Cruise Execs, V.com Leaders & Agents On The State Of The Cruise Biz
At the recent Vacation.com conference, CruiseWeek checked in with retail agents, the consortium’s leaders and the CEO of Carnival Corp to gain perspective on cruise market developments as the midway point of 2016 approaches.
One cruise seller, pointing out that this year’s wave season was book-ended by Paris and Brussels, put it this way, “The season started late due to Paris and ended early due to Brussels”. But he says there always seems to be some incident with the potential to impact bookings. “It’s like every other year,” he says of 2016. “You need to be resilient and change and shift gears. We find our little niches, and we shift and we do what we have to do to make money.”
Carnival Corp. CEO Arnold Donald agreed there’s always something going on somewhere in the world that will impact a global business like cruising. “It’s a great period for cruise. But having said that, there’s always ‘stuff’ going on, and we have to assume there always will be. That’s the only way to run your business. This year there is Zika virus. Last year it was MERS. The year before that it was Ebola. The year before that it was Asian flu. So there’s always something out there. Always.”
Donald says the key is to be prepared and spread the risk. “Now, in our company, we’re with scale everywhere in the world. So we’re going to get hit somewhere every year. We have to factor that into our business and say ‘How are we then going to still deliver despite that?’ As a company, we have to be able to deliver for our shareholders in that environment because that is the environment,” Donald says.
So is this year, in a certain sense, no different than any year since 2001?
“Exactly,” replied Donald. “In fact, in some ways it’s better in that we didn’t have overcapacity in the Caribbean this year. We have more capacity this year than we had last year, which was a great year, but we’re not drowning in capacity in the Caribbean. Two years ago, we were.”
Sometimes it seems as if business reports from cruise lines are more upbeat than what agents are experiencing. CruiseWeek asked Donald why there is a seeming discrepancy.
“Here’s why it could be different,” he replied. “#1, we do have a global business, not just North America. So what happens globally factors into our numbers. #2: we only have so much capacity. Shifts in sales between agents and agent groups is still a sale for us. So if one agent group is growing and another one is not doing so well, there still could be growth for us in total revenue.”
Donald added that Carnival Corp. is not growing capacity a lot this year in North America. “So if they’re not all evenly participating in that, then some groups are going to experience what to them could feel like a decline, especially in bookings,” Donald said. “Now, in revenues, it should be decent because of higher pricing. But they could see bookings shift if they’re losing sales to a different group of folks.”
As V.com has almost $2 billion a year in cruise sales, what they say counts, and in his introductory address, President John Lovell told the crowd, “Right now, there is a little bit of headwind in the industry, and I think just by having communication with each other, all of us can address the future a little bit better.”
Asked to characterize the year in terms of cruise business for V.com members, Lovell replied: “Back in January, I was optimistic, but then we had some unfortunate things happen around the world that continue to happen. And then unfortunately we’re in an election year. I look at this election year a little differently because this is a really strange one.
“Now I would say our cruise business is moderately good; it’s good in pockets. It’s a challenge for Europe right now, but you look at Alaska, per diems are up, APDs are up, doing extremely well; you look at the exotic products - they’re doing extremely well. The Caribbean is really performing extremely well. So is it where we all thought we were going to be in January? No, it is tempered a bit. But the further we push out from Brussels and Paris, the better it is.”
Stephen McGillivray, Chief Marketing Officer of Travel Leaders Group, says cruise lines deserve credit for maintaining price integrity. “We don’t see the bloodbath in the Caribbean this year as far as price slashing. I give credit to the lines on that because holding price is good for everyone, distribution, and the product. The idea is that ‘Hey, I may not sail full at 100% capacity, but I’m maintaining my pricing integrity.’ We support that 100%.”