Revenue
Posted By Cruise Market Watch / 21st September 2009
The growing Indian tourism sector has proven an opportunity for new venture Louis Cruises India. The subsidiary of Louis Cruises was officially launched in India on the 19th of September 2009. MV Aquamarine, a 1,200 passenger capacity cruise vessel will cruise from its homeport in Kochi (colonial name Cochin). The vibrant city situated on the south-west coast of the Indian peninsula is located in the scenic and prosperous state of Kerala, hailed as “God’s Own Country.”
Kochi currently receives 6 million domestic and .5 million internationational tourists annually with a 15% growth rate. Its proximity to the equator, the sea and the mountains provide a moderate equatorial climate. Its historic blend of Arab, British, Chinese, Dutch and Portuguese influences provide a rich cultural setting.
According to Mr. Oneil Khosa, CEO & MD of Louis Cruises India “exotic voyages to Maldives and Colombo are generating a large interest.” The product offering will be a fusion between Western and Indian themes – in entertainment, food and service. As a part of the launch, Kerala Tourism has signed an exclusive deal with Louis Cruises India wherein both parties will engage in joint marketing efforts for promoting Louis Cruises India. These include an inaugural sailing in Mumbai (Bombay) with media guests and Bollywood tie-ins.
Aquamarine will be conducting Kochi-Maldives-Kochi and Kochi-Colombo-Kochi cruises with overnight stays at both the destinations. The cruises have been specially designed to allow guests the flexibility for either 3-night or a 7-night cruises.
Mr. Khosa previously served DVB Bank as a cruise industry focused financier. DVB Bank has been active in the cruise industry M & A activities apart from conventional asset lending. Before joining DVB, Mr. Khosa was employed as a First Officer with Royal Caribbean Cruises Lines.
Posted By Cruise Market Watch / 17th September 2009
Travel agents report an average increase of 14% in cruise ticket prices during June, July and August of 2009 compared to April 2009, according to the quarterly Cruise Pulse survey. Pricing, while still below the same period the year prior, indicates stabilization in the cruise market.
There is also evidence of stronger pricing for cruises booked for 2010 departures, driven by interest in the new ship builds, more favorable demand in the European market and re-surging interest with luxury cruise lines.
Data was gathered August 25 to September 8, 2009 from 349 travel agents from around the world. Margin of error +/- 5.2%.
Read the full report here.
Posted By Cruise Market Watch / 21st July 2009
MSC Cruises has been a regular trackside advertiser at Formula 1TM races around the world for the past several years. They even have a Formula 1 Simulator aboard the MSC Fantasia.
But they aren’t just settling for sponsorships at the racetrack. They are aggressively getting into the race to acquire market share in the growing cruise industry.
MSC Cruises just launched its tenth ship – the MSC Splendida in Barcelona. The Splendida is the sister ship of the MSC Fantasia, launched last December 2008. She was the largest ship ever build by a European owner, carrying 3,959 guests. The MSC Poesia was introduced the March prior and the MSC Magnifica comes into service March 2010. Moreover, MSC unveils two more new ships MSC Meraviglia and MSC Favolosa in 2011 and 2012.
Head swirling? Here is a chart to help you get you oriented.
| Date | Passengers |
| MSC Poesia | Mar ‘08 | 3,013 |
| MSC Fantasia | Dec ’08 | 3,959 |
| MSC Splendida | July ’09 | 3,959 |
| MSC Magnifica | Mar ’10 | 3,013 |
| MSC Meraviglia | 2011 | 1,245 |
| MSC Favolosa | 2012 | 1,275 |
| | |
That is 130% growth in passenger capacity in just five years. What is the impact on market share? From a worldwide market share in 2009 of 4.3% to 5.1% in 2012. Doesn’t sound like much? That eight tenth of an extra percentage point alone means $230 million in gross revenue from a $29 billion 2012 worldwide cruise market.
