What’s the strongest region for cruising in 2019? Certainly, capacity-wise, it’s been the Caribbean, followed by Europe and then Alaska and other destinations.
But what about performance? How has the year in those regions been for the agency community? From the perspective of Brad Tolkin, co-chairman/CEO, World Travel Holdings: “This was the best year ever in the Caribbean. Pricing went up nicely and the amount of deployment was right-sized with demand.”
Even with the loss of Cuba as a destination and Hurricane Dorian moving through the Bahamas, he still believes this year's Caribbean results will shine “as there was so much business on the books that [those events] couldn’t possibly affect the overall year.”
That said, he acknowledges that the brands have started to see Caribbean pricing "moderate" a bit, and the fourth quarter 2019 in the Caribbean remains a bit more of a challenge. Still, first quarter 2020 Caribbean bookings “look strong,” Tolkin says, but he also notes that there is a lot of capacity yet to book.
Tolkin, Debbie Fiorino, chief operating officer, and Drew Daly, senior vice president and general manager of Dream Vacations, CruiseOne and Cruises Inc., were onboard Royal Caribbean International’s Symphony of the Seas last week for the brands' 2019 National "Dare" conference.
More than 1,000 travel advisors attended, with Vicki Freed, Royal Caribbean's senior vice president of sales, trade support and service, participating for the entire week on behalf of the cruise line.
Alaska Pricing and Results
Certainly, revenue results for 2019 thus far were top of mind. So, if the Caribbean has been fantastic in 2019, what about Alaska?
“I think Alaska was sort of the opposite of the Caribbean year as the Alaska deployment basically outran the demand, so pricing in Alaska for 2019 was much more challenging than in any other region," notes Tolkin.
Alaska for 2020? “It’s too early to call,” he says, telling reporters that "a recent trend over the last 35 to 40 days is that pricing in general is starting to moderate.” That price moderation is also beginning to crop up in both Europe and Caribbean, too.
Alaska's Dawes Glacier in Endicott Arm is shown above. // Photo by Susan J. Young.
Yet, Tolkin stresses "that doesn’t necessarily mean lower prices than last year," but rather just “not as much growth” in pricing year-over-year.
For example, there was strong growth in pricing in Alaska for 2017 over 2016 and 2018 over 2017, and even through the first six months of this year. That's what agents have come to expect, but it's moderating this year.
So, for example, if growth in pricing was 4-to-5 percent last year, “moderating” means it could be 0-to-2 percent this coming year. Still, bookings “look pretty strong” for Alaska 2020, Tolkin says.
North American Sourcing for European Cruises
Tolkin tells advisors that the major cruise lines increasingly are focusing on North American sourcing to fill their ships around the world, thanks to a strong U.S. economy. Just a few years ago, those same cruise lines were much more focused on European sourcing to fill their ships sailing in Europe.
While they still do rely on European sourcing, “it’s North America now that is filling a greater percentage [of cabins/suites] on those European/Mediterranean itineraries,” he reports.
Specializing in FITs and luxury, Mike Hanlon owns a Dream Vacations franchise in Wilmington, NC. He tells Travel Agent that a lot more of his clients are seeking to vacation in the Mediterranean region, much of that desire driven by social media: “I’m seeing a lot of Europe."
Because that's increasingly the case, cruise lines are "putting a little bit of pressure on their North American distributors as they are setting our goals higher and higher and higher to fill those itineraries,” Tolkin notes.
As Royal Caribbean Cruises Ltd. and Norwegian Cruise Line Holdings soon report financial results -- RCL this week, what does Tolkin expect?: “You’re going to see a much more upbeat report from Richard Fain [RCL's chairman and CEO] than we saw from Carnival Corporation because [RCL is] more dependent on the North American business because of their brands."
While Carnival Corporation has numerous North American brands, it also has numerous European brands, including P&O, AIDA and Costa Cruises.
In its most recent quarterly earnings report, Carnival Corp. reported higher revenues and higher third quarter adjusted income, but Arnold Donald, president and CEO, acknowledged: "As a truly global cruise company, with nearly 50 percent of our guests sourced outside of the U.S., we are facing a number of current headwinds, including weakening economies affecting our Europe & Asia segment, a strong dollar and, of course, the IMO 2020 regulations, and we are working to mitigate them.
