Plans to scrap the five-year-old Ocean Village brand shocked the trade this week but showed the crusie sector is not immune to the economic downturn.
The news came days after sister brand Carnival Liberty pulled ex-Dover sailings for 2009 and follows Island Cruises’ acquisition by Thomson Cruises.
Carnival UK chief executive David Dingle attributed the transferral of Ocean Village’s two ships to P&O Cruises Australia by the end of 2010 to the pressure of high fuel and air costs and the fact the ships can make more profit in a less mature, growing market.
“Where you see an opportunity elsewhere it would be irresponsible not to act on it,” he said.
Observers point out the cruiseline’s brand is still a relative newcomer, relying at certain times of year on the struggling family market without the backup of its own airline or shop network.
Dingle is adamant the move is not a result of failings of Ocean Village, which carries 100,000 passengers a year, or the concept of using older ships with a lower book value to reap “adequate” returns on lower margins.
Revenues and general cost control are decent, he said, and there is a well-developed recognition of the brand. He added: “It is not a demand issue. This is because of the rising cost of fuel.”
Taking the ships out of UK circulation will mean a drop of 3,300 beds. However, by the end of 2010 the group will have added 5,200 beds with P&O Azura and Cunard’s Queen Elizabeth 1 and 2 ships. “I am not in any way reducing our UK presence,” added Dingle.
Operating fewer brands would lead to greater business efficiencies, he admitted, but stressed capacity growth elsewhere in the group and natural attrition meant no job losses were anticipated.
To establish itself as the informal cruiseline for “people who don’t do cruises”, Carnival UK has already spent millions of pounds on marketing. Its TV campaign in May, the second of the year, cost £1 million.
Its bid to attract younger, first-time cruisers is thought to be largely successful – the average age on a summer Ocean Village cruise from Palma is 46.
But brand experts are less sure. PR Week editor Danny Rogers said: “I would question whether the central proposition was right in the first place.”
Dingle argued the slow phasing out of the brand demonstrates it still has value, and Carnival UK reassured agents it will be “as active as ever” in promoting the brand during the peak January sales period. “It will still operate for two years. It will be put on the shelf but I would not want anyone else getting their hands on it.”
Rivals set to gain new customers
Cruiselines say the phasing out of Ocean Village will give them an opportunity to gain extra customers.
The brand’s demise comes as cruiselines openly admit extreme trading conditions in 2009.
Royal Caribbean UK and Ireland vice president and managing director Robin Shaw said: “The environment [has become] dramatically different in the last few weeks – the economic situation will have an impact on business. Capacity is fixed and it’s down to cruise industry, partners and the media to convince guests of the value of cruising. Clearly, with Ocean Village, there will be opportunities for upselling.”
TUI Travel director of cruising David Selby said Thomson Cruises would look to sell to former Ocean Village customers, while Norwegian Cruise Line said its freestyle dining concept would appeal to them. UK general manager Stephen Park said: “There is an opportunity to migrate people up the cruising ladder.”
But Carnival UK is keen to migrate customers to its own sister brands. Chief executive David Dingle said: “Ocean Village prices are already knocking on P&O Cruises prices.”
