Saturday, 26 November 2016

Demand and inventory, a delicate balancing act

Demand and inventory, a delicate balancing act

Image result for river cruise ships

When you have more bookings than you know what to do with, that's the good kind of problem to have in the travel industry, right?
Well, sort of. No travel company ever wants to have too many empty beds/seats/cabins. But not having enough openings to meet demand, that's a tricky problem too, because that's when you risk losing clients to the competition.

And when demand is a bit in flux, as it currently is in the river cruise market, it's hard to plan for unknown growth and an unknown future. For those watching closely, you may have noticed that shipbuilding momentum has eased up in the river cruise industry. Viking River Cruises is only building two ships next year, down from the six it debuted this year, 12 last and the record 18 the company launched in 2014.

AmaWaterways too is only launching one new vessel each in 2017 and in 2018 (the company typically launches two each year). And Avalon Waterways doesn't have any new ships planned for 2017, after several years of consistently building two or three vessels annually. The shipbuilding frenzy clearly has died down a bit for now, even as some newer players (I'm looking at you, Crystal) have entered the market.

But then there is the issue of pent-up demand following a softer year such as the one the river cruise market just experienced, driven by the terror attacks in Paris and Nice and by high water levels that disrupted some departures. River cruisers who put off the popular travel style in 2016 may now be looking to get onboard in 2017.

Noting pent-up demand from the U.S. market and on the heels of two promising future booking months, AmaWaterways this month announced its 2018 sailings are open for booking. And several other river cruise lines have been promoting their 2018 availability as well. If there really was some pent-up demand as AmaWaterways claims, a shipbuilding slowdown could potentially create a capacity bottleneck that might force river cruise lines to offer up 2018 cabins as an overflow alternative to 2017.

Then again, let's not get ahead of ourselves. This past year was a challenging one, and river cruise lines will likely be happy to simply fill their 2017 inventory at higher capacity levels than they did in 2016. If demand for river cruising returns with a fervor strong enough to have some river cruise lines regretting they didn't put in some additional ship orders, that is a problem they would probably prefer to have over figuring out how to fill empty ships.