At a Celebrity Solstice executive question-and-answer session for top-selling agents, in which both Azamara and Royal Caribbean International (RCI) brands were represented, the state of the cruise industry, given the current economic crisis, was top of mind. Several executives described consumers as having a "deer-in-the-headlights" fear of spending and suggested various measures to counter it.
RCI president and CEO Adam Goldstein said that, while the company is considering all sorts of moves and trying many, RCI is forging ahead with a tactical approach.
"If we went with a broad approach right now and it was the wrong one, there would be hell to pay," Goldstein said. "It’s premature for us to pick one way to approach this."
"We’ve seen this before," Richard Fain, Royal Caribbean Cruises (RCC) chairman and CEO, added. "It’s clear that this is worse than most of us expected, but the industry has the advantage of good value."
Fain drew nods when he said bookings were "remarkably good" until mid-September of this year, when there were "fairly dramatic" changes.
"All of a sudden, it was as if someone had thrown a light switch," Fain said. He noted that the company hasn’t yet worked out new consumer buying patterns, adding, "It takes a while to know what to do."
Celebrity/Azamara president and CEO Dan Hanrahan agreed.
"We’re having trouble seeing the pattern," Hanrahan said. "We’re trying everything from a reduced deposit to buy one cruise and get half off on the next."
Vicki Freed, RCI senior vice president of sales, told agents to reach out to clients by telephone and to help clients give themselves permission to travel.
"Tough times don’t last, but tough people last," Freed said.
Don Gleason, vice president of travel at AAA Arizona, said his company is hiring salespeople and investing in training.
"We’re being aggressive now to rebuild later," Gleason said.
He said 78 percent of the company’s revenues come from cruises and tours and asked about future commission levels. Hanrahan responded to Gleason by saying that more than 90 percent of the company’s business comes through agencies and all future discussions have been based on a strong distribution system.
When asked about price protection in the event that cruise rates drop, Hanrahan said that, except for a few promotions, Celebrity does price protect; however, agents have to ask for it.
"We are entering a difficult period," Fain said. "Neither of us can say that the way we are going to solve this is through the other one. We are both going to suffer and what we have to do is minimize it. We need you more today than we did three months ago. We need to deal with what is a mutual problem, and a big one. Our solution to the problem is not to take it out of the hide of the travel agents."
When Hanrahan was asked whether it is prudent to bring out five Solstice ships by 2012, especially given the current world economic situation, he answered, "We’re taking all five and if Meyer Werft can deliver them early, we’ll take them early. The Solstice ships will be our best earners."
Solstice is priced 20 percent over other Celebrity vessels.
In terms of itinerary changes, Hanrahan said there are no plans for additional changes. Now that Celebrity’s Australia/New Zealand sailings are cancelled for 2009/10, the line will probably sail in the region every second year, he said. Goldstein said there are no plans for RCI to take more capacity out of Europe after Brilliance’s announced move to Dubai for the 2010 winter season.
Commenting on the global nature of the line, Goldstein said, "Southampton, Barcelona and Venice are as much home to us as Galveston, Cape Liberty and Boston. "Our efforts to cultivate the local source market around these ports is just as strong."
Celebrity plans to take a targeted marketing approach in 2009, considering consumers, not by age, but by spending patterns. Hanrahan said the line will share its findings with agents. The average age on Celebrity now is 55, but with the Solstice ships executives feel they can draw Gen X cruisers as well. Twenty-two percent of current passengers are first-timers, 37.7 percent are past cruisers with other lines and 40.3 percent are Celebrity’s past passengers. About 30 percent of Celebrity guests are international.