Cruise Retailers Report Surprising Strength In Wave Season Sales

Cruise Week

Cruise retailers say they’re riding a strong wave.

Comments from top sellers and sources in the industry about business trends during the very early part of Wave Season indicate surprising strength despite considerable background noise, ranging from Iran/Iraq tensions to Australian wildfires.

"Overall, call volume is up and bookings are up," one major U.S. retailer told Cruise Week, "but the results are not distributed evenly across all cruise lines."

A second top producer added: "Highly variable sales levels between lines. The bad geopolitical news does not appear to be hurting sales. So far, so good."

Varying Promotional Levels In Alaska

Much of the focus is on Alaska, because it is seen as the most challenged of the three major markets for 2020. Recall that Princess, the capacity leader, has launched its most extensive sale in the history of the company, and it's not a brief one. It began back on 9DEC and doesn't end until 29FEB.

Early reports are that the new pricing program is resonating. 

Several other lines, including Holland America and Oceania, have also boosted promotions with an emphasis on Alaska.

Royal Caribbean, in contrast, has not expanded its promotions. RCI is still going with its BOGO 60 promotion, which it has done for years, and some see that as a sign of strength, because it means Royal hasn't had to increase discounting like some of its competition.

Capacity Increase Not As Daunting

As for Alaska capacity, during the most recent Carnival Corp. earnings call, CEO Arnold Donald said there was a 9% capacity increase for Carnival Corp. in the Alaska market for 2020.

Our own research finds that outside of Seabourn, Cunard, and Carnival Cruise Line, few other big players are increasing capacity, though RCI is adding a third ship. Overall, numbers indicate a 6% increase industrywide in Alaska for 2020.

So the overall Alaska capacity increase this year doesn't appear to be as daunting as in 2018 or 2019.

On To Europe

So far so good for both the Med and Northern Europe, report retailers, adding that they see several major lines with price promotions for Europe all the way up through 2021, including Celebrity extending into 2022, and that's unusual.

The Iran/Iraq situation hasn't hurt cruise bookings yet, but it has caused all agents we've talked with to be on "high alert." If there is a regional conflict, the expectation is the Caribbean will benefit as well as Alaska, since people tend to stay closer to home when there are international tensions beyond the norm. Luxury cruises to far-flung destinations will be hurt, and the resurgence of Eastern Med cruises will be threatened.

However, that hasn't happened to date. Europe continues strong on the cruise side from North America. The only reported casualty of the recent tension is that Nile River cruises are once again a concern, but those are not operated by any of the big lines.

One veteran cruise exec opined that in general Europe business continues strong for North American passengers because there are essentially five markets in Europe: Western Med, Eastern Med, Northern Europe, British Isles, and even River. The repeat cruise market to Europe is booming, and some of those customers tend to go from market to market within the region.

Hence, Europe, from the perspective of North American pax, is better able to absorb cruise capacity growth than Alaska; even with the growing family market in Alaska, it's still a one-and-done market for the most part.

Caribbean Strength

In a certain sense, the Caribbean is more like Europe; people return repeatedly just to soak in the sun and relax. New-to-cruise here is obviously important, but oftentimes satisfied first-timers find a line that matches their needs, and they go more than once and generally more than twice.

Which brings us to early Wave for the Caribbean. Basically, everyone reports that it's way too soon to tell how successful the Caribbean will be this year. That said, at this point retailers are surprised at how strong the business is in early January. The earthquake in Puerto Rico is mostly a non-issue with cruisers at this point.

In the bigger picture, it's seen as important that CCL, in particular, is not digging deep with pricing or specials. Royal is sticking with its BOGO 60 promotion in the Caribbean as well, so no smell of desperation there either. Top retailers report that booking volume for NCL has picked up in the past 45-60 days, continuing into Wave.

General Observations

Here's how the head of one agency group summed up the recent situation: Heading into 2020, the cruise lines had broad jump-start programs with many agency partners that included both offers and incentives for both advisors and customers. That helped pave the way for the current success.

"There are a lot of distractions already in 2020, but feedback from our top cruise sellers is strong to date for Wave, with both the biggest national agencies and the smaller local travel advisors reporting a great start to January," said a Cruise Week source.