Archive for October, 2008

Carnival ready to launch new ad campaign with agency partner Arnold

Ad agency and media bible Brandweek magazine is reporting Carnival Cruise Lines will soon debut a new ad campaign under the tagline "Fun For All. All For Fun."   This has been highly anticipated, since Carnival dropped CooperDDB for Arnold in June 2008. Arnold was the agency of record for Royal Caribbean until December 2007.

The new campaign will start Oct. 26 in Dallas with a World Record attempt to create the biggest beach ball followed by the largest pinata Nov. 2 in Philadelphia (details below). According to Brandweek, footage from the events will be used to create national TV spots.

Carnival's signiture in room activityOther advertising includes a series of online videos based on Carnival's "get your pod chirping" in-room activity - the towel animals (pictured here with a soft toy friend who apparently wants to get in on the act).  The online clips are at www.carnival.com/funville undoubtedly with the hope of going viral on the likes of YouTube and other social networks.

Further event details:

The first event is Sunday, October 26th at 12 noon at Pegasus Park in downtown Dallas.  The World's Largest Beach Ball is 35 feet tall or about 3 stories. Senior Cruise Director John Heald will be in attendance tossing around the humongous beach ball.

The second event is in Philadelphia's City Center at North 20th and Market streets on November 2.  The World’s Largest Piñata is 62 feet tall and 55 feet long or about six stories - and filled with 8,000 pounds of candy. Click here for an on-the-spot account or here for an ad age video wrap up.

Updated 10/6/08.

 

 

 

 

 

 

 

View from under a cruise ship

Starting with the most recognizable object, the anchor.  It weighs more than 10,500 kilograms, or 23,00 lbs and is attached to 13 lengths of anchor chain. Each length is 15 fathoms or 90 feet.

The large "odd shaped" object protruding from the front of the ship is the "bulbous bow." Used in most large modern ships with long, narrow hulls such as navy vessels, freighters and passenger ships the bulb modifies water flow around the hull reducing drag and increasing stability and speed. It also improves the "islands per gallon" 🙂 extending range up to 15 percent.

The "fan things" on the side are the bow thrusters. They allow the ship to turn in port. Only used at slow speeds or when stopped, they have reversible propellers to push the ship’s bow to port (left) or to starboard (right). When the bow thrusters are operated together with the pods (located at the stern of the ship) the ship is able to move sideways or turn on a dime.

The last photo is taken from directly under the ship at the bottom of the hull. The 101,353 ton Destiny (the first passenger ship to have exceed 83,676 tons since the Queen Elizabeth launched in 1938) is carefully positioned and lowered on the resting blocks shown in the photo.  Then the formerly submerged portions of the ship are cleaned and coated with anti-corrosive and anti-marine growth paint. They've also been using a new hull paint that reduces the ship's drag in the water.

 

Increase onboard revenue with digital pictures.

Recently onboard the Carnival Destiny I was fortunate to be photographed several times by the friendly staff.

Pouring over the giant wall of fully developed photographs, I couldn’t help thinking of the I-phone. You know, the nifty screen where you flip through pictures with a short flick of the tip of your forefinger.

Had Carnival shifted to digital cameras, the entire photo developing and printing process could be limited to only the pictures actually desired by passengers. It might look something like the kiosk at your local Walgreens.

It would reduce expenses by:

  • Saving back-end labor processing, printing and placing the photos up on the wall
  • Cutting the cost of all those negatives and photo paper

It would increase revenue by:

  • Freeing up a lot of retail wall space for other product.
  • Freeing up passenger time spent squinting and scanning the hundreds of prints so they spend time in other profitable places
  • Making it more convenient and easier to find the pictures.   By displaying watermarked digital images (categorized by date and time taken) on a few widescreen kiosks, as well as searchable via shipboard TVs, cell phones and even for purchase on the Cruise company’s website would increase exposure and sales.  Even friends at home could see and buy them.  Bottom line, I know there were a couple of photos I couldn’t locate on the wall. It would have been nice to casually browse for them on the web later from home.

