Left to right: Andy Stuart of Norwegian Cruise Line, Vicki Freed of Royal Caribbean International, Dondra Ritzenthaler of Celebrity Cruises, Joni Rein of Carnival Cruise Line, Brian O'Connor of Princess Cruises, Ken Muskat of MSC Cruises and Charlie Dunwoody of Holland America Line. // All photos by Susan J. Young
More capacity is moving to North America from Europe year-round and new ships are launching, so what does all that mean to Caribbean pricing?
That’s a question David Crooks, senior vice president of product and operations, World Travel Holdings, asked seven top cruise executives during a panel discussion at the CruiseOne and Cruises Inc. annual conference on Norwegian Breakaway this week.
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Executives participating were Andy Stuart of Norwegian Cruise Line, Vicki Freed of Royal Caribbean International, Dondra Ritzenthaler of Celebrity Cruises, Joni Rein of Carnival Cruise Lines, Brian O’Connor of Princess Cruises, Ken Muskat of MSC Cruises and Charlie Dunwoody of Holland America Line.
David Crooks, SVP of product and operations, World Travel Holdings
Capacity Jumps
CruiseOne and Cruises Inc. will do its best to sell more Caribbean capacity, but with so many ships coming back to North America, the concern Crooks has is: “At what price point? We want to make sure the price is as high as possible.”
Norwegian Cruise Line (www.ncl.com), which is hosting the conference onboard Norwegian Breakaway, has a 48 percent capacity increase looming for the Caribbean.
The line’s new Norwegian Getaway will begin sailing year-round in the Caribbean starting in January. It’s the largest ship ever home ported at Miami.
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“We’re excited about the growth in the Caribbean,” said Stuart, noting that while it is a little bit challenging, it’s a good thing. In the past, Norwegian had a different type of challenge. “A lot of you forgot about us in the winter, because we weren’t there in the summer,” he said.
Now, that’s changed as the line builds a year-round presence from South Florida. The other plus? “That’s a lot of capacity that’s going to attract a lot of new consumers into the industry,” Stuart stressed.
He said Norwegian’s product is hugely different than it was just five years ago. It has many new ships, enhanced new destination experiences, and an upgraded private island in the Caribbean.
Crooks stressed to the panel that selling on price is onerous and “it’s diminished our role as travel agents.” How do lines avoid compromising pricing to fill ships?
Andy Stuart of Norwegian Cruise Line, Vicki Freed of Royal Caribbean International, Dondra Ritzenthaler of Celebrity Cruises and Joni Rein of Carnival Cruise Line
Gaining New Customers
Royal Caribbean’s Freed said agents should use growth as an opportunity to get more first time cruisers. “It’s so much more cost effective for people to take a Caribbean cruise,” she stressed. Royal Caribbean has new year-round service from Galveston, TX, for example.
With more ships now in U.S. home ports, “it keeps the drive market very active,” said Freed. “The Caribbean is a good way to introduce people to cruising.” She said Europe tends to cater to experienced cruisers.
For Royal Caribbean, people sail to the Caribbean, Alaska and then Europe, in that order, according to Freed. So agents should look at more Caribbean as a greater option for getting first timers, especially those people who are price sensitive to the cost of air tickets. With so many drive ports, they have many opportunities close to home.
Crooks acknowledged that CruiseOne and Crusies Inc. agents continually strive for first timers, but it’s a bit of a challenge. He said it’s important not to just shift share from market to market but rather to build a bigger base of clients.
Celebrity Cruises is one line that doesn’t have new ships in the pipeline; it’s completed delivery of five Solstice-class ships. Celebrity’s Ritzenthaler said while they’re not introducing more new ships in 2014, they’ll be maintaining their capacity in Europe.
“We are thrilled,” said Ritzenthaler, as while some lines are exiting Europe next summer, Celebrity will have six ships in the market and, for the first time, seven-night open jaw sailings that can be combined for seven, 14 or 21 days.
One agent benefit? With new seven-night cruises next year, the premium line is planning a greater focus on North America and getting North Americans onboard its ships in Europe, while at the same time, looking less for sourcing from Spain, Italy and some other European countries.
Also, given the capacity shifts by other lines, Ritzenthaler added: “It’s okay to not have a ship in Caribbean in the summer. It’s absolutely okay to sit this one out.”
Carnival Cruise Lines is bringing both Carnival Legend and Carnival Sunshine back from Europe and will not have a European- based ship next summer.
Given events of this year, the line has struggled with pricing, but it has been willing to sacrifice occupancy to try and keep pricing at a certain level and in giving unsold cabins to the trade, said Crooks.
“First time cruisers are very valuable and this year has been a very bad year for cruise rookies,” Rein acknowledged. She hopes that improves next year.
Princess Cruises’ O’Connor said his line has two new ships, Royal Princess and the soon-to-be-launched Regal Princess in 2014. “We’re also going to be year-round in the Caribbean,” he said.
He said Princess is bringing back the “Getaway” cruise concept, designed to entice first time cruisers. For example, Princess has recently been running full page Getaway ads in South Florida newspapers.
He said short cruises often get discarded as an option by the trade because of the lower fares. He urged the CruiseOne and Cruises Inc. agents to pay attention to the line’s own research, which reveals that short cruises ”are a great opportunity for potential new guests to do brand tasting.”
