|From left to right: Mark Conroy, president, Regent Seven Seas Cruises; Gregg Michel, president, Crystal Cruises; Peter Shanks, president and managing director, Cunard Line; Ken Watson, chief operating officer, Silversea Cruises; and moderator Bill Smith, vice president, cruise sales and exclusive product, Virtuoso (at podium)|
Discussing everything from globalization to product evolution, from sales opportunities to industry challenges, a stellar panel of luxury cruise executives took to the main stage at Luxury Travel Expo in Las Vegas earlier this month, giving thousands of agent attendees and industry leaders the latest intel and trends for luxury cruising in 2012.
Moderator Bill Smith, vice president, cruise sales and exclusive product, Virtuoso, fielded questions to Mark Conroy, president of Regent Seven Seas Cruises, Gregg Michel, president of Crystal Cruises, Peter Shanks, president and managing director of Cunard Line and Ken Watson, chief operating officer of Silversea Cruises.
Opportunities for 2012
Smith stressed the tremendous value and inclusiveness provided by all the represented lines. Most luxury lines include more in the overall price of the cruise than do their premium and contemporary counterparts; soft drinks, liquor, gratuities, special dining experiences, or (in the case of Regent Seven Seas Cruises) even shore trips, might be included.
The luxury executives urged agents to look at the rising non-commissionable charges (NCFs) charged by most premium and contemporary lines. Watson stressed that 18 percent commission paid by a line with hefty NCFs is far less valuable in revenue to the agent than 15 percent paid on a more inclusive product like Silversea.
Clients too benefit from inclusivity, as it improves the onboard experience. As a result, the lines are doing well heading into the new year. And, "with the increase in [luxury cruise capacity], I don’t think pricing [for consumers] has ever been better," said Crystal's Michel.
“This was a fantastic year, and we’ve come of age," said Shanks, referring to the launch of Queen Elizabeth in fall 2010. Silversea's Watson said 2011 was his line’s best year ever.
Regent's Conroy too said his line was doing very well. He urged agents to communicate the tremendous inclusive value of luxury to clients and to create side-by-side comparisons between luxury and premium or contemporary products.
“Don’t be afraid to tell the story," Conroy stressed.
Watson urged agents to also urge clients to book early so they get the voyage they want. For example, Silversea's expedition-style Silver Explorer, which spends summer in the Arctic and winter in Antarctica, is almost sold out for 2012.
More At-Home Luxury Sellers
Where do the lines find new luxury sellers? When Smith asked the Luxury Travel Expo attendees if they worked at a brick-and-mortar or home-based agency, more than half of the audience indicated they work from a home office.
So Conroy, noted, “the bigger issue is how do we find you now? There’s a switch that’s going on – less brick-and-mortar agencies and much more agents working from home – but that doesn’t mean that this distribution channel isn’t critical to us,” Conroy told the audience.
Smith also asked the executives about a smaller complement of travel agents than in the past and whether that's detrimental to the industry. Michel said he thought there were probably just as many agents now as in the past, but just not as many agencies.
Michel also said technology is allowing more agents to work from home offices, so they “can sell more efficiently and that means less overhead.” E-mail and the ability to get information out via technology to clients is also much easier than in the past, he added.
Crystal is seeing many cases where a hosted home agent is in a different state than the host agency, and right now, some of those agents aren’t getting the support they need, Michel acknowledged. He said Crystal is about to launch something to help tackle that issue.
Smith asked the luxury executives their perspective on "ship within a ship enclaves" and luxury suites now offered by many contemporary and premium lines. Has the meaning of luxury broadened? Are those products pulling customers from the pure luxury products? The consensus of the executive group was that true luxury encompasses all aspects of the experience. The executives said that when luxury guests step out of their staterooms, they must encounter public spaces and service levels reflecting a pure luxury experience.
