As Tough Marketplace Reigns, Agents and Cruise Lines Adapt

In recent weeks, cruise lines have responded to the nation’s changing economic barometer with reduced pricing, consumer perks, schedule shifts, adjustment/removal of fuel surcharges and other proactive tactics. Agents are also scurrying— working the phones and ramping up promotion— much as they did after 9/11.

”Business has been way down,” notes Sabine Harris, owner, Cruise Planners in Tampa, FL. “I worked on a Christmas cruise yesterday only because Princess had a rate you could not pass up, but other than that, I have had very few new orders.” She believes many of her customers are scared, particularly with the current job situation, and they’re not focused on vacations. “I will say, though, the cruise lines are really stepping up with ‘bargains.’ For the folks that have no worries about the economy, they are quite lucky [with the great offers out in the marketplace],” Harris notes.

Jim Sweat, managing director, travel agency services, AAA Auto Club South, also in Tampa, says discounting and a relaxation of rules worked for the industry after 9/11. This time, though, he says, it’s a bit different. “Consumers are worried about their jobs, their 401(k)s, the stock market, their homes’ values…a much different fear,” says Sweat.

“The middle-class portion of our customer base is holding back right now a bit because they are still having difficulty visualizing what their lives are going to be like long-term vs. short-term,” acknowledges Sweat. And, even within the affluent market, “we continue to see some descent activity,” he notes.

Leisure analyst Robin Farley of UBS Warburg recently told her firm’s investors that “October was reportedly a challenging month with cruise lines [being] more aggressive with 2009 promotions to maintain the integrity of the yield curve going forward.” She said if lines promote now and fill more cabins, they might not need to continually lower prices as departure dates near. That could keep both fares and agency commissions from tanking.

Cruise lines are devising increasingly creative promotions. Hours after the U.S. presidential election was over, Celebrity Cruises issued a three-day “Post-Election Sale-a-Bration” on many ships. Through December 31, American Safari Cruises’ is giving agents up to 20 percent commission and passengers a $250-per-person travel credit on select departures of the company’s two Mexico itineraries. Several lines are also fielding veteran and military discounts this month.

Also helping are adjustments or removal of fuel surcharges. Some lines are also moving ships to better capture demand. “Close-to-home cruise options…are clearly the preference of the vast majority of the mainstream vacation market right now,” says Gerry Cahill, president and CEO, Carnival Cruise Lines. So, Carnival will launch year-round cruises from the Port of Baltimore on Carnival Pride starting April 27, 2009, several months earlier than planned. Carnival cited market conditions, economic uncertainty and high air costs to Europe as factors.

Meanwhile, Harris keeps actively promoting. Still, she says: “I don’t remember it being this bad, [even after 9/11]. I hope it gets better with [Barack Obama] in charge.”

The good news? “The U.S. dollar is getting stronger against the British pound and the euro, something we have not seen for a few years,” says Sweat. “Perhaps that should be an important factor in convincing customers that their trip to Europe will be more affordable.” In addition, Sweat says that over the past several weeks, his group’s Alaska consumer events have been very well attended, with more sales interest than anticipated.

Moving forward, Sweat says those agents who have strong relationships with both vendor partners and their customer base will be the first to turn the corner.

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