Thursday, March 17, 2011

Seatrade Cruise Shipping Miami - What the Cruise Lines Have to Say...And What You Need to Know.

I have just returned from Cruise Shipping Miami, the most important conference in the cruise industry, and can report that nothing really dramatic came out of the sessions I attended or the new products that I saw (though MTN's new application I previously wrote about was not ready for the conference and I believe that is going to be huge in the contemporary and premium markets.)

Before I get to the details of some interesting things, I do want to let you know I spent a good bit of quality time with the folks at Seabourn including a long private meeting with its president, Rick Meadows, as well as senior vice president of marketing, John Delaney, and others including some of the technical folks in charge of making sure the ships are properly maintained and fully operational.  I will write about those conversations (to the extent appropriate) shortly.

I also spent some time with the Ken Watson, Christian Sauleau and Stephen Tucker at Silversea.  While we some great conversation about the Prince Albert II, we actually were more involved in the logistics and ramifications of the tragedy in Japan on the Silver Shadow's only port calls, disembarkation and embarkation, and sailing issues.  The complexities of dealing with guest concerns (both legitimate and emotional), safety of the guests, crew and ship, operational costs, airfares and flights, and possible liabilities, etc., coupled with the uncertainty of what is happening with the nuclear facility and the unpredictability of trade winds, weather, etc. the difficulties in short and long term concerns and planning was self-evident.  You should know that it is something that is truly cared about by Silversea and any delays in providing concrete decisions is because Silversea really cares and wants to do the best thing overall; not make a decision because it is the easiest in the short term.

Now to the State of the Industry Panel.  Some of the highlights will also be the subject of more specific articles later, but I did want to give you the flavor of where things are as it may relate to the cruising public. 

*As many of you know, I have clients from all over the world:  Australia, China, Andorra, Italy, New Zealand, etc., so this was not news to me...but it is one that I believe North Americans need to be cognizant of:  Presently about 27% of cruise passengers are not from North America.  With the growth rate for European cruisers increasing at a far more rapid rate, be prepared for many traditionally North American ships to carry up to 50% or more non-North American guests within the next 5-7 years.  (There are cruise lines now that are almost 100% European such as Hapag Lloyd, TUI, Aida, P&O, etc.)

I read comments, especially from some of the more vocal "experts" on Cruise Critic complaining about multi-national experiences and cultures clashing with "their" cruise experience (ironically, usually while on a cruise that starts, ends or travels through Europe!).  Just like their demands for multiple formal nights, things change and this is one change that is coming far more rapidly than I think most expected.  I, personally, think nothing of it as the world is quickly becoming a global community.

* Speaking of Cruise Critic, the issue of cruise line cheerleaders came up.  Not really, but the statistics supporting why they exist did.  Believe it or not, far more than Coke vs. Pepsi when measuring overall loyalty to a brand, cruise line loyalty is Number One.  People are more loyal to a particular cruise line than they are to brands for cars, beverages and, believe it or not, even baby products. (Don't question a mother's decision on care for her baby!).  That explains in large part why so many Regent Seven Seas loyalists have stayed with that cruise line while the product has changed (for better or worse) so many times over the past decade.  It also explains why there is far less cross-over from say Silversea to Seabourn and visa versa.  What wasn't discussed is "Why?" I just may tackle that one in the near future.

*  Environmental regulations may significantly change the nature of non-luxury cruises in the very near future.  Under the Clean Air Act, the U.S. Government has established Emission Control Areas (ECAs) where the sulfur content in fuels must be significantly reduced and, in fact, almost eliminated.  More specifically, from the effective date in 2012 until 2015, fuel used by all vessels operating in designated areas cannot exceed 1.0 percent sulfur (10,000 ppm). Beginning in 2015, fuel used by vessels operating in these areas cannot exceed 0.1 percent sulfur (1,000 ppm).  The ECA for the coastal United States goes out 200 miles.  (It may also apply to the United States Virgin Islands too, so it has impact in the Caribbean as well.)

While the cruise lines are working to find "equivalents" such as using higher sulfur content fuels, but having scrubbers on their exhaust to remove the sulfur down to the same level, what it otherwise means is that the cost of fuel and/or operating the ship is going to rise significantly.  So other than significantly raising cruise fares what is the solution?  As you should know, when you speed your gas mileage significantly drops.  The same thing happens with cruise ships.  (Have you ever noticed that ships leave at a specific time and arrive at a specific time and there is very little wiggle room to make up for a delay?  It is because the ships are operating at near top speed.)  So if the ships slow down they can save over 20% in fuel costs. Now, if you think about that, if the ships cannot go as fast they cannot reach ports that far apart overnight.  Thus the result is going to be fewer ports, closer ports (so less diversity) and more sea days.

*River cruises are rapidly gaining in popularity.  One thing I found very interesting was the President of Viking River Cruises basically saying that river cruise ships do not have, nor need, many of the facilities that ocean cruise ships have because they spend so much time in port.  I think that was a very unfortunate statement and, to be sure, that may be what Viking River Cruises must say due to the quality of its ships.  Take a look at AMAWaterways (it is pronounced "Ama"; not "A.M.A.") and you will see beautiful new ships with massages and beauty salons, saunas and larger staterooms with French Balconies, etc.  Just as the popularity in ocean cruising drove innovations and luxury lines, so too is this happening with river cruises.    I just might host a Food & Wine River Cruise on an AMAWaterways sooner than later.

*There as been a serious issue with unscrupulous selling practices by British travel agencies resulting in the UK arm of Carnival Corp. drastically cutting travel agency commissions.  I will write extensively on this, but consider the following:  Three (3) travel agencies in the UK sell almost 50% of the cruises in the UK and they generally have you pay them directly months prior to when the cruise line is required to be paid.  Further, they have no mechanism for you to have the protection of paying the cruise lines directly (which is how Goldring Travel operates).  So these agencies have stifled competition, care little about quality because they thrive on quantity, and then take your money for their own use for months.  Yes, I will have lots to write about on this subject!

To be sure I also had a good bit of activity on the superyacht side of things and spoke with many cruise line people on topics at private events as well.    Stay tuned for more.