Cruise Industry Targets Mtgs. W/ Tech, Attractive Rates
Meeting buyers lately have exhibited some renewed interest in holding corporate meetings on cruise ships following years of weak demand, and the cruise companies are responding by increasing the technological sophistication of new and existing ships and introducing other amenities to draw more corporate interest. However, while rates for cruise meetings and group incentive trips remain low, prices are beginning to rise, and generally high, leisure-generated occupancy can restrict meeting buyers' negotiating opportunities.
During the last two months of 2003, corporate cruise bookings spiked after a very slow summer, said Joyce Landry, president and CEO of Miami-based corporate cruise consultancy Landry & Kling Inc. "We're finding that confidence levels are up, budgets are up and people are feeling more secure to make plans," she said.
Prices for cruise meetings generally were low for most of 2003, Landry said, but the late-year spurt of business has prompted cruise lines to tighten negotiations around popular itineraries and peak times. "It's still a very good buy, you can get a high-quality ship today for less than what you would pay at a comparable resort, and they are still negotiating," she said. "Yet, they are tightening up around certain times. Space is getting tight in the Mediterranean in May and September."
Cruise lines also are implementing more extensive yield management strategies, Landry said, with many different rates in play for different decks on ships. "They're becoming more savvy with inventory control, and, like the airlines, all rooms are computer-coded now," she said, noting that cruise lines' negotiating positions often are bolstered by the fact that corporations typically exhibit little flexibility in their choices of dates for incentive events. "Most corporations are very locked into their chosen dates," she said.
"2003 was a disaster until after April, due to the war," said Steve Bloss, vice president of sales for Plantation, Fla.-based corporate cruise consultancy Worldwide Travel & Cruise Associates. "Since then, there has been a slow but steady increase in the amount of new inquiries and business. Without a doubt, they're aggressive, but prices are increasing very gradually. Yields are increasing. It's all due to demand. Prices are still low, just not as low."
Many cruise lines have focused on filling cabins by offering cut-rate deals to leisure travelers, which can limit options for corporate buyers seeking short-term deals. "You're not able to pick up the phone and find space whenever you want it, like you have in the past," Bloss said. "There's space out there, but it might not be readily available."
Like many aspects of the meetings industry, lead times have dropped for booking corporate cruise meetings. Group incentives traditionally were held about 18 months after booking, Landry said, a number that has dropped to between 12 months and 15 months, on average. Non-incentive corporate meetings can be booked in as little as two months, Bloss said. "Lead times have dramatically shrunk," he added. "It's a function of past economic uncertainty, and corporations see it as a quick way to rev up sales. You don't want to book an incentive program a year away if you're looking for better results this quarter."
"We started to see a turn late last year," said Richard Weinstein, vice president of corporate and incentive sales for Miami-based Carnival Cruise Lines. "Bookings are coming back alive a bit, both confirmed business for future years and short-term events."
Weinstein said Carnival of late has received requests for meetings two months away, a sign that corporations are interested in liners for events other than pure incentive travel. "We're seeing the hotel-type short-term trend," he said. "There are two reasons: The sudden positive turn in the economy, and we've made a concerted effort to get corporate meetings on ships, so we'll see more booking patterns typical of corporate meetings."
Weinstein said the cruise line only would increase prices based on actual demand and noted that the introduction of new ships would increase Carnival's supply. Carnival introduced the Carnival Glory in 2003, and this year plans to debut Carnival Miracle and Carnival Valor. Glory and Valor each can hold 2,974 passengers based on double occupancy, while Miracle will hold 2,124.
"Our revenue modeling follows based on demand," Weinstein said. "We have two new ships coming out, which means there are still opportunities and plenty of options. We still have enough availability. My strategy is not to stop looking for business and not to artificially increase prices. The only increase comes from genuine occupancy."
The new ships will sport more dedicated meeting space, Weinstein said, and 700 of 1,000 cabins will have balconies.
Ships also have invested heavily in onboard technology improvements, Landry said, addressing the concern of many corporations that connectivity and availability suffer on a cruise. "The industry has gone from Internet cafés to Internet capability in all rooms," she said. "The technology is changing rapidly. Wi-Fi is everywhere now. There's 24-hour connectivity."
Buyers lately also have sought different itineraries and event lengths, more so than they have in the past, Landry said: "There's a lot of variety in the length of the cruise. Ten years ago, a three- or four-night cruise meant going from Miami to the Bahamas. Now, you can do that out of the Northeast, different parts of the South, Portland, Ore., or Seattle on nice, new ships." Shorter itineraries largely are a function of lower corporate budgets, she said. Companies with relatively high budgets, though, are willing to travel through faraway waters. "Surprisingly, we're being asked for exotic itineraries," Landry said. "I thought there would be a desire to stay around the U.S. after the war, but there's requests for Mediterranean and Baltic cruises."