Cruise Line Leadership Shares Insight---Travel Weekly's CruiseWorld 2012 Live

This is a series of live posts from Travel Weekly's CruiseWorld 2012. Due to the short time frame from which we hear the sessions to when we publish them, please excuse any errors! 

CruiseWorld 2012 started off Tuesday's general session with The President's Panel. Travel Weekly editor in chief Arnie Weissmann led the panel discussion of leaders in the cruise line industry.

Panelists included:

1. Dan Hanrahan: President & CEO, Celebrity Cruises
2. Ellen Bettridge: President of the Americas, Silversea Cruises
3. Han Birkholz: President & CEO, Windstar Cruises

Below is a rough transcript of what the panel of cruise line experts said.

Weissmann: How have you been handling the double whammy of the Concordia disaster and the European debt crisis? 

Birkholz: Windstar has been doing renovations, finding new cruise destinations, and continuing to improve our product in a tough environment. We have also been working with consortia and host agencies to strengthen ties with the agent community.

Hanrahan: November and December saw really strong revenue. We had the largest booking weeks in our history at beginning of wave season. We’re filling ships. For 4th quarter this year and 1st quarter next year, we have more on the books than last year at this time. It’s been challenging but we’ll get through it; the cruise industry will get through it and become stronger. Travel professionals are resilient and Celebrity is well positioned for 2013.

Weissmann: Despite great products and great prices, people hear the price of airfare and then back off. What do you recommend for people that are nervous about airfare and how agents can handle objections from clients?

Bettridge: We include air as part of the cruise so it’s not an obstacle for us.

Hanrahan: We have an air promotion right now. Regardless of the cruise line and if air is part of the package or not, you’ve got to be selling the whole package.

Weissmann: Last year at this time, Ellen [Bettridge] was head of American Express retail travel services. Ellen, you’ve spent most of your career on the agency side and now you’re president of a cruise line. I’m sure you had a lot of ideas what cruise lines could do differently to help travel agents. Could you share with us how you’ve been able to influence cruise lines on the travel agent side of things?

Bettridge: Behind the curtain wasn’t as different as I thought it would be. It’s a balancing act between travel agents, cruise lines, and consumers. It’s a huge challenge. We want you to be happy, we want consumers to be happy, we want to pay you more money, but we need to be able to invest in our products. There is a huge opportunity for education, different products for different times and different lifestyles.

Weissmann: How can relationship between cruise lines and travel agents deepen? How do you envision the distribution mix fitting into the future (home based, online, etc.)?

Hanrahan: I was just at an investor conference and was asked about travel agents. They asked me why do we support them and is there a future for it? I answered, “Who wouldn’t want 100,000 people selling their product?” Wouldn’t that be a really good thing? Why would you ever walk away from that? When I explained it like that, the investors understood. I don’t see it going away, I don’t see how it could. Such a valuable proposition. As to the makeup of it? I think you will figure that out. I think there is room for everything.

Weissmann: When you see the travel agency mix (online vs. traditional) do you see them as different pieces of the travel agency business?

Hanrahan: No. We need to make sure we supply the technology and means for all travel agencies to be successful, not one particular part of it.

Birkholz: We sell an experience. The connection that the consumer needs with a person, an expert, is incredibly important. Windstar just needs a few good thousand agents. Consumers today aren’t just looking for one good mode of travel, small ship, big ship, land, resort—deepen your knowledge.

Weissmann: Tour operators have becoming very aggressive marketing to travel agents that agents can make more money selling tours than cruises. How can they make more money selling cruises and upselling?

Birkholz: Sell. Luxury. Cruises. The price point is there so the commission is there. While you’re selling those luxury cruises, don’t forget you’re selling a vacation—upsell. How about adding a package? We sell a beverage package where the commission is $70. I’d argue the commission on that is the same you’d get for some cruises. Don’t think of it as a cruise, think of it as a vacation.

