Click here to download a complete PDF of the October 2009 Luxury Cruising supplement.
As cruise lines bring out new ships and features to satisfy the luxury market, agents are finding that selling upscale cruising today requires a whole new arsenal of knowledge, offerings and approaches.
Some cruise sellers say that the age of conspicuous consumption died with the Great Recession. While people still have money to spend, it seems that few feel good about doing so frivolously. For some, it is a moral issue of “fiddling while Rome burns” — that is, enjoying the good life when so many are struggling. For others, it is a financial issue, not wanting to burn through their own savings.
Today's luxury cruiser is getting more bang for
their buck. // © 2009 Regent Seven Seas Cruises
As a result, wallets have tightened, and a much more savvy luxury consumer has emerged. The new cruisers are looking for more than just good value — they need offers they can’t refuse. And, today’s luxury customer is increasingly Internet-conscious and discerning; the agent who is not on top of all aspects of cruising will soon find clients moving in another direction.
Such is the backstory to a broader scenario that is still unfolding. Witness the latest pricing initiative in the luxury sector when, last month, Crystal Cruises changed its entire pricing structure to include free air and other value-added offers.
Many consumers are taking advantage of trying out “these once-overpriced, high-end products, and feel they are getting an incredible deal, as if they are buying a foreclosure,” said Diana O’Regan, co-owner of San Simeon Travel in Cambria, Calif.
In fact, these consumers are getting incredible deals. For per diems that are around half of what they once were, guests on today’s luxury ships get a whole lot more than they would on contemporary, premium and upper-premium vessels.
For starters, agents say they upsell clients to luxury based on the luxury vessels’ higher space ratios, larger staterooms and bathrooms, the all-inclusive nature of the luxury product, the higher standards of service and cuisine, better amenities, the ability of the smaller luxury vessels to cruise into ports that the big ships can’t reach and more. Moreover, the luxury lines, with the exception of Crystal, require no additional
outlay for gratuities.
Most of all, however, agents say that the pricing initiatives and all-inclusive nature of the products are what helps them sell luxury cruises. A week after Crystal’s announcement, it was clear that the new pricing was working.
“There is a great deal of renewed interest in Crystal because of its new promotions,” said Susan Reder, owner of Frosch Classic Cruise and Travel in Woodland Hills, Calif.
The new initiatives are also helping agents upsell. Ruth Turpin, owner of Cruises Etc. Travel in Fort Worth, Texas, said she expects Crystal’s new offerings to attract people who have never been on a Crystal cruise. She emphasizes to new clients that the two-for-one offer with airfare included is a great deal.
Other luxury cruise lines that have offered pricing initiatives have been reaping big benefits, according to Reder.
“Regent Seven Seas Cruises [RSSC] is still off the charts, and Silversea Cruises is bouncing back with lots of interest with its offers of 65 percent savings,” Reder said. “The Yachts of Seabourn, however, has slowed a bit after their push a couple of months ago.”
RSSC’s free shore excursions and air promotions have been very effective persuaders, and cruise sellers say they are using the included excursions to motivate clients.
“Its shore excursion inclusion has helped us close sales,” said Anthony Adler, president of Cruise and Resort, Inc. in Sherman Oaks, Calif. “Some have even switched from other luxury cruise lines.”
Late last year, RSSC’s executive team searched for ways to distinguish itself among other lines.
“We decided that our goal was to be the cruise line offering the most inclusive product in the world,” said Andrew Poulton, director, corporate communications for RSSC.
When it comes to the all-inclusive nature of luxury cruise lines, Ralph Cooper of Bon Voyage Travel in Tucson, Ariz. sees the benefits.
“As much as I dislike two-for-ones and free air add-ons, they are definitely working,” said Cooper. “The early booking promotions help push the decision-makers, particularly as consumers learn that, on certain cruise lines, the early pricing is the best.”
Another way that agents upsell to luxury cruises is to compare per diems. When Silversea’s initiatives were announced, Selvaggia Rimoldi, a Silversea sales consultant, ran the numbers to calculate the savings on a 2010 voyage on Silver Spirit, which will begin service in January. She found out that the total per diem came to $400 per person for the nine-night voyage from Barbados to Fort Lauderdale ($3,680 per person, with all port charges, taxes and air included). According to Rimoldi, the promotions represent the most significant savings she’s seen come across her desk during her six years with the company.
“Before we had the Silver Savings, with up to 50 percent off, but it only applied to select voyages,” she said.
The new ships coming into the luxury sector are sparking interest as well, both among consumers who are new to luxury cruising and those who have been loyal customers. The greater size and more extensive amenities seem to be a plus, and comments so far appear to support the cruise lines’ take on what the luxury client is looking for.
For 2010, pricing and perks initiatives are driving business upward, with cruise sellers reporting an uptick in the luxury segments of their businesses. Some even report that space is now becoming difficult to find aboard the luxury vessels, which is a good thing, according to Greg Nacco, of Seattle-based Cruise Specialists.
“Once you push the booking window past six months, you can begin to raise the rates,” he said. “Right now, it’s important to let customers know that the rates in the current marketplace are artificial and will rise eventually.”
Of course, with the luxury lines offering such
incredible deals at the moment, it raises concern about what will happen when cruise lines revert back to higher per diems, said Christine Calderon, marketing manager for Cruise Specialists.
“I’m sure luxury cruise lines are wondering just how they are going to raise the prices, now that their passengers are getting used to all the included goodies.”
For now, luxury cruise companies are content to see the new business. And, cruise-sellers are too. With the new initiatives, agents are seeing more than just last-minute bookings come across their desks. There’s a serious focus on next year.
“When we look back at 2009, it is not going to be a good year,” Cruises Etc. Travel’s Turpin said, “but the large number of bookings we have lined up for 2010 speaks well for the future.”
Staying the Course
The luxury sector, in general, has done an exceptional job of supporting agents by adding tremendous value to the equation but keeping pricing steady, according to Jeffrey Anderson, vice president of marketing for America’s Vacation Center (AVC).
“I didn’t expect to see yields perform the way they have,” Anderson said. “I am really impressed. The luxury lines have thrown in so much on the backside — free air, onboard credits, all sorts of perks — but our records show that the prices clients are paying hasn’t changed much at all. As a result, commissions are about the same, and agents are definitely taking careful note of the lines that support them.”
Anderson said that, in terms of the up-front product price, the luxury lines have not dramatically lowered their prices, and the bottom line is that they are not forcing agents to bear the burden of the economy.
“This is ‘putting your money where your mouth is’ in terms of support for the distribution channel and most of the luxury lines have done a remarkable job,” he added. “They have proven that they are willing to continue to invest in agents. The difference between what customers are paying this year in comparison to last year [for an enhanced product] is very small. Our hats are off
However, Anderson sees the new luxury ships, overall, as a double-edged sword for the cruise industry.
“In some ways, cruise lines that are launching new products are having a more difficult time than those who aren’t,” Anderson said. “Especially when there has been a gap of about a decade between older ships in the fleet and the new ones — nearly everyone wants to experience the newest ship, and it creates a problem in selling the rest.”
Going into 2010, AVC is optimistic about the strategies shown by the suppliers and is a particularly big fan of the companies with strong anti-rebating policies.
“People are still willing to pay good money, and the lines that keep dollars in the agents’ pockets are the ones the agents will support,” Anderson said. “If they didn’t, they’d be out of business.”