Another eye opener, the MSC Fantasia was scheduled to host U.S. President Barack Obama, British Prime Minister Gordon Brown and other leaders from Russia, Germany, Japan, Italy and Canada at the G8 “Group of Eight” Summit in Italy early July. While those plans were scrapped when Silvio Berlusconi switched the venue from La Maddalena to L’Aquila, MSC Cruises nevertheless remains on a fast track.
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Posted By Cruise Market Watch / 4th July 2009
Below are price ranges for three different contemporary cruise lines for August 2009 sailings, balcony cabin, all 7-day eastern Caribbean cruises:
- Brand 1 = $739 – $1,309
- Brand 2 = $999 – $1,149
- Brand 3 = $1,463 – $2,309
Why is one line able to fill cabins at rates 50% to 100% higher than the others? Why are consumers willing to pay a steep premium even in tough economic times?
It is due to passion – consumer’s passion for the brand. Review the passion pyramid below. At its pinnacle is aspirational attainment – a brands ability to fulfill a market’s goals and dreams. Consumers who get here feel a kinship with the brand, they are where they belong and are willing to pay to get there. At the bottom is the mass market, where there is no pricing power because the vacation experience is a commodity competing on price.
Consider an example from the auto industry, where consumers pay more to purchase and maintain large SUV’s with four-wheel drives that are rarely if ever engaged. What is engaged is the fulfillment of the dream or idea that one could escape – a member of the group that can climb mountains and steer around avalanches – even if it is only on the way to the suburban grocery store.
A family vacation at its core is functional, but the choice of what vacation you take is “what does it say about me.” Consumers today consciously choose to associate with your brand. It is the label you use to display your kinship, like kachina dolls displayed in Native American Hopi family dwellings to designate membership in various clans. It is not just your vacation, it is telling others who you are.
And who is willing to pay a 100% premium for a contemporary cruise? Consumers who aspire to become members of the Disney clan. Disney’s power is derived from the fact they are not communicating in monologue, but engaging across multiple channels; cable networks, teenage pop stars, theme parks and 80-year-old characters that are cultural icons. Professor Ludwig Von Drake introduces me to cruising via podcast on my iPhone.
Most recently Disney Cruise Line is partnering with Kodak and Disney Channel to deliver themed cruises where cruisers will mingle with stars from Disney Channel shows like Hannah Montana, Sonny With A Chance, The Suite Life on Deck, JONAS, Camp Rock and High School Musical. All complete with autograph session and live performances.
“A dream come true for hundreds of kids this summer by offering kids the possibility to hang out with their favorite Disney Channel stars.”
Now that is something to aspire to.
Posted By Cruise Market Watch / 21st June 2009
Oprah Winfrey is with her employees this week on a cruise. At the same time, she has become part of a marketing trend.
According to Jo Kling, Founder and President of Landry & Kling, Inc, a premier cruise event services company “We anticipate the number of corporate and incentive cruise programs and meetings at sea to triple.”
And here at Cruise Market Watch, the trend is our friend.
How can one take advantage of a trend? It begins by identifying the market, then developing strategies to win it over.
How big is the market for corporate meetings and incentive travel? Annual estimates range from $175 billion to $40.3 billion. I prefer the Incentive Research Foundation’s $77.8 billion. If cruise acquires 2% (roughly its same share of the overall world-wide travel market) it would represent $1.6 billion in revenue or about 6% of all cruise revenues.
How to Win them
As one can see from our chart below – providing superior meeting experiences aboard a cruise ship at a competitive price will lead over time to market share gain from the competition.
The cruise lines are doing their part by building conference facilities on ships to rival those in hotels. For example, Royal Caribbean’s Freedom of the Seas boasts dedicated conference meeting space with breakout rooms and reception area accommodating up to 400 people. It also includes high-tech presentation rooms with color touch screens, wireless remote controls and teleconferencing equipment.
