As the Dream Vacations, CruiseOne and Cruises Inc. conference concluded late last week, Travel Agent talked one-on-one with Brad Tolkin, co-chairman, World Travel Holdings about the present and future for cruising, land vacations and travel advisors.
The European Experience
Can cruising restart safely and protect the safety of guests and crew? Tolkin cited Royal Caribbean Group’s (RCL) earnings call with financial analysts earlier this month, “because I think it’s very instructive,” noting that the group’s brands have successfully operated 70 sailings in Europe. He also pointed to MSC Cruises’ and Costa Cruises’ European cruises.
On the RCL side, “what they said is that the number of [COVID-19] cases are exceptionally low, and it shows that the protocols do work,” Tolkin noted, adding that they’re “doing whatever they possibly can for there not to be a situation where we come online and then have to go offline.”
While RCL acknowledged that's nothing perfect, Tolkin said testing required prior to getting on a ship also helps mitigate the infection rate, and “then, of course, if someone gets infected, they have the protocols” so it doesn’t spread.
Will consumers book a cruise, though? Will they feel comfortable doing so, given that some ships have had positive COVID-19 cases. It's not a perfect world.
Tolkin said it's about the consumer “realizing and being educated that cruising is actually one of the safest environments to be in now with all of the protocols taking place.”
He cited restaurants, for example—whether indoor or outdoor dining—and the fact that “you have no idea who has been tested" and that happens at other venues, too. "To me, there’s not a safer environment because of what this industry has done," Tolkin said, and "with education, I think there will be consumer acceptance.”
In addition, last week, with worsening COVID rates ashore, Italy passed a partial shut-down decree. Yet, "they did not mention cruising and, because of that, Costa can continue its November departures as planned," he added.
Trieste, an important home port for ships departing from Italy is shown above.
That shows "authorities believe that putting health and safety protocols in place can support cruising, despite the current [situation in Italy]," Tolkin believes, adding that "they did shut down many other sectors of the Italian economy. They did not shut down cruising.”
Tolkin says European authorities now recognize what cruise lines have done, but the task remains of dealing with the U.S. Centers for Disease Control and Prevention (CDC) on safety/health protocols and procedures.
“We have to work with the CDC," he noted. "The unknown is, ‘will they take a similar approach where the infection rate is far below what you’re seeing in any part of the country and, therefore, cruising is safe than any other thing the CDC is acknowledging is open?'"
He’s quick to point out: “I don’t know the answer to that, but we’re hoping that takes place. But I want to be fair on both sides, because we don’t know what the CDC is going to do.”
The Role of Advisors
As the 2020 Vision Conference concluded late last week, Tolkin also revealed about what he learned from advisors and his own team. In the past, he said, the conference focused heavily on “hard winds,” such as new technology or marketing plans. And, yes, while some of those things were introduced this year, there was something else much more potent.
There was the strong reaffirmation about "the fortitude of the travel advisor community,” not only for the WTH brands but for others throughout the industry," according to Tolkin, who also was invigorated to see what the WTH brands did this past week in educating advisors and preparing them for the future.
"Travel professionals remain excited about their future," he said. “They know it’s coming," Tolkin said of travel’s return. "The world is in for another bumpy 100 days, but we’ve had some good news, some great news,” citing the CDC’s recent expiration of the "No Sail Order," replaced by a new "Framework for Conditional Sailing Order."
The cruise lines and the CDC are talking, he said, so "we now have a working dialogue and that dialogue won’t stop.”
Encouraged on the vaccine front, Tolkin also mentioned that “even Dr. [Anthony] Fauci, who is still warning us about another tough couple of months ahead, said that there is not going to be one vaccine by Pfizer but multiple vaccines out there and he now sees a clear path to the end of this thing.” (Since our conversation, Moderna announced its vaccine has an efficacy of 94.5 percent.)
By mid-year 2021, if the vaccines arrive, even if not everyone opts to take one, the reported effectiveness rate is “far above what the flu vaccine effectiveness rate is, according to Tolkin. "With multiple companies coming out, they’ll be enough people that will take the vaccine on top of the therapeutics, on top of the protocols, and we will slay this virus.”
Education and Demand
Dream Vacations, CruiseOne and Cruises Inc.’s convention helped deliver encouragement to advisors that the growth ahead is going to be explosive. “The build-up of demand has never been seen before in any of our lifetimes,” he stressed, noting that “we’ve never been shut down as a society like we have been shut down now—not even in a World War.”
Showing the extent of that pent-up demand for cruising? Royal Caribbean's president and CEO Michael Bayley said on a recent social media post that more than 100,000 people had volunteered to sail with the line on its upcoming trial voyages as required by the CDC prior to the launch of regularly scheduled voyages. And that occurred in less than a week.
Tolkin applauded the cruise lines for, despite their significant financial struggles, giving out “supercharged" Future Cruise Credits, or FCCs. That spells opportunity for advisors who track them well.
"This is someone who said: ‘You know, I don’t want my money back, I want the supercharged credit because I am going to go on a cruise again,'" he said. "So, in the cruising industry, there should not be a travel advisor [who] let’s one FCC go out of their sight.”
