International growth is offsetting US jitters over Europe, says NCL

Posted on 10 June, 2016 by Spacejunkie2

by Lee Hayhurst

Aggressive growth in international markets over the last 12 months will help cruise operator Norwegian Cruise Line cope with a slowdown in the US market.

After recent government warnings over the safety of travelling to Europe cruise operators have reported a softening of the market, although Americans continue to sail closer to home.

NCL says the US slowdown will mean other markets, including the UK, will be expected to make up the shortfall, but international deployments in China, south America, the Middle East and Australasia has grown non-US markets.

Francis Riley, NCL executive vice president international business development, said: “We are de-risking ourselves from just being reliant on one major source market.

“Initial growth has been really accelerated by having a local presence in these markets. It’s not rocket science, we have just accelerated our international growth.

“We have changed the structure of our business so that we have a whole dedicated international area directly reporting into the CEO.

“In general the US business has slowed down a bit. It’s not that the business has fallen off completely, it’s just they are tending to sail closer to home. They are changing their choices.”

Riley said NCL was seeing a bigger drop off when balances are due among US guests who had put down a refundable deposit of a European cruise.

And the line is seeing an increase in bookings for Caribbean as US customers defer plans to visit Europe for a year.

NCL says it’s more established international footprint means it can react to specific issues in markets, like the slowdown in Brazil and Norway associated with economic problems due to the low oil price.

Regions where it has significantly upped its presence are Australia, where it has gone from having no one based to 40 today, China for which it has built a ship, the Norwegian Joy, Israel and Scandinavia.

But the UK remains a key source market and next year NCL will reflect this by deploying Norwegian Jade, a ship which was previously based in the UK, to Southampton and Hamburg.

“There is significant increase in capacity for the European market and a big chunk of that will be for the UK to grow,” said Riley.

Recent promotions for this summer have gone down well in the UK, said NCL, which is poised to kick off a campaign linked to the Euro 2016 football tournament that kicks off tomorrow.

The operator will screen matches live on board its ships for those who are interested but will also promote its ships as places to get away from the football if customers choose to.

“Reaction among the trade has been phenomenal which means the UK has seen a record breaking year in terms of passenger numbers and revenues,” said Riley.

“This summer there is a lot of capacity in Europe which has had an impact to a degree on pricing but that comes back to us not being reliant on one particular market.”

NCL says it is working hard to ensure the message gets out that customers who book early do get added value compared to a late bookers taking advantage of a discounted price.

Valuable additional benefits like free Wi-Fi, a drinks package that is worth up to $600 per week or dining options are only available to early bookers.

“Also early bookers are getting the first choice of cabins and the best availability. Typically when you come in with price reductions it’s about topping off the ship rather than filling it.”

Booming Cruise Industry Reports Better-Than-Expected Passenger Numbers in 2015

Posted on 9 June, 2016 by Spacejunkie2

Booming Cruise Industry Reports Better-Than-Expected Passenger Numbers in 2015

Independence of the Seas in Southampton, photo by Dave Jones

The Cruise Lines International Association has bumped up its passenger predictions for 2016 after numbers showed that the industry surpassed its 2015 passenger projections.

According to CLIA, the industry reported a total of 23.2 million passengers on ocean cruises globally in 2015, up from a projection of 23 million, and a 4-percent increase over 2014. As a result of steady year-over-year increases, CLIA has modified 2016 expectations and is now predicting 24.2 million travelers will set sail on ocean cruises around the world.

A statement from CLIA says the numbers show that the industry is stronger than ever, coming during a period where pretty much every other maritime sector is struggling.

“The success in 2015 demonstrates the cruise industry’s continued strength in the overall travel sector,” said Cindy D’Aoust, president and CEO, CLIA. “This is a direct result of the amazing work and commitment of our community of Cruise Lines, Executive Partners and Travel Agencies and Agents. Plus, with the highest satisfaction rates among all leisure travel segments, it reflects that a cruise vacation is the vacation of choice for travelers around the world.”