Cunard’s Shanks acknowledged he was being blunt, when he said: “You can’t be half pregnant. You don't walk out of a luxury concierge lounge and into a bowling alley.” He said Cunard prides itself on White Star service regardless of accommodations so staff onboard don’t know if clients are coming from Brittania cabins or the highest level suites. Conroy thanked the premium and contemporary lines for upping the ante. “The great news is that where [many of] our new customers are coming from. They keep raising the bar and that’s forced all of us to do a much better job.” He did say, however, that his guests seek others of a similar socio-economic background.
From Watson’s perspective, “when you think about luxury, intimacy and small – that’s what sets us apart." He noted that many premium or contemporary lines with their larger ships just can't reach and call at the same types of ports.
What's the Potential?
As for industry demographics, the average age demographic for the luxury lines is lower than in the past. Shanks said for Cunard it's about 60, but that trans-Atlantic travelers are much younger -- in the 52-53 average age range.
Conroy said Regent’s average age is 58, and some longer cruises may have a higher age demographic.
Extended family travel on longer cruises is also a trend. That's developed as the cruise lines have enhanced Internet connectivity or added cell phone service onboard. Conroy said it’s not uncommon for any Regent Seven Seas voyage to have 80 to 100 guests under the age of 16, most in extended family groups.
Another sales opportunity? World cruising popularity continues to soar said Michel, while Shanks called world cruising a “lifestyle” akin to having a second or third home.
"Once you get them [to do it], they love it,” Shanks said, and “anyone lucky enough to sail into Sydney harbor, it’s worth what they paid.”
For agents, the revenue potential is incredible; Conroy revealed that one of his World Cruise guests has spent $3 million in taking 10 separate $300,000 World Cruises over a decade.
Silversea’s Watson said that in watching World Cruise guests, one thing stands out. “They love coming back to the same crew that they know and love. It’s an extension of their family.” He quipped that World Cruises do truly make guests feel at home, giving the example of one World Cruise guests who brought onboard 43 pieces of luggage – five of those holding, yes, just shoes.
Fleet Upgrades and Itineraries
Smith asked about re-investing in the luxury line fleets. “Reinvestment is the price of entry,” stressed Michel. “We put ourselves under the microscope to see how we’re doing. We just spent $60 million on our two ships, with the Crystal Symphony being totally revitalized in 2009, and the Crystal Serenity similarly updated this past May and June."
Any line that does not invest in its fleet and keep it fresh and updated will simply kill its brand, the officials collectively said.
In terms of destinations, Shanks said northern Europe is selling well, but the Mediterranean is soft. He personally hears concern from guests about the Mediterranean with the political unrest in Greece, the Middle East and North Africa splashed across newspaper headlines. Shanks said no line would take its ships, crew and guests to any unsafe area, and urges agents to tell clients the Mediterranean is safe and a great experience. He stressed that the region is rich in culture, makes a great destination cruise, and "we can always change ports if we need to."
Michel added, “It’s a great time to be booking luxury, the best time in years, and Crystal is [essentially] going all inclusive in Europe in 2012.”
The Agent Factor
Watson stressed to the audience that commission levels are strong for luxury products, and “we cannot fill our ships without you [as agents]. We value you as a distribution system and we want to nurture and educate you. It’s that simple."
However, technology is fast changing how consumers communicate with both suppliers and agents. Agents who want to capture future business need to be in the game, said Shanks, who urged agents to really “get good at what you do online, on social networking and on Facebook.” And Shanks told conference attendees to “be confident. You all know so much. The opportunity is massive.”
Addressing the industry's need for some direct sales for some consumers who simply won't use an agent, Conroy stressed the value of the agent distribution system to all the lines and promised that even with any direct business his line does, “they’ll never buy one [a cruise] cheaper from us than they'll buy it from you.”
Watson provided a salivating number for sales-focused agents attending LTE show: "Six thousand baby boomers a day are now reaching the age of 60. It’s the most incredible wealth transition ever – to baby boomers from their parents. It’s a demographic shift. Make sure you get that money."