Retail Perspective: Product Innovations Driving Positive Cruise Market

Cruise Week

With strong growth patterns returning to the overall market, some retail leaders welcome the buzz that new markets, new ships and the focus on new demographics are creating.  

“... it’s looking like 2016 is going to be a better year and we got a nice run. One of the things is there’s a lot of chatter about new ships and where they are going and the effect of their deployment,” says Matthew Eichhorst, President, ExpediaCruiseShipCenters. “Although we’re going to see a couple of ships go to China and into some other new markets, I’m really excited about this. At this point, I think it’s 58 ships which are coming out which is about 9.6 million new beds.”
   
Indeed, both Carnival Corp. and RCI have accelerated growth plans. Carnival Corporation alone now has 17 new ships scheduled to be delivered between 2016 and 2020.
   
“I would say that the industry is going faster than the shift,” continues Eichhorst. “So we’re bullish about the next 5 years. I love what the industry is doing in terms of investing in the product line. I think the demographics make this industry better than ever. Combined with the good economy, we’re really, really excited.”
   
Eichhorst also notes how innovative some of the new product is. “I think the lines that are aggressively making their product appeal to a broader audience are going to really do well in the next 5 years. And the ones that are sticking to their knitting, I think they are going to be a little bit challenged. I wouldn’t say I worry about lines, but I would say lines that don’t have a broad appeal are going to struggle.”
   
He welcomes lines willing to step out of their comfort zones. “You’re starting to see luxury cruise lines have a family message, which is new. With all this multigenerational focus that’s going on, you’re starting to see more of the younger families really focus on a family cruise product.”
   
China and growth are not the sole issues arising with retailers. There are concerns about Europe sales, Costa and rebating, among others. There are
an unusual amount of side issues impacting business in 2016.
   
One is U.S. election year. Over the years cruise execs have identified the presidential election cycle as creating an uncertainty due to all the media attention on negative world issues, but that business bounces back once the elections are over.
   
“We’re aware of it,” says Eichhorst. “I wouldn’t say we’re concerned. But we have seen it a couple of times, at least since I’ve been in the business. What I would say is that it’s a distraction. We’re going to have some distractions for sure with all of this campaigning and election stuff going on. Overall I think the tailwind will be stronger than the headwind, but I do think it has a toll.”
   
During ExpediaCruisehipCenters’ annual conference aboard Ruby Princess, one of the issues that was talked about was the strong USD and its affect on the Canadian market in particular. “We’ve certainly seen great growth in our U.S. stores, and we’re still seeing good growth in our Canadian stores as well despite the currency issues,” says Eichhorst. “But the Canadian economy is under pressure whereas the U.S. economy does seem to be picking up quite nicely and it’s really fueling our growth.”
   
So the challenge is not so much Europe sales but location of sellers. “I would say our Canadian stores have seen cancellation rates around the U.S. dollar and that continues to be a concern as far as the exchange rate in the Canadian market.”

Eichhorst says ExpediaCruiseShipCenters has their eye on a more controlled growth pattern and is vetting potential franchisees carefully. “We had 30 new stores in 2014; 35 for 2015,” says Eichhorst. They have more than 200 stores currently. “This year we’ll have 4,500 enquirers seeking a new 

franchise. So it has been very active, and we’re very selective on who we’re letting in right now. We’re around one-in-a-hundred about who gets through the awards process. The plan is 45 more stores. We’re continuing to add more stores because business has been very good.”



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