 

 

Possible reasons one of NCL’s new F3 ships was put on hold

The latest news posted October 10, 2008 about Norwegian’s new F3 ship-build by Cruise Critic clears up some of the questions about the ship's status. In a nutshell, speculation is Norwegian may only take delivery of one of the previously two ordered ships. It likely prefers to pay a stiff penalty as opposed to the full price tag for delivery of the second ship. The shipbuilder would then shop the partially completed second ship to another buyer.

 

The reason for this turn of events might be found in the seemingly unrelated world of private equity investment.  The price tag for delivery of the full two ships would come amid a rough time for Apollo Management, the private equity firm founded in 1990 by Leon Black.  It owns 50% of Norwegian (Regent Seven Seas Cruises and Oceania Cruises are under ownership of Prestige Cruise Holdings, Inc., a corporation also controlled by Apollo).  Oceania also has one new ship on order for 2010 and a second in 2011).

The recent stock market turn of events has squeezed many private equity firms who acquired companies in leveraged buyouts with low-cost debt. With revenue growth not materializing quickly enough to pay down the debt (due to a consumer spending slowdown) and refinancing difficult (due to the freeze on capital financing) many are struggling meet their obligations. To grow cash flows and pay down debt, they have to implement cost controls and cut new capital expenditures.

Recently, Apollo has seen several companies in its portfolio of holdings in trouble.  The home furnishings retailer Linens ‘n Things filed for liquidation.  Costume jewelry retailer Claire’s Stores and Realogy, parent of Century 21 and Coldwell Banker are reported by NY Times to be under pressure and closely watched by analysts.  Casino Harrah's has been slowly cutting jobs since early last year and may seek to amend credit agreements, according to a Deutsche Bank AG report. Lastly, a court ruled Apollo's chemical company Hexion (that was trying to back out of a $6.5 billion merger) honor terms of the agreement or face-uncapped damages for breach of contract.  Apollo forked over $540 million to help Hexion proceed on closing the court ordered deal.

All these events have transpired in the last few weeks.

 

Cruise value will be enough to manage economic slowdown.

One can make an argument that the slowdown, over the long term, may actually help the cruise industry. Hear me out.

Yes, in recent weeks there has been a decline in bookings and some price drops as a response. Declines have also been noted here in our CruiseSearch and Cruise Price indexes.

Once the initial panic to the stock market fall stabilizes, vacationers will begin to feel less stressed, adjusted to their current economic circumstances and more comfortable to begin booking again. This will happen soon.

Over the longer period of a recession, I believe vacations (perhaps considered a luxury to previous generations) are now considered a necessity.  Even in this economic slowdown, people will still be looking for something to do – just searching for a better vacation value.

This will mean:

  • Families who were thinking 7 day cruises will now be booking 4 or 5 day cruises (shorter cruises in-fact, might prompt higher per-day per passenger on-board spending).
  • But most importantly, non-cruisers who were considering a different type (more expensive/less value) of vacation may now consider a cruise.

Where else can you find for as little as $100 per person per night?

  • Breakfast, lunch and a lobster tail sit down dinner – every day
  • Water-park
  • Nightly Vegas style entertainment
  • Hotel room accommodations
  • Travel to exotic destinations
  • Casino, shopping etc. etc.,

No doubt, the oncoming recession is serious. Cruise lines earnings per share will be impacted. To keep prices low and cabins filled cruise lines will make:

  • additional expansions to local ports of call (further reducing consumer's travel costs)
  • more pricing segregation on ships – meaning less access to fewer included amenities for lower priced berths.
  • fewer all-inclusive amenities overall and more charges for on-board services.

My point is the recession may actually stimulate some non-cruisers to try one for the first time due to the value.  Over the long term, this would further expand the market and positioning cruise lines for even more success in the future. To make this happen during these rough economic times, cruise lines must not back-off promotions, advertising the worry free escapism and value cruises offer.

