The 'Ripple' of 2003

The traditional first-quarter busy season never develops into a tidal wave

By: Theresa Norton Masek

This year’s Wave Season is nowhere near a tsunami, but neither is it a complete washout.

“Around here, we’re referring to it as the ripple,” said Lisa Bauer, senior vice president of sales for Royal Caribbean Cruises Ltd.

Throughout the industry, cruise lines are reporting decent sales, but nothing like the huge wave of bookings that is traditionally seen during the first quarter of the year.

“Bookings are coming in, but at a less predictable pace and not at the usual velocity,” said Bradley S. Ball, director of public relations for Silversea Cruises. “But it hasn’t been a total washout.”

What’s to blame? Obviously, there’s uncertainty about a war with Iraq, the threat of terrorism and the sluggish U.S. economy.

The Orange Outcome

Bauer recalls the day the security alert was raised to the orange level by U.S. Secretary of Homeland Security Tom Ridge.

“We were having really strong booking levels that Monday and Tuesday,” Bauer said. “On Wednesday, when Tom Ridge took the warning to orange, it was almost like someone disconnected the phones.”

Ball agreed. “It depends on daily events,” he said. “People are tuned in to the radio and TV, and if it’s a good news day and looks like things will be resolved, we get bookings. If it’s a bad news day, everything seems to slow down.”

The bookings that are still coming in are often for close-in departures.

“We’ve definitely seen a major shift in business to within 90 days of departure,” Bauer said. “A good 10 to 15 percent of our business is for within 90 days; that’s more than we’ve historically ever seen.”

While that’s been the case for most cruise lines, ever since Sept. 11, Bauer thinks that there’s more to blame now.

“I don’t think it’s related to Sept. 11 anymore because we’ve had such a strong recovery,” she said. “Consumers think, firstly, if they wait until it’s closer in, they’ll get a better deal; and secondly, there are overall concerns around what’s happening with the war and economy in general.”

“We started out really strong and Norwalk (virus) certainly didn’t do the industry any favors. But just as we were coming out of that, we went to orange.”

A Good Beginning

Patrick Clark, vice president of sales for Uniworld, a Los Angeles-based river-cruise specialist, said that while booking patterns for river companies are slightly different from big cruise lines, the quarter got off to a good start.

“It started out strong and even today, we’re still ahead of last year,” he said. “Russia is booming and China still looks strong, despite the recent things going on with North Korea. And Europe is up, but not a lot. It was up a lot earlier, but over the last month, with all the talk incessantly on TV and in print, it caused people to hesitate.”

Uniworld responded with its cancellation plan that allows clients to back out of a trip, for any reason, without major penalty.

Cancellation Plan Works

“It has had the desired effect,” Clark said. “We’ve had hundreds of passengers book, as a result of that. And it’s really helped us in these last weeks, as the rhetoric heats up, and is psychologically working on people and the economy.”

Interestingly, Uniworld is seeing some bookings for departures in the late summer, the fall and the winter.

“There’s been so much publicized about the timetable and the unlikelihood that it would go beyond March for any kind of land conflict,” Clark said. “Those that have some nervousness don’t want to go in the spring, but they’ll go in the summer or fall.”

War Timetable

Apparently, the conditions in Iraq and the Middle East would become too windy and sand-blown for U.S. troops after March.

“Some people think if it’s going to happen, it’ll be in the next month or so, or it’s not going to happen,” Clark said. “Or it’ll happen much later.” Clark also said that some clients feel safer cruising in small river boats of 100 or fewer passengers, which dock in small cities.

“It’s not the same as a big cruise ship, pulling into a high-profile port,” he said.

Bauer, however, said RCCL plans on keeping three Royal Caribbean International and Celebrity ships in Europe this summer, whatever happens in the Middle East.

“Europe has been holding its own in the past seven to 10 days, but we’ve seen that slow down a little bit,” she said on Feb. 25. “The trade is a little concerned that ships will be pulled.”

Princess Cruises pulled the Grand Princess from its previously scheduled Mediterranean season to keep it in the Caribbean.

“We’ve made the decision the ships should stay in Europe, even when we do go to war,” Bauer said. “Our financial analysis shows that we will still do better in Europe than to move them and not have ample time to market and sell them.”

Scandinavia is ‘Cool’

Silversea reports that its summer Baltic cruises, with visits to St. Petersburg, are doing especially well. St. Petersburg is celebrating its 300th anniversary this summer, and Scandinavia is also perceived as a safe region, Ball said.

“In people’s minds and reality, it’s a safe, secure place with no anti-American sentiment,” he said. “It’s cool to go to Scandinavia now and it’s attracting a younger demographic.”

Bauer said that Alaska is booking well, which is often perceived as a safe destination, along with the Caribbean, which is doing OK but not great, she said. The challenge in the Caribbean is the heavy concentration of capacity with the familiar result of dropping fares.

“Unfortunately, there’s not enough demand. So, everyone is lowering prices, which we don’t agree with,” Bauer said. “We have such high conversion rates, that we don’t believe price is the issue. It’s a demand issue.”

Don’t Retreat

While Royal Caribbean hasn’t followed Uniworld with the cancellation incentive, Bauer said that it has increased its marketing, both to consumers and travel agents.

“We have pages and pages of initiatives,” she said. “We’re expanding our seminars-at-sea, we’re partnering on cruise nights, we’re at all the various trade shows, we’ve increased our co-op spending, and our sales people are everywhere working with the agencies.”

In a nutshell, advertising and marketing should increase in challenging times a theory to which travel agents should also subscribe.

“We believe that in times like this, we have to be more aggressive with our sales and marketing,” Bauer said. “Don’t retreat. Get out and market as much as you can.”