Cruise lines brace for a downturn as presidential election looms

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With less than a year to go until the 2020 presidential election, travel suppliers and sellers are bracing for the slowdown that typically accompanies an election year's commotion and distractions.

Every four years, sales run into headwinds as politicians and interest groups load up on ad time and consumers, especially in battleground states, are besieged with debates about the fate of the nation. 

And this time, the quadrennial cycle could be a doozy, as impeachment proceedings run parallel to the election campaign.

"It will be a very interesting Wave season, for sure," said John Chernesky, senior vice president for North American sales and trade marketing at Princess Cruises. 

Chernesky said Princess is taking steps to mitigate the anticipated pause in bookings momentum that has built up this year.

"I think at Princess we're seeing a good forward booking curve going into 2020, but we're not oblivious to the fact that, historically, there has been a business downturn in the election years," Chernesky said. "So we're trying to work with our trade partners as best we can to essentially base-load as much as possible into the [coming] year. 

"We know the marketing spend next year is going to be less effective than this year, because there's going to be so many distractions," Chernesky said.

In 2016, presidential candidates Donald Trump and Hillary Clinton spent $1.8 billion on the election, much of it for television ads, some of the same news, public affairs and sports programming favoured by cruise lines.

Eva Jenner, vice president of sales at Holland America Line (HAL), said what's true for Princess and HAL is true industrywide.

"We all are aiming at the same goal of base-loading and having a further [out] booking window than ever before," she said.

For agents, that means that some of the best pricing for 2020 is available now when consumer receptivity to the cruise line marketing message hasn't yet become blocked by political static.

"If nothing more, it might be a great year for consumers," said Michelle Fee, president of Coral Springs, Fla.-based Cruise Planners. "It's the travel advisor's job to let the consumer know, 'Hey, this is a great deal. You might not see this next year.' So we need to continue to be in the marketplace and get the word out."\

Although travel advisors have been aware of it for years, the presidential election-year slump in sales was documented in research by the Virtuoso travel network that it released at its Las Vegas conference in August.

Virtuoso found that U.S. travel sales grew an average of 14.3% in a year before a presidential election, but only an average of 2.9% in the year of an election. In 2016, sales actually fell 0.2%, after growing 15.4% the year before.

One reason for the slump, according to some, is the reluctance of consumers to make big-purchase decisions while economic uncertainty hangs in the air. Some support for that theory comes from data on auto and home sales.

Meyers Research, a real estate data firm, examined the past 13 presidential elections and found that home-sales activity dropped 15% in the November of an election year, versus 8% in the same month a year later.

And a 2016 study for Dealer.com, a site for car shoppers, found shopping behavior dropped 9% year over year in the months going into a presidential election in battleground states where no one candidate was a clear favourite.

James Grace, then director of analytics product management at the site, attributed some of the slumps to a spike in the cost of digital advertising, leading to fewer car ads and diminished shopping.

Sheer uncertainty could also factor into the presidential election-year slump. For example, travel sales in the U.K. have sputtered this year as the government has repeatedly tried and failed to resolve the terms of its exit from the EU.

But Fee said the daily combat between Trump and Democrats might have already caused consumers to tune out.

"If you look back historically, there are things that happened that used to shut our business down," Fee said. "If something would happen in Europe, it was six months before people would travel there." 

Not anymore, Fee said. “Today, we're numb to all of it, so they might be numb to the presidential election, too."

Fee is telling Cruise Planners agents to stay positive and stick to business. 

"I feel like we need to focus on people who we know travel through it all and who might be celebrating some kind of milestone," she said.

With newly developed analytics, agency groups such as Cruise Planners can find prospects celebrating a 25th wedding anniversary or a 60th birthday, for example. 

"They’re not going to wait until next year to go because of an election year," Fee said.

Another positive for agents that could help offset the election-year drag is a tsunami of new cruise ships. Twenty-one vessels are set to debut in 2020, including first vessels from new lines such as Virgin Voyages and the Ritz-Carlton Yacht Collection as well as the first ship with a roller coaster being rolled out by Carnival Cruise Line.

Doug Seagle, Seabourn's vice president of business development, said, "A good counter to everything that's going on in the world is that there's a lot of new product out there. New product raises consumer awareness and creates excitement. Our travel partners want to get that message out there so that it counters the negativity in the marketplace."