The Crystal Symphony sails into Sydney Harbor. // © 2011 Crystal Cruises
The profile of the new luxury cruisers and predictions of what they will do in an economy, which is at best fluctuating, occupy the minds of agents and suppliers alike. And, although recent economic signs have been ominous, agents and cruise executives in the luxury sector are reading the cards differently.
Tom Baker, 2010 Conde Nast Top Travel Specialist and president of the CruiseCenter in Houston, Texas, sees an economic pattern similar to when the economy dropped dramatically.
“There’s a real slowdown among the middle class, and the very high-end customer isn’t enough,” said Baker. “I’m worried about 2012.”
However, Brad Anderson, co-president of Avoya Travel in San Diego, Calif., said his company is having its best year ever.
“Prices are still too low,” he said. “But people buying in the luxury sector are not spending their last pennies when they book a cruise.”
Peter Shanks, president and managing director of Cunard Line, described these as challenging times, but added that people are still spending money on luxury items.
“In the luxury market, we are seeing everything — clothing, hotels, etc. — coming back,” said Shanks.
Jack Anderson, senior vice president of marketing and sales at Crystal Cruises, summed up the situation.
“There’s no question that luxury lines have been affected by economic problems, but the affluent market is large and the most insulated,” Anderson said. “They worked all of their lives and feel it’s their time. Occupancy is moving up, and advance bookings are strong.”
Sven Lindblad, president and founder of Lindblad Expeditions, said that agents must understand how mindsets are changing. A recent study surveyed 5.1 million baby boomers and 51 percent of them said that they are not interested in leaving money to their children — a huge shift from the previous generation. Boomers feel that they have helped and supported their children and, now, at around 60, they are at the beginning of a new life and are ready to spend it doing things that matter. From the perspective of people selling valuable travel, this new mentality is a huge opportunity.
Lindblad said that the cruise line was worried about the economy and, in August, expected to take a dip, but they have found a robust pace that is constantly increasing.
“We are building memories and unique experiences, and people see it as an intelligent investment,” he added. “Our expeditions are not cheap.”
Complicating the current outlook is that agents are concerned that, in today’s market, there is no one definition of luxury.
“I’d rather call it an upscale or inclusive vacation experience — it’s definitely not the same as the luxury product 10 years ago,” said Avoya’s Anderson.
Crystal’s Anderson considers this trend to be the biggest change in the luxury market.
“Old luxury was about things and tended to be ostentatious; new luxury is about enrichment, growth and experience,” Anderson said. “People are looking toward new adventures in life. They want personalized experiences, so we have regular shore excursions, smaller-sized outings, more flexible programs and ones where you can design your own experience.”
Baker agrees and, despite the protests of Oceania founder Frank Del Rio, he contends, that Oceania’s new ships are clearly a luxury product.
“Oceania delivers above what it promises,” said Baker, “and in the areas of cuisine and ambience, they are amazing. The only area that’s weak is entertainment.”
Baker also sees a clear luxury product in Norwegian Cruise Line’s Haven, particularly on the Epic. Brad Anderson, however, finds Norwegian’s exclusive areas a harder sell than an all-luxury vessel.
“Not that the value isn’t just as good or better — it’s just that explaining it to the client is more difficult than other lines that offer one product throughout,” said Anderson.
In contrast, Shanks sees a big advantage for Cunard being spread across sectors — from mainstream to luxury. The reason behind the diversity of the line’s approach to the luxury market is the broadened base of those who are wealthy.
“Today’s upscale cruiser didn’t necessarily have a lot of money 10 years ago, and we’re seeing people in their 40s and 50s onboard with young kids or multigenerational cruises,” said Avoya’s Anderson. “You don’t want to leave these people behind.”
Compagnie du Ponant is one example. Over the last eight years, the line has seen younger couples driving the average age onboard down about 10 years — from mid-60s to mid-50s, — along with a stronger emphasis on family cruising. Its seven-night cruises are particularly popular with more time-constrained clients, while its longer cruises to Asia, the Arctic and the Antarctic are drawing an older demographic and those who regard these types of cruises as trips of a lifetime.