With the basic physical needs of corporate meetings taken care of, it is up to branding to communicate the message to corporate planners. The experience of a corporate meeting on a cruise is more exciting, motivating and rewarding. In addition, a cruise ship adds to employee camaraderie and bonding (ask Oprah).
Jo Kling and her team are going a step further. By understanding the habits of the target market they are re-engineering the group quote process online with a new venture called Seasite. Since nearly 80% of corporate meeting planners use the Internet for research, Seasite will for the first time consolidate cruise information online from strictly a meeting planners perspective. It also facilitates a single RFP and quicker quotes. The goal is to make the cruise booking experience equal to or better than the hotel experience. Speaking the customer’s language is always good thing.
“At Seasite, we understand that cruising for many planners is virtually uncharted territory. Seasite demystifies the entire process by providing easy access, depth of knowledge and the tools and resources needed to successfully plan and execute corporate meetings” says Kling.
I like the strategy. The Seasite slogan “One-Third Land, Two-Thirds Meeting Space” successfully evokes the question in a corporate planners mind – why not at sea? And Seasite accomplishes this without going directly to price (maintaining the brand and margins) or using a picture of a cruise ship (we know what a ship looks like – create the desire by selling us on the emotion).
And price? According to Kling, the cruise lines can offer meetings for up to 40% less than traditional hotels. A study by TNS about non-cruise corporate meetings taken outside of North American by U.S. companies states costs typically run from $750 to $570 per person, per day and average 4 days in duration. This breaks out roughly as
- 30% airfare
- 20% lodging
- 20% activities/entertainment
- 15% food
- 15% ground travel
The competitive cruise pricing structure, favorable meeting facilities and overall cruise experience leaves plenty of opportunity to deliver on the promise – rich and rewarding meetings that motivate and inspire employees. This will help cruise lines continue growing market share.
For more on our “growing cruise markets” series see:
Posted By Cruise Market Watch / 26th April 2009
The third edition of the Cruise Pulse Agent panel survey focuses on U.K. trends in addition to cruise bookings in the U.S.A. Special thanks to the over 660 travel agents world-wide for participating in these important surveys.
Among the findings:
- Price stabilization – there is evidence pricing is stabilizing.
- The “close in” booking trend is becoming a permanent way of cruising for North American passengers.
- Optimism increasing - particularly in growth regions such as Australia and New Zealand.
Download Cruise Pulse April 2009 – International Edition
Download Cruise Pulse February 2009 – Second Edition
Download Cruise Pulse January 2009 – First Edition
Posted By Cruise Market Watch / 29th March 2009
In 2009 we launched our series of discussions about niche market opportunities – markets where cruise lines can grow market share and revenue. The first niche in the series was the spa market. We sized the spa market for revenue potential and subsequently blogged a marketing strategy for how to successfully acquire share. This is the final post in the spa series, covering current cruise industry trends in the spa market.
Undoubtedly the oncoming demographic waves of boomers have an appetite for new senior lifestyles that emphasize active travel experiences and spending on rejuvenating the mind, body and spirit. Cruise lines are quickly positioning to take advantage, with the primary spa trend being the development of special spa cabins.
For example, the newly launched Holland America’s Eurodam has 56 spa cabins, staterooms located close to the Greenhouse Spa that offer special in-room amenities. They include a designated spa concierge to book treatments and four exclusive spa packages. Passengers can choose from Spa Staterooms on the Observation (floor-to-ceiling windows and scalloped verandas) and Panorama Decks.
Celebrity established an “Aqua-Class” for its new ships (Solstice, Equinox and Eclipse). Guests have unlimited access to the spa’s relaxation and thermal rooms, plus services of a spa concierge and free dinner in Blu. Other perks include upgraded robes and slippers along with in-room aromatherapy.
The Carnival Splendor offers 68 spa cabins connected to the ship’s 21,000-square-foot spa, and include free access to the spa’s relaxation suite. The new 3,646-passenger Carnival Dream will include spa staterooms with priority reservations, free access to fitness classes as well as the steam and sauna in the thermal suite.