CLIA says that Much of the industry’s growth can be attributed to emerging regions of the world, particularly in Asia and Australia.

In 2015, Asia experienced the most growth year over year in ocean cruise passengers with another impressive 24% increase from 2014 to 2015, with a total of more than 2 million ocean cruise passengers in 2015. While Asia continues to see record growth in the cruise industry, Australia is not far behind. The region, which includes Australia, New Zealand and the Pacific, experienced an incredible 14% increase in ocean cruise passengers from 2014 to 2015. Last year, a total of more than 1.1 million ocean cruise travelers originated in Australia.

“When looking at the travel industry, cruise travel has astonishing long-term growth potential since it represents only two percent of the total leisure travel market, has the highest satisfaction rates among global travelers and is growing in popularity,” CLIA said in a statement. “In fact, according to the United Nations World Tourism Organization, in the decade between 2004 and 2014, global cruise vacations have grown faster in popularity than land-based vacations by a 20-percent margin.”

Of course this growth has not gone unnoticed by cruise lines, with new ship orders from just about every major cruise company such as Carnival and Royal Caribbean. In 2016, a total of 27 new ocean, river, and specialty cruise ships are scheduled for delivery, according to CLIA figures.

Norwegian Cruise Line’s Andy Stuart ~ Q & A

Posted on 2 June, 2016 by Spacejunkie2

Norwegian president and COO Andy Stuart

Norwegian Cruise Line has worked hard to make value-added amenities rather than price discounting its go-to tool for making sales. The current Free at Sea promotion offers a pick among five items, including shore excursions, WiFi, unlimited beverages, specialty dining and third and fourth berths free. But Norwegian introduced Sail Away fares in March designed to eliminate those amenities with a reduction in fare after finding that the value of Free at Sea was hard to convey in some online searches. It disclosed the fares in a recent conference call with Wall Street analysts. Norwegian president and COO Andy Stuart spoke with senior editor Tom Stieghorst about Sail Away.

Q: What are Sail Away fares?

A: As a brand, we want our business to be very focused on value and away from price. The majority of what we sell comes with some value-added feature, either a beverage package or an internet package or onboard credit or free shore excursion or some other way. The Sail Away fares … come without a value-add.

Q: Why were they created?

A: What we were seeing is there are environments where the fares look too expensive. If you just have a conversation, it’s quite easy to explain. If you move into a more price-driven environment, it becomes more complicated. Most online sites were designed to show a particular cruise for seven nights or three nights or four nights. It tends to be cruise, the number of days it is and price.

In an online environment, it starts to get a little more complicated. There are two things going on. The higher prices move the cruise down in the search results. The second thing going on is even when we were well-positioned in search results, with the higher price the value-add doesn’t come through.

Q: How long has Sail Away been available?

A: We started testing it in March and April on a relatively small number of cruises, and we were quite pleased with it. It’s been widely available since the beginning of May.

Q: How much lower are the fares?

A: It’s hard to generalize because of the varying length of cruises involved and different itineraries. In most cases, if a customer were choosing between the Sail Away fare and a fare that includes the value-added items, we would expect them to choose the value-add. The cost of a beverage package on its own can be $600, and I don’t think any of the Sail Away fares are reduced by that much.

Q: Are they available only to OTAs?

A: They’re generally available. In the conference call we were talking about the OTAs because that’s the environment where people are selling in an online world.

Q: Can Sail Away be purchased as soon as inventory becomes available?

A: Most of these are available close-in, but we’re testing a lot of different things. But they’re only available in four categories; you can’t buy them on a suite. So it’s a tiny percentage of our inventory. There’s one inside, one outside, one balcony and one minisuite. It’s less than 10% [of the inventory].

Q: Are Sail Away fares contrary to Norwegian’s value-add strategy? If not, why not?

A: It’s not contrary. The reason it isn’t is that it applies to such a small percentage of our inventory. Secondly, the discount will never equal the value of the value-add. It’s a tactic that we think will ultimately be used on a very small percentage of our business.