In addition, don’t overlook frequent cruisers for short offerings. Princess’ research also shows that its “most loyal Captain’s Circle guests wanted an opportunity in between.” Past passengers do want more than just their big cruise in a given year, O’Connor said.
Ken Muskat of MSC Cruises and Charlie Dunwoody of Holland America Line
New Year-Round Player
MSC Cruises’ Muskat said MSC Divina will begin sailing year-round from Miami in November. That step was announced in March and at a time when some other lines weren’t in the year-round Caribbean market. “Then everybody else came in, so thanks very much,” Muskat quipped to the other executives.
That said, “we’re up for the challenge,” Muskat emphasized. He said there will be a lot of buzz and much PR prior to the ship’s arrival in Miami in November.
He told agents to expect a new MSC product onboard, unlike what agents may have seen in Europe in the past. MSC will do much more than in the past for the North American market. An upcoming story here will detail those changes.
That said, MSC has 12 ships, and 11 of those remain in Europe, so Muskat said agents need to not forget that, if clients want an authentic Mediterranean cruise experience in Europe.
When it comes to the industry’s capacity jump and new ships, “the buzz will be great for everybody,” acknowledged Holland America’s Dunwoody.
He said that in terms of price integrity, “home-based networks are less likely to sell on price,” which is good for his line. He noted that with so much capacity, it’s important to have agents to sell the right product to the right consumer, not just to sell them a cruise.
Holland America will have seven ships in Europe next summer. “That’s where we were born,“ noted Dunwoody, referring to the line’s 140-year history and its founding in The Netherlands. “That’s our homeland. We are a European cruise line in how we design our itineraries for 10 or 11 days.”
Many clients now take three or four of these Holland America cruises back to back, and he urged agents to ask clients taking one cruise if they wouldn’t want to add another cruise on top of their seven-day cruise. It can’t hurt to ask, he said, and if they bite, it helps them amortize the purchase of their air ticket over a longer period.
Joni Rein of Carnival Cruise Line, Brian O'Connor of Princess Cruises, Ken Muskat of MSC Cruises and Charlie Dunwoody of Holland America Line
Going for First Timers
But how do you get first timers on Holland America? What do you pitch in terms of an experience or itinerary? Interestingly, Dunwoody says that Holland America’s first timers are not Caribbean cruisers but rather headed to Alaska.
Each year, pricewise “we go out with the best price the market will bear,” said Dunwoody. He also said the line encourages guests to book early, but inevitably there are geo-political or economic events that happen, and “we have to top it off.”
Crooks asked what agents can do to assure clients book and understand the promotions. “Pick a perk,” suggested Ritzenthaler. Agents clapped and cheered, as she explained Celebrity’s recent offering.
The line didn’t reduce the price, thus retaining the level of agent commission, but it provided value-added perks for guests. Ritzenthaler said, “the first thing is to protect the integrity of the price, second protect the commission, and third give consumers a choice. It worked…and we are, knock on wood, having a good year.”
Rein said Carnival has had the same promotion in place since mid-February. The line has extended that consistently as the year has progressed.
She acknowledged the challenges with the fare codes, though, and thanked agents for their patience as the line has worked to make changes.
“It’s been a year of amazing lessons learned,” she said, noting that agents have been “nothing short of heroic” as the line worked to stabilize pricing and fares were all over the map. “We had too many price codes and it was overly complicated,” she said.
With Carnival Conversations, Rein said the line has listened and learned. It’s made changes in many areas. As for upcoming pricing promotions, she said there will be fewer of them, and they will be more intuitive. “We’ll get back to the basic core of what pricing is,” she stressed.
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And agents clapped as she said, “Yes, Virginia there is a Santa Claus. Brochures are coming back.” She also said the line has added agent call-to-action lines on all marketing and advertising materials.
“I apologize for too many changes too fast and not respecting the relationships,” Rein said.
O’Connor said Princess “literally burned our team out,” with way too many promotions with short notice. Look for the line to expand the sales offered and to make them a minimum of seven-day sales. Others will be 30 days.
Agents need time to look at the offers, to study them, and really make something of those, according to O’Connor.
Muskat said MSC typically has a lot of sales with reduced pricing, as its brand is not well known to the North American market. But now, it will focus on the value adds to help protect commission.
He also noted that MSC Yacht Club will never be discounted. “The inventory is less, so we’re able to maintain pricing,” he said. He also pledged to “do more promotions that have a really strong meaning.” The line recently launched a 100 days to MSC Divina promotion.
Holland America has conducted a popular Verandah sale for several years, and Dunwoody said it encourages people to book early. “We encourage people to book early and we try to stimulate the market so we don’t train the consumer to wait,” said Dunwoody. “We’re now letting you know earlier as well.”
“We’ve been very successful with promotions, we’ve had more than we’d like, but we try to mix things up between the Freestyle Dash and the Cruise Event sale,” said Stuart. Industry-wise, “I think we’re going to be in promotional environment for a while longer, but we’re trying to get away from that.”
With more inventory, he stressed to the audience that Norwegian is seeking agents to sell more groups as “a little bit of this [the price environment] is within your control. If we get groups on early… it will prevent a lot of promotional activity. That’s what really stops it from getting ugly late.”
Freed said that the U.S. economy continues to play a part in pricing, but “we’re starting to lower pricing early out,” so then the line can fill the ship and then really increase the rates closer to sailing.
Stay tuned to www.travelagentcentral.com for more CruiseOne and Cruises Inc. conference coverage.