Two new ships from Costa, the Luminosa and the Pacifica, will have special staterooms that allow guests to access a spa via a private stairway or elevator. Two spa treatments are built into the cost of these rooms along with meals at a restaurant serving healthy cuisine.
On NCL’s upcoming Epic a new category of spa staterooms will also be introduced. With cabins located near the spa, guests will have access via an exclusive key card. The 39 staterooms will also have 24-access to the thermal suite and each spa suite has its own whirlpool.
Another new ship, the Seabourn Odyssey, will introduce the largest spa facility ever on a luxury cruise vessel, at 11,400 square feet (spanning two decks). There will be seven private treatment rooms that (along with ocean views) have a dry float bed to envelops the user in a warm cocoon of relaxation once the body wrap ingredients are applied. Seabourn ships have always offered the “Firmatone Aroma Spa Ocean-Wrap” that smartly ties in the ocean/water healing experience by combining the richness of sea plants and marine algae with aromatherapy.
The Odyssey will also feature a separate spa deck above the main spa housing two private spa villas available for half-day rentals complete with dining areas, bathing areas and wraparound terraces.
Posted By Cruise Market Watch / 8th March 2009
The recently completed February edition of the Cruise Pulse travel agent survey panel analyzed responses from 254 travel agents gathered from February 22 to March 3, 2009. Findings provide further insights into wave season cruise booking trends. Highlights include:
- Cruise bookings have picked up significantly from January 2009
- On average, the price per booking per passenger has declined 16% to $1,580
- Travel agents are remaining optimistic
Download the entire study to see the details, plus:
- Which line was ranked the “the hottest cruise line?”
- Which line did agents choose as “most agent friendly?”
- Which the line would agents most likely recommend to clients?
Cruise Pulse is sponsored by Latin Capital Market, The Online Center for Latin American Stock Investing and Trading.
Posted By Cruise Market Watch / 7th March 2009
This recession is proving the cruise industry incredibly agile and able to successfully cruise past recession island. With an average annual growth rate for nearly two decades of 7.4%, the industry has a history of phenomenal success. Today cruising reaches a much broader market than the retirees of old. While diversification greatly expanded the market, it also exposes the industry to impacts in the mainstream economy.
For those who can take advantage of the tremendous deals being offered, Norwegian Cruise Line has introduced a job loss protection program in its insurance policy. For the one-week period ended March 1, 2009, Carnival recorded the highest number of net weekly bookings in its history.
CruiseMarketWatch.com estimates passengers carried will still increase by 2.6% in 2009.
Navigating four oceans
The industry will continue to chart the navigation of four oceans to cruise up the revenue growth curve.
1. Get consumers to start spending again (Pacific Ocean)
2. Absorb the new build passenger capacity (Atlantic Ocean)
3. Find new cruisers (Arctic Ocean)
4. Get prices moving up (Indian Ocean)
1. Get consumers to start spending again
Tighter consumer budgets mean shorter holidays (cruising to closer destinations), departing from closer homeports, booking closer to departure dates, and less onboard spending at the bar, casino and spa. When these trends reverse, we will have traversed the first ocean. Economists recently surveyed by Reuters forecast a 0.8 percent gain in U.S. gross domestic product during third-quarter of 2009 and 2.0 percent in the fourth-quarter.
2. Absorb the new build passenger capacity
One can’t help but be excited by the development of new and exhilarating ships. Oasis of the Seas, Odyssey, Dream, Equinox, Luminosa, Splendida, Luna, and others have jaw dropping wow factor. Most likely you already know that by the end of 2011 a total of 29 ships with passenger capacity of 70,390 will be added to worldwide fleets. This new capacity is projected to help add 2.4 million cruisers to the annual passengers roles.
