Voyager of the Seas, once the world’s biggest cruise ship, docked in Sydney last week. Circular Quay was packed with 3500 people trying to board plus sightseers attracted by blanket media coverage.
It was chaos, but a positive mood prevailed, especially among Royal Caribbean Line staff, for whom the low-risk gamble of basing three ships in the heart of the booming Australian cruise market, had paid off.
They join market leader Carnival Australia and a number of other majors catering to a seemingly insatiable appetite among Australians for cruising either at home or abroad.
In 2011, the number of Australians taking cruises grew 34% to 623,294. This year growth in passengers is forecast to be 32%. Australians clearly can’t get enough of cruising at when other tourism sectors are struggling. Why?
The bottom line in my opinion is that they are responding to a compelling value offers from the cruise companies – at every level, from entry up.
Here are a few thoughts on how other tourism sectors can learn from the cruise industry:
Package pricing: No nasty hidden extras. Cruise companies are the kings of package pricing. They understand that people want an experience where they’re not continually being slugged. So they include all food, which makes for easy budgeting – and decision making. Holidays can be complicated to organize. Cruises are simple. Find a ship you like, a price you like, and book.
Make spending easy: Of course there are extras on a cruise. The two big ones are alcohol and shore excursions, plus things like spa, photos, and a supplement to eat in the nice restaurant. But, hey, customers have already paid for their cruise, they are on holidays and relaxed, so just put it on the bill and deal with it later.
Occupancy v. Rate: Cruise companies do not believe in setting sail with anything less than 100% occupancy and will do everything to achieve that goal. Extra passengers mean extra revenue. Hoteliers, on the other hand, have a blinkered view that room rate is everything so they like to hang tough even to the detriment of occupancy and, ironically, RevPAR.
Incidental revenue: What you lose on a room make up in other ways.
Flexibility: The great advantage of package pricing is that it’s opaque – customers cannot see the cost of each component. This means , cruise companies can discount without appearing to by adding in extras. Hoteliers are unable to do this because all they’ve got is the room rate. If hoteliers packaged more, they would have greater flexibility in terms of offers and sales bait.
Product segmentation: Each ship has a clear target market whether it’s family, rich older people, history buffs or whatever. Interestingly cruise ships are never defined by a star rating, as is the case with hotels, rather by their product offering and destination.
Heavy Marketing: The cruise market is totally committed to marketing. Other sectors aren’t. It’s only now and then. Each week the Sunday travel supplements are packed with cruise advertising from suppliers, wholesalers and travel agents. They have a very big share of voice, and it’s working.
Use of Media: In addition to advertising, cruise lines understand the value of PR and are experts at milking the opportunities, especially when larger ships visit port. There is also a strong emphasis on hosted cruises for media resulting in positive stories.
Market education: Travel agents are key to the success of cruising and the cruise companies stay in constant contact with the industry, educating them on product and experience.