Posts Tagged ‘industry’

Luxurious growth in the cruise segment

The Seabourn Spirit, Sydney Cove, Sydney, Aust...

The Seabourn Spirit, Sydney Cove, Sydney, Australia. (Photo credit: Wikipedia)

In 2008, there were about 10 million U.S. households with a net worth above $1 million (excluding home equity).  This is almost double the number from 2002, just six years earlier.  This growth has led to a boon for retailers who can appeal to the luxury market.

In fact, over the past ten years luxury has seen the most growth of perhaps any market sector. During this time, revenue growth in the regular retail mass-market has been in around 4%-6% annually.  Comparatively, growth in the luxury category has been from 20% - 32% annually.   Estimates are the luxury segment will continue to grow at a rate of 15% a year to 2010.

It is no wonder cruise lines have been scrambling to fill the increased demand for luxury.  From now until 2011 luxury cruise line capacity will increase 30%.  The rest of the cruise industry’s capacity will increase 17% over the same time period.

The bulk of this increased luxury capacity is with Carnival’s Yachts of Seabourn.  It alone is growing passenger capacity 216% over the next 3 years - from a current three-ship total of 624 passengers to a six-ship total of 1,974 passengers.

Over an entire year this amounts to a considerable amount of new customers to win.  Approximately 50% of Yachts of Seabourn’s current consumer base is a repeat customer.  Therefore, Seabourn will need to generate significant interest within the luxury niche to find and expand its customer base.

It is interesting to play with the numbers.  Assume each of three new ships (the first named Odyssey, with its maiden voyage scheduled to depart Venice, Italy, on June 24, 2009) are at sea for a total of 48 weeks per year with a trip duration average of 17 days.  That’s roughly 20 trips per year per ship, or 60 total sailings per year.  With 450 passengers per ship, that equates to 27,000 new passengers annually.

How to win them

To win them, Seabourn will communicate its unique experience: industry’s best crew-to-guest ratio, “of coarse” attitude, engaging social environment, well-appointed suites and privileged access to the world’s most desirable ports of call.

According to Greg Furman, Founder and Chairman of the Luxury Marketing Council “In addition to the search for the memorable, the unique and services that have high value, is what I call the rise of connoisseurship and the hunger to know. Never before has the luxury market seen buyers as interested in learning what constitutes the best of the best.”   In addition, the luxury consumer has become “more and more demanding of superior service, intelligent communication and a personalized understanding of their wants, likes and desires.”

Seabourn will use marketing to generate positive social conversations about Seabourn within the most discerning ultra luxury travel segment in the world. Conversations that will lead to increased agent, friend and family referrals.  Again, Furman: “They want sophisticated marketing, marketing intimacy, one-to-one marketing, what I call intelligent coddling by brands.”

Not to be left out, Regent Seven Seas Cruises recently announced that it will invest approximately $40 million dollars to implement an extensive refurbishment and enhancement of the line’s all-suite vessels.  "We are not only refurbishing the ships, we are adding many new luxury features that will enhance the guest experience,” said Mark Conroy, President of Regent Seven Seas Cruises. “This comprehensive enhancement program will see each of the ships emerge essentially brand new and positions our fleet as the standard-bearer in the luxury cruise category.”

 

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.

 

Mobile applications for increasing on-board revenues

Here is an idea.  Symbolically shed the vestiges of corporate life and ritually transition into the freestyle cruising culture.

Encourage owners to bring their Blackberry’s and iphones and upload a NCL widget.  In a fun and lighthearted way users would transform their “electronic lease” into a “personal freestyle cruising digital assistant.”

Talk about fish swimming against the school!

The widget would become passenger’s freestyle 2.0 on their phone - leading them through the leisure metamorphosis  - displaying shipboard services, event calendar, download pictures from phone to personal web page, delivering messages and even facilitating epayments.

Benefits:

  • The ritual transition communicates and strengthens the brand positioning
  • The widget tool increases and facilitates on-board spending
  • Acts as a retention device as the widget facilitates sending future “reminders” of the “freestyling” times once the passenger has returned back into the corporate office - along with offers to book next years vacation
  • First to market enhances image versus competition – particularly among a key market segment of business class professionals
  • Function off shipboard wifi or cell service

For example, a mobile campaign for Smirnoff vodka loads an application onto a user’s phone that guides them through how to include Smirnoff into a fun evening.  Users can enter the social situation they find themselves in – a business dinner, night out with the guys, or first date –and receive suggestions as to what cocktail order would be most appropriate for the situation.

The application even takes advantage of cross-promotional opportunities, suggesting bars and restaurants that are strategic partners, located in cities around the world, so that a business traveler can find an appropriate place to go while in a strange city.  And at the end of the night, the application will even call you a cab and give you directions back to your hotel.

Holland America has taken the first step in this direction with its custom e-brochures.

 

Cruise Ship 2.0

Web 2.0 is linking people.

Cruise 2.0 is linking cruisers to booking agents, travel discounters, reviews (by actual cruisers not professional critics) and self-created travel blogs.  Where is it going?

The article "Understanding the Psyche of Tomorrow's Travellers" states future cruisers “have grown up in an era where computers and rapid communication are the norm, where landline telephones are considered a waste of space as they live on their cell phones and communicate via texting…prospective college roommates have already checked each other out on social networking sites, where they have shared their most personal thoughts with the whole world.”

The trend is already picking up considerable momentum.  A recent article from Theodore Koumelis "Web 2.0 playing big role in decision process" states "research conducted in August 2008 by Prophis Research with online US adults has shown that, when compared with a range of offline and online sources for travel decision-making, Internet sources are largely seen to be near the top of the list."

I envision a cruise ship version of classmates.com.  Select the line, ship and date.  Proudly receive a “badge” (an electronic version of state stickers RV vacationers place on their vehicles).  This automatically invites you to link to all others who were passengers on the same ship – opening communication channels to facilitate discussions, share photos, blogs, videos etc.,  Additionally, this would be a multilingual site (as another Koumelis article importantly points out) to facilitate the expansive international cruise and online growth.

The website would facilitate communication about:

  • who else was on your cruise ship at the same time as you?
  • what they thought of the experience, or what other cruises they would recommend?
  • where they booked their travel or what they paid for the same trip?
  • What they recommend for on-board and offshore activities?
  • Ever meet someone on-board you want to get into contact with but don’t know how to find them?
  • Ever want to contact someone who cruised a specific ship to ask a question (how about what it was like on the Carnival Miracle that left New York City on Aug. 29 (click here for story)?

Yes, there are cruise groups on other sites, facebook, flickr, etc., and yes there are cruise review sites, CruiseCritic, Cruisemates.com etc., However, in the ever evolving world of the web there are always opportunities to bring the next viral application to the market.

I would like to hear you thoughts.  Please post your opinion.

 

The Cruise Community – Who is this site for?

Who could benefit from this web site?  Almost anyone interested in marketing and research. Sustainable growth and development of consumer markets is a delicate balance of both art and science.  But more than that, it is a systematic process of identifying and maximizing business potential by meeting consumers conscious and subconscious needs.  That systematic process can be applied over and over for any industry.

The cruise industry itself is vastly larger than just the ships we observe in ports of call. It includes:

  • Cruise Lines
  • Advertising Agencies
  • Travel Agencies and Agents
  • Stockholders
  • Industry Analysts
  • Trade Associations
  • Cruise customers
  • Travel and Tourism Colleges and Universities
  • Ship Builders
  • Employees
  • Ancillary Industries
    • Vendors
    • Suppliers
    • Transportation services
    • Retailers
    • Ports
    • Destination cities and countries