3. Find new cruisers
Hotels, resorts and casinos are slashing prices to lure guests and be competitive. Cruise’s continued growth requires reaching out in new and creative ways to acquire market share from the likes of destination spas (such as Celebrity’s spa concierge and spa cabins on Eurodam and Spendor), weddings, family reunions, casinos, and singles.
Ships are sailing full due to the cruise value proposition relative to other vacation options. But we are seeing a higher percentage of former cruisers onboard because they are the ones who understand best the value, and are taking advantage of the aggressive pricing. In the long term, the goal is to find new passengers by maximizing trends in consumer behavior.
4. Get prices moving up
While oil prices remain low, cruise lines can offer striking cost savings for the consumer over comparable land-based alternatives. This is a great strategy for acquisition of market share and the cruise industry is undoubtedly growing its piece of the travel pie in 2009. As more people cruise, more will tell others and they will want to cruise too. The cruise industry is in an enviable position for the imminent economic recovery. This leaves the final stage of re-establishing the upward revenue growth trend – the ability to raise prices in the face of increasing demand and limited supply with positive impact on profit margins.
Long-term prospects are bright; it is an exciting and challenging time to be in the cruise industry. I love a good cliché. So grab the rails, we are riding this storm out. Industry leaders are charting the navigation of the four oceans for future prosperity and the vacation enjoyment of millions.
Posted By Cruise Market Watch / 21st February 2009
Feb 8th I began blogging our “finding new passengers series,” focusing on the size of the spa market and its growth potential. In this post I’d like to focus on the how.
First, let’s discuss the natural law of consumer attraction.
In order to bring the spa market to cruise, you must either create new first time spa users or take customers away from a different spa brand. Either way, you need to be seen as a superior spa alternative. As shown in the chart, if you demonstrate a “superior spa experience” for a competitive price you will draw away business from competition and gain market share. This is the law of consumer attraction – over time consumer segments within a market niche will gravitate towards the superiorly branded and priced alternative.
- How does the cruise industry create a “superior spa experience.” I suggest we use the fact the ship is surrounded by water to our advantage. About 60% of adult men’s bodies are water; babies are born at about 78%. Therefore, the most holistic, natural and organic approach to healing should be surrounding oneself with the most abundant and natural element on earth. We brand the fact we are placing the spa user in the best environment for the most true and honest spa experience.
- Here is the tough part to get over. To a spa user, it’s not about the ship, it’s about the spa. This may be a difficult concept for marketers inside the cruise industry to overcome – naturally we have been trained by repetition to focus on the ship. It took billions to build; we put hearts and souls into it and rightly love it. But think about it from a spa consumers view. As an example, look at the luxury watch ads – is it about the watch (spa) or about the store that sells it (cruise line). How about “To book an official AquaSpa experience today call 1-800-000-000.” Is this approach different for a cruise line, yes. Daring, definitely. Effective? Only if you want to create buzz and acquire customers from the spa segment.
- I’d partner with a well-known spa “guru” to create a unique brand, branded treatment techniques and spa products related to the seawater, then launch it in media where spa goers thrive. Furthermore tie in the ship menu, the shore side itineraries, the health club and on board activities (yoga instead of Vegas style show anyone?)
In summary:
1. Choose the target (destination spa users)
2. Brand the spa to be different and better (extraordinary, unique, new, trendy and the ultimate health experience due to natural healing of salt water treatments and peaceful, rejuvenating places).
3. Get the attention of the pod by taking your message to the alpha influencer
- Get an already famous spa name to co-brand
- Give spa writers and bloggers a free spa experience
- Advertise the Spa (not the cruise) to the target (spa magazines, web sites, buy google spa related ad words).
- Price the spa in. Remember the target is buying a new type of destination spa package, not a cruise.
4. Finally, deliver on the promise (build it, do it, don’t fake it).
Next week we will focus on some spa developments coming from the new cruise ships.
Charlie
Pietro
Stuart Falk
Greg
Robert