Norwegian Cruise Line President Andy Stuart Talks Value, China, Cuba

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Andy Stuart, Norwegian Cruise Line's president and COO, talked about the past, present and future, including Cuba, China and Millennials, during his keynote presentation to CruiseOne and Cruises Inc. agents onboard Norwegian Escape. // Photo by Susan J. Young

Recalling the early days of cruising when the SS Norway and Cunard’s former Queen Elizabeth 2 were the industry’s biggest ships, Andy Stuart, president and COO, Norwegian Cruise Line, talked about the evolution of the cruise industry to 800 agents, franchise owners and vendors attending the annual CruiseOne and Cruises Inc. conference onboard Norwegian Escape on Thursday.

Stuart, who has served with Norwegian for nearly three decades, said the first ship built during his time in the company was the Seaward. He quipped that it was also the first ship with an alternative dining venue, which carried a $35 cover charge. At the time, Stuart noted, there was “horror” across the industry for that off-the-wall move.  

But the future brought new innovations. "As the ships got more interesting and exciting, as the industry expanded, the demographic started to broaden, the appeal broadened for the product," said Stuart, noting that cruising started to become an industry that could be a major player in global tourism.

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Amazing Progression

"It's amazing where the industry has come in a relatively short period of time,” Stuart told the agents, in discussing worldwide deployment. “I remember when Princess announced that Grand Princess was going to Europe,” he said, “and everybody raised an eyebrow,” saying it was madness to take such a big ship to Europe.

Now, Stuart said there’s an Oasis-class ship in Europe and the Norwegian Epic is in Europe: “It’s incredible all the capacity that’s in Europe,”

In the early days, cruise lines operated three- and four-day cruises out of Miami, while now the industry has ships positioned around the world. Stuart said that initially it was even considered odd for a cruise line to position a ship in New York. Today, however, that home port is very successful for attracting new cruise customers. 

Still, he said the biggest challenge is that consumers still don’t know there are new amenity-laden ships in places like Barcelona, Australia and Asia.

China and Cuba

China is obviously a massive opportunity for our industry,” Stuart said, because as the lines move tonnage to China, the capacity is right-sized in other places, including the Caribbean

“You should be excited about the fact that China is growing and that the industry sees China as a big opportunity because it means that capacity will be spread farther afield,” Stuart stressed. “It means that we’re going to able to keep pricing at great levels in this market…which is good for both of us.”

He believes Cuba will see the arrival of North American lines in the relatively near future – 2016-2017. Even better? “At some point we’ll see ships in Cuba for ‘tourism’ versus the ‘people to people' regulations that are in place today,” Stuart said, calling it a “huge boost for the industry.”

He told the agents they need to be getting prepared to sell Cuba as it’s a massive opportunity, based on what research shows the consumer interest is.

Qualifying the Customer

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Choices abound on the new Norwegian Escape // Photo by Susan J. Young

As for today's onboard experience, “it’s no longer one buffet, one restaurant, one casino and one bar," Stuart said. Using Norwegian Escape as an example, "it’s extraordinary how far the industry has come in giving choices to customers.”

That complexity – both in cruise products and what's available on individual ships -- has aided travel professionals. For example, The Haven, Norwegian Escape’s ship-within-a-ship concept, is a far different experience than the solo cabins on the ship.

Qualifying clients becomes critical in today’s world of ships with different experiences right on the same ship. “The good news is that more customers are using a travel professional, which…gets us a more satisfied customer, so we think that’s a good thing,” Stuart stressed.

Stuart even quipped that his own team, at times, struggles with showcasing and explaining the onboard experience, which consists of so many choices. “It’s complicated, so imagine how confusing it is for the consumer,” Stuart said. “They need your help and they need to talk to somebody who really gets it.”

The Rise of Technology

Technology is front and center in business-to-business communications between cruise lines and agents, agent-to-client communications and even shipboard life.

“Who remembers the days of faxing?” Stuart joked. He related that the most frequent trade phone call he would get decades ago was a call from an agent yelling, “Stop faxing me. My thermal paper has run out.”

Urging agents to use the power of social media, Stuart noted that Norwegian would never have had the global reach it achieved with the christening of Norwegian Escape; the festivities and ship features were trending on Instagram and Twitter.

"How would we have done that 10 years ago?” Stuart asked. He urged the CruiseOne and Cruises Inc. agents to use social media to tell the stories of their own brands, their day-to-day business activities and what they offer to customers.

Online bookings are going to continue to grow, said Stuart, calling them both “a blessing and a curse.” Clients like to book online, so that's good for sales. That said, research shows that people spend more during their cruise when they have discussed the options one-on-one with a skilled agent.

He also said that mobile technology is enormous, when looking at the growth of mobile versus desktop. “It’s extraordinary,” said Stuart.

