Tolkin Tells Cruise Sellers He's Bullish on 2019

By Susan J. Young Oct 29, 2018 9:00am

“Bullish on 2019” is how Brad Tolkin, co-chairman and co-CEO, World Travel Holdings, describes the outlook for the coming year. He believes agents should dismiss the current volatility in the stock market because in the course of history, October is typically the most volatile month.

What’s more important? The stock market is still higher than during the same period in 2017, people had well-performing 401Ks in 2017 and "the foundation of our economy is incredibly strong,” Tolkin emphasized.

Citing an almost 50-year low in the unemployment rate, he also showed that the economy has posted two back-to-back quarters of more than 3 percent growth in the gross national product (GNP), plus wages are rising and consumers are spending more money.

In addition, cruise lines are posting record earnings. Looking to 2019, Royal Caribbean Cruises Ltd.'s brands are filling more berths (versus the same time a year ago) and at higher fares, said Tolkin.

Capacity Increases, Tailwinds Ahead

Many cruise lines have huge capacity increases coming. “It’s the craziest capacity increase in the history of the industry,” Tolkin emphasized, noting that the industry's product “just keeps getting better and better and better.”

The CruiseOne, Dream Vacations and Cruises Inc. agents experienced a new ship first-hand with their stay on Norwegian Cruise Line's Norwegian Bliss during the conference.

But it's not just new ships, Tolkin explained, citing “billions of dollars being put into older hardware,” including Celebrity Cruises’ $600 million revitalization effort announced earlier this year.

Virgin & Ritz-Carlton Are Coming

Tolkin said that new players are entering the market, and existing players are also expanding. “By 2023, Disney Cruise Line is doubling its number of berths,” he said.

Capturing the “new to cruise” guest is important to the future of the industry. What Virgin Voyages and the Ritz-Carlton Yacht Collection bring to the market, Tolkin believes, is that "they're iconic travel brands that are getting into cruising for the first time.”

While everyone isn’t going to go on a Virgin ship or a Ritz-Carlton ship, "what they will do is expose so much of the population that has not taken a cruise or who has not cruised recently to cruising," he emphasized.

Less than 4 percent of the North American population will take a cruise on any given year, so Tolkin's view is that "we have a lot of growing room."

AAA Study Shows Agents Matter

A recent AAA study showed that 75 percent of Baby Boomers [those born between 1946 and 1964] always consider using a travel agent for their leisure trip.

In addition, results showed that 75 percent of Millennials [those born between 1981 and 1996] consider using a travel agent for their leisure trip. .

As for the generation in between Boomers and Millennials, “I don’t know why they don’t talk about the Generation Xers,” he said.

But he believes the study was impactful in demonstrating the value of a travel agent to both older and younger consumers.

Not in the Ninth Inning

Tolkin's firm belief is that the bull economy still has room to grow: “While you might read a lot of material that we’re at the end of it, and who knows when it will end, I guarantee you, given the foundation that we just talked about, we’re probably in the sixth or seventh inning.”

He continued: “We are not in the ninth inning. We are not in the dug-out. This bull economy still has room to grow and over the last 20 years we have seen longer bull economy runs.”

Agents heard more during the conference about robust cruise capacity growth and soaring consumer demand for destinations like Alaska.

In a chart used during Tolkin's presentation, Alaskan capacity is up 12.91 percent in 2019, compared with this year, while Caribbean capacity is up 6.86 percent, Europe and the Mediterranean up 4.64 percent, and other regions up 7.16 percent.

Also, “we have great capacity growth in the Caribbean,” he said, noting that the most 2019 capacity growth in the Caribbean will come in the first and second quarters.

On top of the capacity increase, the average selling price of a cruise has also increased -- roughly between two and three percent, he said.

Looking at capacity and how that impacts sales, Tolkin said that if agents are only growing their business by 10 percent next year, they’re just staying even with the capacity growth.

“I hope we wake up every day and say, ‘That’s not good enough,'" he said. "We want to grow by a lot more than just the growth of the industry.”

Non-Cruise Sales Growth

While the division of World Travel Holdings that is comprised of the CruiseOne, Dream Vacations and Cruises Inc. brands did very little in land-focused sales a decade ago, times have definitely changed.

In 2019, “this division will book $100 million in non-cruise vacations," Tolkin told the agents, noting that the Caribbean has returned and any hotels impacted by last year's hurricanes are either reopen or will reopen soon.

Owning Success

“We own our own success,” said Tolkin. “The cruise lines and non-cruise suppliers are incredibly appreciative of you introducing your clients to them, and they want those clients to book again through you.”

But he says they also make investments to assure that the client returns to them. He put up a slide showing a $200 mail offer he received from Oceania, 10 days after he returned from a cruise.

Yes, it did have an agent to action, but he urged agents to be sure to do their part: "Every offer a cruise line or a hotel puts in front of your guest is available to you -- to us -- to give to the guest."

Doing that and also establishing a great dialogue with clients is critical. Research shows that Virtuoso’s top travel advisors all have one thing in common -- how well they communicate with their clients immediately after they've returned from a trip.

He urged the CruiseOne, Dream Vacations and Cruises Inc. agents to always talk with clients when they return from a trip, to know their clients’ bucket lists and know what the clients want to see in the way of travel over the next five years.

At stake is a lot of business. It's not a given, either. Three of every five Royal Caribbean cruisers who book through a travel agent and then return for another cruise choose to switch to another travel agency for that subsequent sailing.

Similarly, 50 percent of consumers who redeem Norwegian Cruise Line’s CruiseNext certificate choose to redeem it through a different travel agent.

Calling those numbers "shocking," Tolkin said that keeping in touch and maintaining a dialogue with customers "is the biggest opportunity we have [to own our success].”

Then turning to the agent side, “you are my customer,” he said. “I hate it when I lose one of you. I hate it. And I’m working very hard with Debbie [Fiorino] and the team to make sure we don’t lose you.”

Customer Loyalty & Customer Service

A recent Google study showed that loyalty programs are not the most significant thing for a customer. Number one is customer service.

Tolkin’s own definition of loyalty is when consumers desire to repeat an experience and will pay a premium for it.

In that regard, he urged his agents: “We offer a great service. Please, please charge a service fee for your services.” He advocates charging a $25 professional fee for services for every booking.

He asked the agents to deliver a remarkable experience for guests and take an obsessive approach to customer service, pledging that he and his WTH and home office teams also will take that same view with their own franchise and hosted agents.

“We care more," he said about the WTH family-focused service approach between home office and the agencies and agents across the county. "That is our point of differentiation.”

Moving forward, cruise sellers can count on "an incredibly resilient industry.," says Tolkin, who stressed that even with the hurricanes of 2017, all three publicly held major cruise companies still had record profitability; they're also beating that in 2018.

In fact, even during the Great Recession of 2008-2010, the cruise lines still made money.

Bottom line? "We might put off other expenses in a recessionary time, but people today are consuming travel," Tolkin said. “Travel today is part of our DNA."