreciate]  ‘value’ more than the ‘Common Joe.’”

  • “Luxury isn’t Darth Vader. Don’t be afraid of [selling] luxury," he said.

  • "There are a lot of people out there who can afford luxury, they just don't know they can. If they’re afraid of it, get them out of their shell."

  • Most of all, he stressed: "Learn the true luxury products and I guarantee you’ll make a lot more.”

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