Conference Report

Cruise lines and travel agents plan to weather the nation’s economic woes

By: Ralph Grizzle

Cruise sellers have reason to be optimistic.
Port of Los Angeles marketing manager
Christopher Chase says West Coast cruise
sellers have reason to be optimistic.
The economy was the focus of the Cruise Lines International Association’s (CLIA) Cruise3Sixty conference in Fort Lauderdale, Fla., and the Seatrade Cruise Shipping Conference in Miami earlier this month. At both conferences, cruise-line executives sought to assure their audiences that the industry would weather the storm of recession.

Dan Hanrahan, president of Celebrity and Azamara Cruises and chairman of CLIA’s marketing committee, kicked off the Cruise3Sixty event by telling travel agents that while the cruise industry was not “recession-proof,” it has proven to be “recession-resistant.”

“There is a belief among people that they deserve their vacation,” Hanrahan said. “That is part of what has let us weather the storm so far.” Citing the plummeting housing market, the weakening U.S. dollar and a gloomy jobs report that came out during the Cruise3Sixty conference, industry executives stressed a historical ability for the cruise industry to survive recession. Forty-year industry veteran Rick Sasso, now president and CEO of MSC Cruises USA, noted that the industry had not only survived through previous economic downturns, but also had grown. “The industry has gone through recessions before,” Sasso said. “We continue to be successful because we keep investing.”

The executives all pointed to the consistent value of a cruise vacation, even lamenting how the cost of a cruise had decreased in real dollar terms over the years.

“We are selling cruises today at the same rates as when I entered the industry,” said Holland America Line president Stein Kruse. “We’re in a little dip, but as far as long-term prognosis, it’s very rosy.”

Carnival Cruise Line’s new president and CEO, Gerald Cahill, making his first appearance on the travel-trade circuit, said that his customers were still going on vacation, but were looking to spend less money, putting contemporary cruise brands in a very good position.

According to Cahill, “we will fare well compared with other discretionary consumer products.”

The lines also reported that sales were in line with their optimism. Mark Conroy, president of Regent Seven Seas Cruises, said that the line’s 2008 sales had already surpassed its total 2007 sales. Conroy pointed to opportunities for travel agents selling European cruises.

“The bad news is the euro is killing us in costs of operating expenses, with an all-European staff and the cost of building ships,” Conroy said. “The good news is it’s a great marketing tool for all of you. The value of cruising has never been stronger in Europe.”

The executives also said that the mobility of their ships would allow them to redeploy their vessels where there is demand.

“We have a patient schedule of deployment,” said Sasso about MSC ships. “We are looking globally as everyone else is. Wherever there is a population and water, there is a chance we will put our ships there.”

The executives assured travel agents that wherever their ships might go, there would be great opportunity for the U.S. trade. Between now and 2010, Hanrahan told the crowd at Cruise3Sixty that the industry would take delivery of an additional 77,000 berths. That 29 percent increase over current capacity would translate into an additional annual travel-agent commission of $300 million.

“We’ve seen record levels of investment in new capacity,” said Christopher Hayman, managing director for U.K.-based Seatrade. “The order book now stands in excess of $25 billion for 45 ships due to be delivered between now and 2012, with, I’m sure, more to come. That’s a really big commitment.”

The executives did not sugarcoat everything. Several pointed to the travel agents’ need to step up their efforts during the downturn. “The news media will make this recession a bigger deal and more apparent to everyone than it probably needs to be and blow it out of proportion because it makes great news at six o’clock at night,” Hanrahan said. “Don’t let that get to you. Continue to market, continue to be aggressive. People are going to want vacations.”

Indeed, the majority of agents polled by CLIA at the Cruise3Sixty event projected cruise bookings for 2008 would be better than last year. Adam Goldstein, Royal Caribbean International president and CEO, reminded both the cruise-supplier industry and travel agents that they do face a challenge.

“We have to market and sell our experience into an environment possessed by doom and gloom,” Goldstein said. “The talking heads on TV are speaking in draconian terms. We have to keep people excited about cruising.”


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Frank Del Rio, chairman and CEO Prestige Cruise Holdings, parent company of Oceania Cruises and Regent Seven Seas, spoke on the upscale cruising panel and said that the challenge for the lines was distinguishing their product.

“Don’t just recycle or copycat others,” he told his colleagues. “We see too much of that in this industry.” Peter Ueberroth, the former travel agent owner who became commissioner of Major League Baseball and is currently head of the United States Olympic Committee, was the keynote speaker at Cruise3Sixty. He also addressed the challenge of the economy.

“Don’t compete with each other,” he told the audience. “Don’t go for the 20 percent of the economy that cruises; go for the 80 percent that has never cruised.”

West Coast travel agents and suppliers attending the conferences were upbeat about future prospects for cruising.

“For us on the West Coast, there’s quite a bit of optimism out there,” said Christopher Chase, marketing manager for the Port of Los Angeles, “I think everybody knows and everybody feels that cruising will continue to grow.” With Disney Magic returning this spring and Mariner of the Seas coming in 2009, Los Angeles is getting “some ships that have great reputations in other markets,” Chase added. “I think that’s going to be a very positive thing for West Coast travel agents. The hardware coming in our direction presents a lot of opportunities. Your clients may have been to Mazatlan or Puerto Vallarta already, but the fact is that these newer ships have a whole lot more to offer your clients.”