For non-cruise sales, he suggests advisors plan for two separate periods for 2021. One is the first six months of the year, when travel begins to ramp up, and the last six month of 2021 when travel begins to really kick into gear.
During the first half of the year, people will want to take shorter flights and also to drive to a vacation (such as Fort Lauderdale, FL, shown above), Tolkin said: "The coastal United States vacations will sell and will sell more than they ever have as a percentage.
He believes consumers will avoid vacations where the activities are primarily indoor or have large crowds. What will sell? His answer is all-inclusive resorts in destinations that are close to the United States, such as Bermuda, the Bahamas, Turks and Caicos, Cabo San Lucas, Cancun and the Riviera Maya, Jamaica, Grand Cayman and the Dominican Republic.
“I think those are going to do well because they’re shorter flights in terms of proximity to the United States," Tolkin acknowledged, saying the northern Caribbean and northern Mexico regions, in particular, should be very popular.
The case for all inclusive resorts is that "people do not have to leave the resort to have a phenomenal time, he said. " They minimize their risk appetite.”
For similar reasons, he also thinks home-port cruising—characterized as a cruise from a U.S. port within 500 miles of your home—is also going to be hot, noting that "it did spectacular after the tragic events of September 11, 2001.”
He said that cruise lines are going to place more ships in U.S. home ports—from Boston in the northeastern U.S. to Seattle in the northwestern U.S. “We’re going to see a tremendous surge in home port cruising because people can drive to that market, again mitigating their risk," Tolkin said.
He also characterized cruise ships as floating all-inclusive resorts, saying that people don’t have to get off the ship to have a magnificent vacation—with the high number of food and beverage and entertainment options, calling those “more than most all-inclusive resorts.”
Another plus, he says, is the sizable differences between cruise ships built a decade or more ago and ones that have debuted since: “It’s just a completely different industry, so if we thought home port cruising was going to be what was phenomenal after September 11, 2001, 20 years later the physical product that we have is going to phenomenal in the initial stage of the re-start of leisure travel."
Second Half of Year
By the second half of the year, Tolkin sees a much more return-to-normal environment around the world, not only in travel.
Royal Caribbean International's private island, "Perfect Day at CocoCay"
Yes, he says private isles will play a role in helping restart cruising in the first half of the year, not only because cruise lines can control the onboard environment, but because they’re foreign port calls, something required by U.S. law for foreign flagged ships sailing from U.S. ports.
Yet, for a successful summer Alaska season, if the lines depart from Seattle, they’ll need to have the cooperation of the Canadian government, which currently bans cruising from Canadian ports.
“We can’t just leave from Seattle and return to Seattle under our regulations, so that’s going to be important,” said Tolkin. “But, by the time we get to the second half of the year, with everything that we’ve heard about vaccines and protocols, I’m optimistic that the Canadian government will be open minded. “
A Gradual Ramp Up
Late last week, Windstar Cruises extended its list of cancelled voyages and delayed its restart into the spring and even early summer, depending on the ship. Will advisors see more of that from other lines too?
Yes, “we will see more of that,” believes Tolkin, noting that the first six months of 2021 will be a gradual ramp up. “Even by July 1, we’re not looking at anywhere close to 100 percent capacity."
The goal is to have 90 to 100 percent of cruises operating by the end of 2021, according to Tolkin, and "we’ll have a phenomenal 2022 and we’ll do it right.”
Will the lines slash pricing to fill ships? Stressing that the cruise lines have been very disciplined in pricing in general, Tolkin said no one wants to go back to the pre-March 2015 philosophy in which was a price-to-fill philosophy, versus the market-to-fill approach: “By keeping the number of ships down and occupancy going to be either mandated or self-imposed, it [also] will allow for pricing to be up."
Also advisors should not expect an immediate return for the new-to-cruise market. Most FCCs are held by cruise veterans. “Those are people that booked a cruise and want to take a cruise,” he stated.
While the new-to-cruise guests are important for the industry moving forward, as the cruise industry was growing inventory by 5 to 7 percent every year, “it would be naive for us to think the new to cruise market is going to snap back” immediately, Tolkin said. One helpful factor, he cited was that some ships have now left the marketplace as cruise companies have trimmed their fleets.
The Human Touch
One critical point to be made, said Tolkin is that “the consumer is craving the comfort and advice of a professional travel advisor.”
He pointed out that in WTH’s own business lines, the Dream Vacations, CruiseOne and Cruises Inc. brands are a smaller division within WTH, yet on a percentage basis over the past eight month, the business from these brands has been better than the other cruise divisions of WTH.
The interest in becoming a travel advisor is still good, too. In 2008 and 2009, during the recession, many people were displaced from jobs, much as they are today. But Tolkin says that back then WTH’s travel advisor franchise division and its independent contractor network grew—and "very nicely"—and he predicts that will happen again.
One plus for those seeking to become a travel advisor today, versus more than a decade ago, is that now everyone knows that they can really work from home, Tolkin says, noting that the Internet connectivity issues and other factors are "now gone." People have become accustomed to and skilled at effectively working from home.
As for the number of new travel advisors that will be joining the industry, he says: “It’s going to grow phenomenally for everyone.”