His take?: “People are shopping and buying on their mobile device, either their phone or their tablet. So if you’re not thinking of how to take your story out to your customers through mobile, you’re making a mistake because pretty soon that’s going to be the only way people shop, research and figure out what they’re going to do for a vacation."

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Stuart talked about "no need" for parents to walk the decks searching for kids; instead, they can text them via the Norwegian iConcierge app. // Photo by Susan J. Young

He also talked about guest use of Norwegian’s iConcierge app, which he praised for helping parents, including himself, keep track of their kids onboard ships. Parent text their kids through the ship’s Wi-Fi, reaching them immediately and the kids text back.

It’s not the old way of parents walking the decks aimlessly searching for their kids, which Stuart said he had done. “Now I’m completely relaxed and I can get ahold of my kids quickly,” he noted.

Safety & Environment 

Switching gears, he also praised the industry’s current efforts for both safety and environmental matters. He urged agents to talk with their clients “about what a safe industry this is” and use statistics compared with other types of vacations. 

In looking at the environment, Stuart said that while the industry should not be proud of some past moments, in contrast, “today, we should be tremendously proud.”

Beyond the industry's and individual lines' policy changes and programs to protect the environment, Stuart mentioned Guy Harvey, the well-known marine artist who created the Norwegian Escape’s hull art and a noted conservationist.

Harvey has been aboard the ship over the past two weeks bringing his story of conservation and sustainability. Plus, the in-stateroom entertainment system has eight hours of complimentary Guy Harvey produced programming with an eco focus. 

Land Is the Competition

With new cruise products creating buzz and excitement, Stuart told the agents: “I believe we have a very bright future.” As for competitors, he vocalized the same philosophy most other cruise executives have – the real competition isn’t among the lines themselves, but rather with land-based vacations.

Stuart is personally is excited to see Virgin Cruises enter the market. “They’ll do some cool stuff,” he said, plus they'll "build buzz" that will benefit the entire industry and cruise selling agents. That said, he’s also glad they won’t have 100 ships, and will start out relatively small.

But he likes the “positive noise” they’re expected to generate in the marketplace and “they’ll be a new entrant that will expand the reach of cruising to a new audience.”

Millennials Rising

Millennials are the fastest growing, largest group of potential new cruisers. “They’re spending more than the Baby Boomers...and we have to figure out to sell to them and how to employ them…They are now the biggest spending group," said Stuart.

Agents should understand, he noted, that Millennials are not necessarily tech-savvy. Instead, they’re tech-dependent. “There’s a big difference,” he said.

In addition, he quipped that “if they don’t get an instant response they’ve moved on because their attention span is that of a gnat. That comment drew wild applause and chuckling among the agents.

That said, Stuart says he also sees many positives in the newest generation of potential cruisers, specifically citing their optimism for the future.

“They really believe they can change the world, which is a good trait," Stuart added. "They really believe they’re going to make a difference.”

He said that what's also good about Millennials is that “the people they listen to most are their grandparents." Millennials see age and experience as a benefit -- viewing those as valuable in helping them make a good decision.

Yet, he cautioned agents to avoid a traditional sales pitch when talking to potential Millennial clients. They definitely prefer a more collaborative approach, he said. 

While it’s a challenge at times, Stuart believes “we need young people to come in and help us navigate this new world.” He said agencies should learn how to hire, retain, satisfy and motivate millennials.

Most important, Stuart urged agents to communicate with Millennials – both employees and clients – in the way they like to communicate. Some like texting, others social media or email, but few pick up the phone and want to talk that way.

"They want every interaction to be memorable and they want to feel special and they want you to make them feel special,” he added. “Think about how to do that in a way that makes them feel you really care.”

Value Trumps Price 

Overall, he said the future is positive for travel partners as the cruise industry is moving away from a focus on price,” he stressed. “At one time, all the premium and contemporary lines only talked about price.”

That was bad for all, so “you should be excited that the industry is moving away from price, but we can only do this together,” he said, noting that agents must explain the value message.

He told the astonished audience that research shows 15 percent of people who buy a cruise during Norwegian's Freestyle Cruise Promotion don't make a value-feature choice.

“Wow, that’s unbelievable,” Stuart stressed. “They could have an $800 beverage package but they’re not making a choice.” He said that’s likely because no one told them they could make a choice.

“Imagine if we can communicate to everyone the value that’s available when you buy a cruise,” Stuart asked the audience? Demand for cruising could rise much more.

And what’s the top perk of higher demand? “It’s going to mean higher pricing, which is going to lead to higher commission so together we have to do this,” Stuart said. “So if we’re going to be successful and move away from price, together we have to do a fabulous job of communicating the value of the experience.”

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