Bettridge: You’re selling an experience, sell everything to these people. They’ll continue to come back to you because you’ve taken care of everything. Sell luxury. We pay you commission on NCFs and it works for us. You as consultants need to think about how you sell the whole package. You can make money on hotels, transfers, air.

Hanrahan: Think about the longevity of the customer and what you can do to continue the relationship beyond the first sale.

Weissmann: I believe most of you have released online tools for travel agents. Some travel agents have embraced them, some have not. Are you satisfied with the booking tool acceptance rate by travel agents?

Birkholz: Windstar does not have a booking engine. You can still call us and we’ll pick up the phone!

Bettridge: Silversea has one. We don’t emphasize it. We prefer you call because we want you to call in about our product.

Hanrahan: We have a great robust tool. We’ve found some agents want to do everything electronically so we enabled that. If that agent wants to call us, they can. It’s fast, easy, and quick.

The cruise industry has traditionally relied on experienced cruisers. Are you satisfied with the amount of first time cruisers?

Hanrahan: We’re never satisfied with the rate of first-time cruisers! It’s a great way to get a client and keep a client, to get a first timer. Satisfaction rates are through the roof with first timers—better than chocolate! J

Bettridge: How do you convert somebody and get them excited to go on a cruise? Look at those people that stay at those high-end hotels. We’re trying to fill our ships so we’re always looking for new people and we know we need you guys’ help.

Birkholz: I don’t think there is any cruise line executive that doesn’t want higher first time cruiser rates. Just ask your satisfied repeat clients to give you the names of friends who may be interested in sailing.

Weissmann: For agents that talk with people and are pretty sure they have the client hooked, but not the spouse. What would you recommend for talking to the spouse, to get them hooked?

Bettridge: Sell the destination. Focus on the destination and don’t just sell the ship.

Hanrahan: Usually the husband goes on the ship kicking and screaming, and leaves the ship kicking and screaming. This is not the first reluctant husband you’ll run into and won’t be the last. Let them know how many times you’ve run into the situation and how happy the clients are after the cruise.

Weissmann: We spoke about the double whammy that happened in 2012, but here is a longer economic challenge. There’s been a pent up demand for travel. Do you see a direct correlation between consumer confidence and bookings? 

Bettridge: Yes, we check it every day. Yes, it’s definitely correlated.

Birkholz: Our consumers are fairly well off. They want to go to the more exotic destinations. [Due to sound issues, we missed the rest of Birkholz’s comment]

Hanrahan: All the research we’ve done from end of 2008, when the economic crisis started, suggests people don’t want to give up their vacations. Cruises are terrific values. We saw price increases in 2010 and 2011, we certainly didn’t have a great economy. We saw strong demand for us and opportunity for travel agents. Until the accident in January, we saw record sales. No cruise supplier would ever put their guests in harms’ way. That’s the beauty of the cruise industry, we can adjust our itinerary. That’s part of the selling point of cruises rather than an objection you have to overcome.

Weissmann: Give some insight aboard the ships. The mix aboard ships is getting more and more global. How does that affect you? 

Hanrahan: We do about 35% of our business from outside the US and Canada. The international flavor of our ships attracts people. Satisfaction rates are higher. Part of the experience is the people you meet on the ship. It adds to the charm of the experience.

Birkholz: We have about 85% of our business from North America. What’s interesting about when you talk with guests from other cultures is that regional authenticity is becoming more and more desired. We tailor our menus toward the destinations. Whether or not you’re a Brazilian or Kansan, you’re still looking for an authentic experience.

Other Travel Weekly’s CruiseWorld 2012 Live Blogging

1. A Master Class in Marketing & Sales – Travel Weekly’s CruiseWorld 2012 Live
2. Tech Tips and Tricks to Micro-Target Clients – Travel Weekly’s CruiseWorld 2012 Live
3. Keeping the “Business” in Your Home Business – Travel Weekly’s CruiseWorld 2012 Live
4. Legal Dos and Donts – Travel Weekly’s CruiseWorld 2012 Live
5. Successful Travel Agents Share their Stories – Travel Weekly’s CruiseWorld 2012 Live