Thursday, 24 January 2013

Wave season off to strong start

Wave season off to strong start

By Tom Stieghorst
Cruise ships in St. MaartenAfter last year’s aborted Wave season, the cruise industry has been counting on a good start to 2013, and most early signs point to the likelihood that it will get one.

Several suppliers and agents reported last week that the first two weeks of Wave had been positive. In fact, some were clearly beyond encouraged.

“I have put more business on the books in the first full week of January than any other January since I’ve been in business,” reported Chuck Flagg, a Cruise Holidays franchisee in Atlanta.

On the other side of the coin, some sellers said bookings were up but only modestly, while a handful reported that January has been slow.

Suppliers have offered a raft of incentives to nudge fence-sitters to pick up the phone.

Many cruise lines are owned by publicly traded companies and can’t speak to booking trends directly. But privately held lines that are free to comment said early January sales bode well for 2013.

Among them is Windstar Cruises, which just finished a major renovation of its three books for 2013 is 54% ahead of where it was this time last year, said Marketing Vice President Joe Duckett.

“We are significantly ahead of even last year’s great pace,” he reported.
Duckett said that several 2013 sailings have already sold out. Prices in general are slightly higher than last year, although Windstar has offered targeted incentives for Wave season.

At MSC Cruises, Wave season’s kickoff was in line with expectations, said Rick Sasso, president of MSC Cruises USA. He said bookings were “quite good” in the U.S., but MSC is keeping an eye on consumers in Europe, where the booking lead times are still relatively close.

“I assume they will slowly start to return to normal, but it has taken longer than what we normally see as a recovery,” Sasso said.

A greater emphasis on the Continent
Europe has assumed a bigger role in cruise bookings over the past decade, both as a source market and as a destination as more North American lines move capacity there.

The summer months are especially key, and in 2012, they were a drag on cruise line profits.

Reports on European sales from travel agents were a mixed bag, with some saying airfares are still a sticking point and others saying lines are successfully countering high fares with incentives.

“I am finding a few prospective clients,” said Carolyn Nemia, a Cruise One agent in Mays Landing, N.J. But she added, “The air is a killer.”

Nemia said January started slow for her, better than last year but nowhere near January 2011.

Windstar said that one of its runaway best-sellers is a Baltic Sea itinerary. The company has shifted capacity to Northern Europe, taking it from a variety of other itineraries, and the move has paid off.

Windstar has also seen better-than-expected demand for cruises in Turkey and Greece, ground zero for last year’s European economic crisis.

One incentive that has proven successful for Windstar is a two-for-one fare plan that includes two free nights in a hotel pre- or post-cruise. “We tested a lot of offers, and this one appears to be doing well for us,” Duckett said.

In the Caribbean, Windstar offers two-for-one fares with bonus savings of up to $1,000 per cabin. Both offers expire March 2.

“We built these offers specifically for Wave season,” Duckett said.

Agents cited Celebrity Cruises’ “1-2-3-Go!” promotion as another that they have found to be effective with clients. It lets passengers choose from a menu of incentives, either a free drinks package, free gratuities for two or shipboard credits of up to $300 per person.

Scott Koepf, vice president of sales for Avoya Travel, said he has seen a shift in what kind of incentives work best.

“A shipboard credit is not as much of a trigger as it used to be,” he said. “It got saturated.”

Koepf said free or reduced airfares seem to be working better this year.

Avoya, a network of hundreds of independent agencies (ranked No. 41 on Travel Weekly’s 2012 Power List), is seeing a stronger first half of January than it saw in 2012, Koepf said. He cited escorted tours and river cruises as particularly strong.

“We all know that river cruise is the sweet spot in the industry right now, and we’re doing a tremendous amount of river cruises,” he said.

Booking further out
One of the key dynamics in cruise revenue is to lengthen the booking window to reduce discounting as ships near departure. Koepf said that travelers do seem to be booking further in advance, but it is hard to tell because Wave season bookings by their nature tend to skew longer.

“You have people where on the second of January, they plan their vacation every single year,” he said.

Travelers booking Europe and Alaska also tend to jump early because those cruises are limited to the summer months. “I don’t think it portends to any particular trend,” Koepf said.

Several agents said Alaska is doing well and they already see prices heading higher there.

“I see a huge uptick in Alaska,” said Shari Marsh, a Cruise Holidays agent in Durham, N.C. “Of the [clients] who have already inquired and booked, almost all of them are Alaska.”

Marsh said the phones started ringing on Jan. 3 and haven’t let up, but the inquiries outnumber actual sales.

“There’s a whole lot of talking and not a lot of pulling the trigger,” she said.

Marsh said she is optimistic that with the number of quotes she has on her desk, some will become sales by February.

“I’ve got a lot of new clients that are coming through the front door,” she said.

Sarah Waxler, president of Travel Leaders Durham, in Durham, N.C., echoed Marsh’s observation.

“Inquiries are definitely up,” she said, adding that close-in prices are low enough to attract attention, while “prices are not as good for later in the year when most people want to go.”

Some cruise network executives said it was too early to offer meaningful comment on how strong the Wave season is or what it means for 2013.

Traditionally, Wave-related early bookings extend through February.

The initial verdict on Wave season will likely come from Royal Caribbean Cruises Ltd., which will be the first of the major publicly traded cruise companies to host a conference call for analysts when it issues its Q4 and annual results.

Last year, Royal’s results were released on Feb. 2. A spokeswoman said a date for this year’s earnings call has not yet been set.