In addition, many first-time cruisers are returning. Over the past three years, Ponant’s repeat factor is 85 percent; one in four guests is new to cruising; and one in two is new to Ponant. Its price point is rising slightly next year and the cruise line, like other luxury lines, is attempting to continue offering its lowest rates early and with strong incentives.
Windstar Cruises is also responding to a younger demographic and strong interest in its destinations. The line has rolled out a comprehensive land policy as well as the Sail and Stay package with hotels in turnaround cities. Windstar is launching eight new cruise itineraries next year, and its seven-day passage through the Panama Canal is almost sold out already. The line’s return to the Baltic this year brought many back-to-back bookings; it will return next year with Wind Surf.
Vanessa Bloy, director of public relations, said the company is offering its lowest introductory pricing in years, with early booking reducing prices by an addtional 15 percent and back-to-back cruises reduced by 5 percent.
Crystal’s Anderson emphasized the importance of offering the best rates early.
“For 2012, we are emphasizing early savings,” Anderson said. “Prices increased on Nov. 1 and will increase again on Dec. 31 on select sailings. We have to reconvince people and reestablish our credibility by rewarding early booking. I am hugely optimistic that this will be beneficial to the distribution system, the customer and to Crystal. I’m very confident that it will help stabilize pricing in the marketplace.”
Avoya’s Anderson sees the programs the cruise lines have launched producing bookings that are “surprisingly good.”
“Avoya affiliates stress the value provided, actually at a low cost, when you see what is encompassed,” Anderson said.
“The new Crystal program is working very well.” Baker agreed.
“Regent Seven Seas Cruises did a remarkable job of boosting its value and its sales with its new inclusions,” said Baker. “They have had some significant price increases and 2011 sold out on almost every voyage.”
Regent’s policy of including shore excursions in the cruise fare has made guests much more appreciative of its itineraries, as well. Whereas, formerly, only 15 percent of passengers signed up for the line’s shore excursions, now, 85 percent of passengers sign up.
Shore excursions are increasingly important to new luxury cruisers, and these experiences in port are central to lines such as InnerSea Discoveries.
“Luxury clients look for life-changing experiences,” said Tim Jacox, executive vice president of sales and marketing at InnerSea. “With InnerSea, we see amazing encounters in really remote places, and we will carry that into Hawaii with aspects such as the Molokai experience, which you can only do with us.”
The emphasis on unique experiences has formed the identity of Azamara Club Cruises. President and CEO Larry Pimentel said that the line’s shift has been a bull’s eye for the new luxury cruiser.
“Now, the guest scores are unlike anything I’ve seen in my career, and I’ve been with some pretty formidable lines,” said Pimentel. “We’re seeing average scores of 299 out of 300 on a full ship, carrying 41 nationalities.”
The company has raised its per diems significantly and found its distinction by slowing the cruise down. Concentrating on the destination, it has increased overnights and multiple nights in a port. The line has also gone to extreme lengths to deliver a bespoke experience, taking guests to buy limited-edition, handmade objects.
“Others have more physical space, more bells and whistles, but no one cares,” Pimentel said.
He believes that many of the guests who are cruising with Azamara for the first time are attracted to the fact that they are spending more time exploring destinations.
Crystal’s Anderson also noted that many guests are attracted to philanthropic excursions, suggesting that clients want to interact with local cultures and contribute something rather than being traditional tourists. Crystal’s You Care, We Care shore excursions are being expanded throughout the world, since feedback indicates that guests find this the most meaningful experience of all.
There is agreement that everyone, on every level, is looking for value but, ultimately, in today’s luxury market the experience is the most important.
“The way to sell luxury is not to start with value,” said Anderson. “The cruise lines are as guilty — if not more so — as the agents in talking price and savings. These are important, but it is the experience that motivates clients to travel. Agents need to make the invitation on that basis — experience, learning, meeting new friends. Then, the agent becomes the curator of extraordinary experiences, and they can talk about purchasing wisely.”