|Explorer Suite living room on Regent Seven Seas Cruises’ Seven Seas Explorer, set to debut in June|
Eight of 10 travel agencies are projecting increased cruise sales in 2016, according to the Cruise Lines International Association’s (CLIA) “Cruise Industry Outlook,” released this month. What trends can agents expect in the coming year?
A Value Focus: One profound 2015 transformation that’s projected to continue in 2016 is the focus on “value” not price. Calling that “sea change,” Brad Tolkin, co-chairman and co-CEO, World Travel Holdings, told 800 CruiseOne and Cruises Inc. agents sailing on Norwegian Escape that “cruise lines have stopped discounting the price to fill every last cabin” and they’re willing to take a slight hit to load factors to maintain price integrity. They’re letting some staterooms sail empty rather than cutting prices to fill them.
Supply and demand have evened out, particularly as some Caribbean ships shift to China. Some lines are raising fares and adding “value” — everything from onboard credits to specialty dining, drink packages, Wi-Fi and more. The best deals are farther out. Norwegian Cruise Line now includes beverages within Norwegian Sky’s short-cruise fares, MSC Cruises lets kids sail free, Royal Caribbean International has new Suite Class perks and cruise lines’ pricing structures have evolved; Celebrity Cruises’ “Go Big, Go Better, Go Best” approach features choices of inclusions based on price tiers.
New Ship Highlights: CLIA’s member lines will invest more than $6.5 billion in new ocean vessels alone in 2016. Through 2020, Seatrade Cruise News’ order book reveals that oceangoing lines have 41 new ship orders comprising 132,128 berths at a $30.9 billion price tag. Viking Ocean Cruises’ 930-passenger Viking Sea launches this winter, followed this spring by Holland America Line’s 2,660-passenger Koningsdam and Carnival Cruise Line’s 3,954-passenger Carnival Vista.
In June, Regent Seven Seas Cruises will welcome the 738-passenger Seven Seas Explorer and Royal Caribbean will launch the 5,400-passenger Harmony of the Seas. In fall, Seabourn Cruise Line will debut its new 604-passenger Seabourn Encore. Among 2017 highlights are the new Viking Sky, Silversea Cruises’ Silver Muse, a yet-to-be-named Star Clippers vessel and MSC Cruises’ MSC Meraviglia and MSC Seaside.
Soaring River & Small-Ship Demand: CLIA member lines deploy 170 river cruise ships worldwide with 18 new river cruise ships on order for 2016, a 10 percent-plus increase. In 2016, the new Crystal River Cruises will launch on European rivers. European river cruising moved up from fourth to third place on a recent Travel Leaders Group’s “Top International Destination” list for booked trips. Of 1,316 agencies surveyed, 43.2 percent reported higher river cruise bookings, compared with a year ago.
As for expedition cruising, Lindblad Expeditions-National Geographic will build two new U.S.-flagged coastal vessels; the first will launch in 2017. Hurtigruten will expand its Explorer Program from two to four ships on expedition voyages, starting in 2017.
Rising Agency Commissions: Michelle Fee, co-founder/CEO, Cruise Planners, says franchisees who grew their businesses this year did so by an average of 63 percent. The Cruise Planners’ Millionaire Club, comprised of agencies earning $1 million-plus in annual revenue, grew by 32 percent this year. Most importantly, a larger percentage of Cruise Planners’ collective sales were commissionable in 2015 versus 2014.
While praising the new Viking Ocean Cruises’ “no NCFs” (non-commissionable fares) policy, Tolkin also says that, for the first time in five years, the selling price of a cruise is rising more than non-commissionable fares for Carnival Cruise Lines, Celebrity Cruises, Holland America Line, Norwegian Cruise Line, Princess Cruises and Royal Caribbean International. “The good news is that we’re making more money because this is 6.7 percent better than last year,” he stresses.
Rise of the Dragon: Between 2012 and 2014, Asia passenger volume grew from 775,000 to nearly 1.4 million passengers, according to CLIA. Four of every 10 Chinese cruisers are under 40 years of age. “China is obviously a massive opportunity for our industry,” says Andy Stuart, president and COO, Norwegian Cruise Line. In 2017, Norwegian Cruise Line Holdings (NCLH) will home port a new Breakaway-plus class vessel in China.
Royal Caribbean International’s Quantum of the Seas began home porting earlier this year from Shanghai, and its new Ovation of the Seas will arrive in China this spring. They’ll be among five Royal Caribbean ships home ported from four Chinese cities. Costa Asia has operated in China for a decade; Costa and Princess Cruises both base multiple ships there; the new Majestic Princess, launching in 2017, is built for the Chinese market. Carnival Cruise Line’s Carnival Miracle will home port in China starting in 2017. Parent Carnival Corporation also just inked a new Chinese joint venture with China State Shipbuilding Corporation (CSSC) and China Investment Corporation (CIC); they’ll launch a new Chinese brand.
Cuba Calling: Fathom, Carnival Corp.’s new voluntourism brand, sails this spring from Florida to Cuba. Small ship Cuba cruising is also now possible. For example, a new Central Holidays “Cruise Around Cuba” itinerary sails roundtrip from Havana on Celestyal Crystal. Stuart believes major North American lines will arrive in Cuba during 2016 or 2017. “At some point we’ll see ships in Cuba for ‘tourism’ versus the ‘people-to-people’ regulations that are in place today,” Stuart emphasizes, noting that agents should begin preparing to sell Cuba, which he describes as “a massive opportunity.”
Complexity Is a Plus for Agents: With industry growth, product diversification and value-added pricing, “choice” rules. Cruises are more complex in their features. Vicki Freed, senior vice president of sales, trade support and service, Royal Caribbean International, says skilled travel agents are needed to help “confused” consumers navigate through the endless choices in dining, entertainment, activities and accommodations and pick the right cruise for their vacation style and personal interests.
The good news is that even Millennials seem to be looking to agencies to help them sort out the choices. In a 2014 MMGY Global survey, 28 percent of Millennials said they’d used a travel agent in the previous year; 30 percent planned to do so within the next two years.
A Longer Booking Curve: “Our average booking window has jumped by 15 percent, to 200 days,” notes Tolkin. For 2015, close-in bookings (voyages less than 90 days out) dropped 15 percent in the first quarter, 18 percent in the second quarter, 20 percent in the third quarter and 20 percent (thus far) for the fourth quarter. Scott Koepf, senior vice president of sales, Avoya Travel, is also seeing cruise booking curves spread out: “Some consumers still look for close-in sailings, however, many more are seeing the value in booking far in advance.”
Looking Good for 2016: “We’re optimistic for 2016 since there is already a nice rebound in Europe deep water cruising, and river cruising is still performing well,” says John Lovell, president of Travel Leaders Franchise Group, Leisure Group and Vacation.com, adding that “Alaska cruising is looking extraordinarily strong for the second year in a row.” He also says the U.S. dollar continues to perform strongly against the euro.
Year over year cruise vacation purchases, an indicator of future travel, are up 37 percent for Cruise Planners agencies in 2015. From Tolkin’s view: “The cost of oil is down, people feel better, cruise prices are up and the cruise industry’s headwinds are now in agencies’ rear view mirrors, not front and center.”