Tipping point looming for cruise distribution and marketing
08/12/2011 by WiT


Attending the first Cruise Shipping Asia conference in Singapore last month, I sense a tipping point looming for cruise distribution and marketing in the region. There are a couple of reasons why I believe this is so.

One, the competition is intensifying. While the industry remains largely supply-driven, dominated by a handful of big players, the traditional markets of Europe and the US are being challenged and Asia has become the new battleground for new customers and fresh itineraries.

Two, new markets and new customers create opportunities for even the most established and traditional companies to do something new. And customers from Asia are a digitally-savvy lot.

Three, new technology (think virtual, 3-D), rich media and an increasingly interactive and social web will allow cruise companies to create the right user experience to give customers more confidence and trust to book online.

Currently, cruise companies remain largely traditional in their distribution and marketing, relying mainly on travel agents. Michael Bayley, EVP international for Royal Caribbean Cruises, said the company is heavily reliant on the trade for sales and invests vast amounts in education and training each year. “They are the bread and butter of our business.”

He however noted that the web was growing as a channel and third party producers were generating higher sales volumes each year. Brands, he added, were investing more heavily on the web.

“The web has some distance to go in terms of convincing customers to buy online. It’s more of a portal to research and plan but for an individual to book, we need to build up more trust. But it’s only a matter of time before technology changes and gives customers the comfort to book,” he said.

Said Rick Meadows, executive vice president of marketing, sales and guest programmes, Holland America Line & president,Seabourn, “The web remains a limited channel for us. Our average transaction is US$20,000 each and people are not happy to transact that via the web.”

However Brett Dudley, founder and chairman of Australia-based ecruising.travel, does not believe that cost is the obstacle. He told a panel the highest amount transacted online on his site was A$127,000. “It’s not about the amount, it’s about the trust in your brand,” he said.

The success of ecruising.travel, billed as Asia Pacific’s leading cruise travel agency, would appear to put paid to the idea that cruises are hard to sell online because they are complex and costly. Dudley set up a Hong Kong office a couple of years ago in an attempt to crack the North-east Asian online cruising market and he says he has seen some success.

Christina Siaw, CEO of Singapore Cruise Centre, who worked previously with ZUJI in Hong Kong, believes the time is right for online cruising to take off in the region.

Bigger ships are coming in, Asians are discovering cruising and with online travel taking off in the region, it will only be a matter of time before travellers also book cruises online, she said.

Another factor that could push cruise brands to invest more heavily in web distribution is how successful they will be in mobilizing travel agents across Asia to sell cruises.

From remarks made by the president of Costa Crociere, Gianni Onorato, during the opening session of the conference, it is clear that he feels a stronger travel agency commitment is necessary.

He said, “When it comes to distribution, we say the customer has the ultimate decision in how they wish to book. It’s whatever they feel is most convenient and most comfortable with – whether through the web, travel agent, mobile or telephone call. Our obligation is to be there and we will invest in agents and technology to be always there for the customer.”

However he noted that creating demand in Asia was a challenge, saying advertising and marketing was more expensive in Asia than in other parts of the world. “To reach customers is very expensive.”

This is why he said cruise lines had to find the most efficient means of creating demand. “If efficiency can be achieved through travel agents, then travel agents need to decide how much they need to invest today to make a profit in the future. How many agents are ready to commit?”

He said his company would continue to invest in agent educational programmes in Asia. “But are agents ready to commit and not to wait for consumers to ask for a cruise but to sell a cruise?”

In Italy, he said Costa Cruises carries 80,000 honeymooners a year and “we have many agents specializing in this market”.

“My recommendation is to look at how the cruise business has evolved in other parts of the world, take the best practices and commit to it. A strong travel agency presence and commitment is missing.”

So my prediction for 2012 – watch out for ripples in the world of online cruising in Asia.

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