Cruise CEOs debate on panel at ASTA Global Convention
The discussion, moderated by Arnie Weissmann, editor-in-chief of Travel Weekly, was spirited, at times contentious, and the audience of 450 or so broke into applause and laughter several times.
With the cruise market now encompassing age groups from babies to boomers and well beyond, “the beauty of cruising is that we can appeal to great demographics that evolve as public demand evolves,” decreed Richard Fain, chairman and CEO, Royal Caribbean Cruises Ltd. “Our ships offer elements that appeal across the spectrum.”
The solo traveler, a market ignored for years, is now being tapped by Norwegian Cruise Line, said Kevin Sheehan, Norwegian’s president and CEO.
“Our Breakaway ship relates to the solo traveler as well as other age groups in the type of onboard experiences we offer,” Sheehan said. “This is the future of cruising, and we have to continue to be on the cutting edge, not the bleeding edge, of the industry.”
He added that the demographics of the cruise market emphasize the role of travel agents because the choices for the consumer are so overwhelming.
“Agents are the critical part of this equation and we need to simplify choices for agents and show that we are more consistent than in the past,” Sheehan said.
Key differences between river and ocean cruising were emphasized by Viking Cruises Chairman Torstein Hagen.
“Viking is a river cruise line, and we say that the destination is key,” Hagen said. “We can show your clients Europe; we can show them culture and geography. The onboard cruise experience is not that important to us, and this has worked out well.”
Viking’s customers are 55-plus, “have worked hard, are retired or should be,” Hagen said. “I don’t need to climb rock walls on cruise ships, and neither do they. Let’s be definite about who our customers are.”
Even so, Viking is about to venture into ocean cruising with four ships currently on order. “Two are financed, and we’re working on the others,” Hagen said.
Viking’s first ship, which will carry 928 passengers, enters service in April 2015 in the Mediterranean. It is 80% sold out and is being marketed as an all-inclusive to the 55-and-older segment, he said.
There will be no babies, no screaming teenagers, no casinos or water slides,” Hagen said.
Fain agreed that destinations are key because they are “the starting point of the decision-making process. Where appropriate, our ships stay in port for two to three days for destination immersion, but offering the customer variety, value and choice are important,” he said.
Sheehan asserted that Viking does not have a lock on the 55-plus market.
“Norwegian offers the right situation for that age group,” Sheehan said. “Our cruises are multigenerational and have attributes for that experience. We offer a destination on the ship and a destination off the ship.”
Fain said that he saw shared enjoyment as being a key element of cruising.
“My grandchildren like to climb the rock walls. I like to watch them,” Fain said. “Cruise lines need to communicate all that we offer and get the message out that cruising isn’t just for sedentary people.”
As for all-inclusive cruise pricing, Sheehan said the issue is complicated.
“We’re faced with the competitive nature of pricing,” he said. “All-inclusive knocks you out of the market. Cruise prices haven’t moved for about 20 years, which has forced the industry to come up with new ways to be profitable.”
Some Norwegian customers, he said, book a cruise, then don’t spend a dime throughout their time on ship, while others dine in the specialty restaurants every night and rack up some bar bills as well.
In such a market, “It’s hard to have one-size-fits-all pricing,” Sheehan said.
“All-inclusive is our standard on the river ships and will be on the ocean ships, with wine and beer at meals and free shore excursions,” Hagen said. “Our customers are not gamblers, so we don’t have casinos and we use that space for more staterooms.”
Viking, he said, does not aspire to be everything for everyone.
“I took my mother on a cruise 10 years ago,” the 70-year-old Hagen recalled. “I like to think of our demographic as mature people and their parents.”
In fact, he said, he told the New York Times several years ago that the difference between ocean and river cruising is that “Ocean cruising is a drinking man’s cruise; river cruising is a thinking man’s cruise.”
Fain interrupted at that point in the discussion, saying. “There are so many softballs in the air right now, I want to hit some.”
He pointed out that Celebrity’s cruise to Galapagos “is practically all-inclusive. We spend a lot of time on shore, and sea lions don’t accept tips.”
Even so, Fain continued, “The industry has grown, and so have the options. Now, there is a cornucopia of choices. On an all-inclusive cruise, you are not making the customer pay for extras, but you are not offering him any choices.”
Sheehan said that Norwegian had considered river cruise products at one point but decided in the end that “we have an unbelievable product, and we will keep it that way.”
Hinting that it would be interesting to take a river cruise, Sheehan glanced at Hagen, then sighed, “You look tight, so I don’t expect much,” he said.
Despite the rise of the Internet, Royal Caribbean gets very few bookings that way, Fain said.
“The role of the travel agent is very robust in the cruise industry. The agent remains a dominant force for all of us,” he said.
But there is a trade-off in that relationship, Sheehan said: “It is our job to keep agents relevant, and it is the agents’ responsibility to be on the edge of what is happening.”
Hagen managed to get in the last word before time ran out.
“Viking’s business is up 35% this year,” he said, “and I attribute that to the great support we get from agents. We were the first line to abandon noncommissionable fees, and we pay 5% commission on air and shore excursions.”