 

September Cruise Search falls for second consecutive month

Our monthly Cruise Search reflects change in demand and online market share.  U.S. online cruise search is estimated at 8.8 million monthly unique individuals for the month of September.  Cruise Search shrank for the second consecutive month, both versus the prior month and September of last year.  This points to continued weakening in online cruise search activity as the economic conditions faced by travelers have worsened.

% Change for September '08
vs Last Year vs. Last Month
Total Internet Traffic 4.2% 0.3%
Total Cruise Search -6.1% -3.3%

 

Percentages in the charts below represent the approximate share of all online cruise traffic.

Chart 1 - % of traffic for top Cruise Lines from all cruise related traffic (click to enlarge)

Chart 2 - % of traffic for top booking sites from all cruise related traffic (click to enlarge)

 

 

There is word is that cruise bookings have declined further in October, and this is being reflected in last minute discounting of fares.  Royal Caribbean posts earnings on Monday, October 20.  It will be interesting to hear how it forecasts for coming quarters.

 

Biggest Ever All Deaf Cruise Aboard the Freedom of the Seas

If you are a reader of my blogs, you know I love unique.  And it doesn't get much more unique than combining the biggest ever all deaf cruise with Justin Kent, the inventor of the world’s first MIDI Turntable, an optical system for DJing video.

DJ/VJ Justin Kent created history October 28, 2007 when he joined with the Sencity team (Sign Dancers, Deaf Dancers, Aroma Jockeys) to transform sound into vision. Performing with his signature EJ Turntable, Justin turned the Freedom of the Seas into a South Beach nightclub.

By spinning rhythmic visuals for 2,000 hearing impaired guests, he helped the passengers feel the music, whether or not they could hear it.  Kent told Cruisemarketwatch it “gave me an unprecedented opportunity to focus on how the music looks, for people that experience vision and sound in a totally different way. This might be the biggest challenge a DJ could possibly face.” For more info, visit Passages Deaf Travel.

 

The Mortgage Meltdown: The Consumer Behavior Impact

 

The current crisis will be reminiscent of the post 911 "cocooning" phenomena that lead, to among other things, a revolution in kitchen home remodeling towards creating larger and more accommodating spaces to share and enjoy with friends and family.

A new post "Mortgage Meltdown" economy will manifest itself in everything from food (smaller portions) to shopping (socially and environmentally conscious) and excursions (healthy, smaller social footprint).  For the next several years, keywords will be caring, self-consciousness, reflection on "what's really important" and restraint - the opposite of anything appearing as gluttony or greed.

According to a new Ad Age article, Celebrity "is said to be pondering whether its messaging, which uses the 'Starring you' tagline to focus on the pampering, indulgent treatment it offers guests, is right for the economically challenged times."

 

Fuel price decline sweet cruise news in tough market

With markets in free fall and cruise line stock prices getting hammered to 6 and 7 year lows, Carnival released a bit of positive news today.

Effective October 31, 2008, the existing fuel supplement will be eliminated for all new bookings on 2010 departures. Additionally, the company established guidelines for reimbursement of the current fuel supplement charge for 2008 and 2009 voyages.  Essentially, if the price of light sweet crude oil is below $70 per barrel, the fuel supplement will be refunded in the form of a shipboard credit.

The news is interesting on several levels.  For one, it seems to illustrate that at current cruise ticket prices, oil at around $70 per barrel is "cost neutral" to Carnival's earnings per share.  So any drop under that area should help Carnivals bottom line earnings.

From a consumer marketing standpoint, I think it is also a smart move.  As long as the refund system is implemented in a simple to understand and straightforward way, it turns the pesky little surcharge into a clear customer partnership.  Consumers now have a "buy-in" or shared stake in cheering for lower oil prices along with Carnival.  Inherent with that buy-in also comes an easier acceptance of handing over a few extra bucks of compensation if oil goes higher.

 

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Island Cruises brand no longer under Royal Caribbean

 

Liberty of the Seas - Royal Caribbean Internat...

Liberty of the Seas - Royal Caribbean International (Photo credit: Timothy Wildey)

Announced today, RCL sold off its stake in Island Cruises and will move its control of one ship from the group to the Pullmantur brand.