What Impact Will Hurricanes Have On Future Cruise Sales?
After Hurricane Harvey a few weeks ago, CruiseWeek reported that Caribbean business was holding up. But then came Irma and now Maria, another big hurricane churning through the Caribbean islands. In an informal survey this week, the publication is hearing a different story.
Numerous retailers report a fair number of customers are cancelling at final payment for Caribbean cruises, despite knowing hurricane season will be over by the time they cruise and cruise lines will not call at affected islands until the time is right. The prospect of a vacation to the Caribbean has simply lost its appeal for these cruisers. It’s a small percentage, but it’s being felt.
Other retailers report no cancellations, but, in the words of one whose product mix emphasizes both Caribbean cruises and land vacations: "The phones have certainly quieted down."
Going forward, it's hard to predict what customer response will be, since reactions to past hurricanes varied considerably and it's been more than 10 years since a hurricane significantly disrupted Caribbean business.
Consumer buying patterns and sentiments may have changed since then, and this year's hurricanes are so powerful and plentiful that they're unprecedented.
Some retailers expect rates to drop for cruises departing Galveston in early 2018; some say they already see it happening on a limited scale. It's not happening for Florida departures, but cruise line pricing programs may be put to the test this winter in certain markets.
In the meantime, many, such as retailer Craig Baldridge, are hopeful: "People are going to be a little skeptical about Caribbean cruising. But we’re ahead of last year and I don’t see this as changing the positive direction business is going."
At the Signature Travel Network Owners’ Meeting in Phoenix this week, CruiseWeek asked President/CEO Alex Sharpe for insights on the state of the business.
"Thank God (cruise lines) have moveable assets so they can adjust itineraries," said Sharpe. "That said, one of the reasons that the Caribbean has had a great year overall, even with increased capacity, is something as simple as Cuba."
Having one more island has made the Caribbean feel a lot bigger again. "It has allowed older, smaller ships to get higher per diems, and it has allowed the bigger, newer ships to continue to do what they do without having to discount," he observed. "One island did all of that."
And therein lies the challenge in the wake of Irma.
"How many islands did we lose in this hurricane?" asked Sharpe. "We know we lost St. Martin for a period of a time, Virgin Gorda and St. Thomas, etc. for a shorter period of time, etc. But the impact of this all is the Caribbean gets a little smaller again. And capacity is going up in 2018, so can the industry maintain the upward trajectory of pricing?"
While the big companies will likely be impacted, Sharpe sees the challenge as even greater for smaller cruise companies: "St. Martin is a hub for SeaDream, Crystal Esprit, etc., because there has been good airlift into the market. So, these companies have to rethink their whole set of itineraries and we need to be ready to explain and ‘re-sell’ these wonderful products."
Sharpe is emphatic that travel agents can play a pivotal role in the post-hurricane sales process.
While it's great that the industry is providing relief to areas that are the most ravaged, there's a flip side when it comes to sales: "One of the messages that needs to come out, not to be insensitive about it is, 'Hey look at the Dominican Republic today. And look at this island and look at that. It's beautiful.' Or, 'The private islands are untouched.' That kind of thing. We need to find ways to reassure people and to keep them travelling."
He believes that travel agents, in particular, can help allay apprehensions among people who may believe the entire Caribbean region has been impacted.
"We have the ability to train and educate our customers," said Sharpe. He says consumers need to know Caribbean islands are not the same. Agents, he says, “need to sell the new itinerary,” not just recite the change.