"We have taken actions to bring capacity in Southern Europe more in line with demand, reflecting the current conditions which have been heavily influenced by ongoing economic malaise, the uncertain geopolitical environment and recent trends in consumer confidence," he noted.
Trends in China Sourcing
While Tolkin says he can't speak from a sales perspective about China sourcing, as WTH doesn't sell in China, he offers that it's interesting to look at the facts involving cruise line actions.
“Norwegian pulled the Norwegian Joy out of China and put $65 million into a brand new ship to Americanize it, for lack of a better word," Tolkin said. "They obviously felt they could get a better APD (average per diem) in Alaska and filled by North Americans,” rather than by selling to China-sourced guests.
Recently, though, Royal Caribbean has announced its newest Oasis-class ship, Wonder of the Seas, will head to Shanghai, China for Chinese sourcing.“So, just looking at the facts, Royal Caribbean is seeing different results out of China than Norwegian,” he said, but added that’s “probably because they’ve been there longer.”
Parting Conference Tidbits
Here are some other tidbits gleaned from the conference:
Summits for 2020: Dream Vacations, CruiseOne and Cruises Inc. will hold a 2020 Land Summit in conjunction with GOGO Vacations in Cabo San Lucas, Mexico.
For the second year in a row, the River Cruise Summit will be on AmaWaterways, this time during 2020's Thanksgiving week on the new AmaMagna.
Also, for the first time next year, the three brands will conduct a Marketing Summit (date to be determined), as well as a first Luxury Summit at sea from August 1-8, 2020 onboard Oceania Cruises' Insignia.
More Active on the Rivers: On European rivers, “I have seen the demographic drop with younger guests in their 40s coming onboard,” Hanlon says, citing Avalon Waterways’ Active Discovery options as a good example of how the river lines are enticing younger, more active guests onboard.
From a psychographic standpoint, some other guests also may not be young but, increasingly, they're both young at heart and physically fit. During a recent Avalon voyage, Hanlon planned to run a half-marathon in one destination and when a 72-year-old fellow guest heard about that, the man ran and completed that half-marathon as well.
Godmother for AmaSiena: When AmaWaterways' new AmaSiena is christened in 2020, WTH's Fiorino (shown in the photo below speaking at this year's conference) will do the celebratory honors as the vessel's godmother.
AmaSiena will sail seven, 10- and 11-night itineraries along the Rhine, Main and Moselle rivers. Sister to AmaKristina, AmaSiena will feature 78 staterooms, most with twin balconies. Many staterooms will be connecting.
In line with the more active demographic/psychographic of river cruise guests, the vessel will carry a fleet of bicycles for guest use ashore. It will also have a fitness center onboard, and a dedicated Wellness Host will assist guests with group fitness offerings.
As part of its 2020 Loyalty Appreciation Cruises, returning AmaWaterways guests have special offers and loyalty appreciation events on a November 4, 2020, departure of the ship's new "Rhine & Moselle Splendors" itinerary.
Stepping Up to Luxury: Did you know 75 percent of all Regent Seven Seas Cruises’ guests in Alaska are first-timers to the brand? It’s true, says Shawn Tubman, the luxury line's vice president of sales, speaking at a General Session late last week.
In other words, Alaska is a good destinational hook for agents to consider for clients ready to move up to luxury.
Here are other interesting factoids Tubman provided about the line's guests: they're 50+ years of age and the average age is 61; 83 percent are married; 66 percent are still working full-time; 37 percent have a master's degree; and household income is $250,00+ with net worth at $500,000+.
Many agents we met on this cruise told us it’s important to remember that clients do change in mindset as their lives evolve. Sometimes, that can be a surprise – as it can come more quickly than expected.
For example, Pris Phillips, an independent travel consultant with Cruises Inc., Columbia, SC, had one client who had previously sailed on Carnival but for the next cruise booked Seabourn – leaping from contemporary right to luxury and skipping the entire premium segment in doing so. “It came out of nowhere,” she told Travel Agent.
Next Year’s Conference: Next year’s Dream Vacations, CruiseOne and Cruises Inc. conference is set to begin November 7 onboard Celebrity Cruises' Celebrity Apex.