CRUISE CALL TAKEAWAYS

Takeaway: Overall, the takeaway is on the margin negative: Wave momentum slowed in Jan Europe is struggling.

Summary from Wednesday's conf call with Mike Driscoll from Cruise Week

Yesterday, we held a conference call for subscribers Mike Driscoll Editor In Chief of Cruise Week.  From Mike's commentary, we came away with the impression that Wave momentum slowed in January and European demand was softening. Overall, the call seemed to corroborate the findings of our latest cruise pricing survey.  

Here are some more thoughts from Mike:

Wave 2015

  • Mixed results despite high expectations for Wave North America.
    • December Wave bookings were strong, primarly due to a lot of deals and discounting by the cruise lines.
    • January slowed considerably possibly due to an earlier start to Wave this year

Europe

  • Mediterranean/Baltic both slowing since France crisis  
  • 2014 was a record booking season for Europe.
  • Not seeing cancellations but seeing weakness in ocean cruising. River cruising has held up better.
  • St. Petersburg struggling for quite some time

Caribbean

  • Recovery happening.
    • Last year, many norovirus issues. This year, nothing.
    • Benefiting from cold weather
  • Norwegian started discounting early in December and then put out its Wave package in January

Carnival brand  

  • Expectations from agents was already low
    • Agents think Carnival could be doing much better due to comps but that hasn't materialized. 
    • Agents blame Carnival's heavy direct business for the slow recovery (not surprise that agents would blame the competition)
    • Some reluctance from agents to reestablish trust with the Carnival brand
    • Getting hurt badly on the interior part of the US.  Carnival brand but doing better on the ports (e.g. Galveston, Carolinas etc)
      • Norwegian, however, has grown with its national business
  • Feedback from Vista was underwelming

Asia

  • Question mark market
  • RCL only putting its best ships there. CCL testing its middle ships there
  • In the past, Carnival went into Japan with two ships year round and mgmt didn't speak of Japan on the conference calls. Then they pulled back. When things are going well, mgmt will talk it up, like China for example.

1st time cruisers

  • Cruise lines still having difficulty attracting 1st cruisers
  • Very challenging to increase 1st timers
  • Agents are most helpful in this area but requires more of their time
  • They feel like they’re not getting the deal because they don’t know what they’re looking at
  • Many complexities are holding back first timers
  • Norwegian is doing somewhat well but overall, we are not seeing the bump in first timers as we should 
  • Carnival is losing share of 1st timers

More bundled promotions

  • Retailers love it. It’s the way consumers now shop.
  • Travel agents like it because commissions are higher with bundled deals
  • Norwegian is changing its promotions every month.
  • Sometimes it can undermine the group business.

What do consumers value most today when booking?

  • All inclusive bundles
  • Consumers aren't falling for the price tag
  • Direct business hasn’t grown as much because they know they not getting the best deal
  • Repeat customers know what prices they should be paying 

Loyalty

  • Royal and Princess have a very loyal customer base

Competition 

  • River cruise industry is a serious competitor. Even Seabourn is losing business to river cruises.
  • In the US, the alternative vacation choice is Vegas and Orlando
  • Carnival's biggest competition is all-inclusive packages

Princess

  • Princess is doing 3-4 day cruises out of Los Angeles and Fort Lauderdale to attract first time customers. Prices lower than expected. ~50% of customers were first timers to Princess but not first time cruisers.

Agencies/Commissions

  • Only a few large travel agencies control the business now
  • Viking is coming out with new ocean going ships in the Med with higher commissions
  • Max out at 17% commission with Princess