Predictions: The cruise market in 2009

Peter Shanks, chief commercial officer, Carnival UK

It’s very difficult to predict trading patterns and consumer behaviour at the best of times – and here we are in the very worst of times. In the cruise sector we can take comfort from the fact that the fundamentals are still in great shape and the market remains set for sustained profitable growth over the next five years.

Our new ships are coming, innovation will continue apace and customers will continue to see great service and value. The UK Cruise Market is not expecting growth in 2009 – happily for once it’s a year where we pause for breath in our new ship delivery programme.

The fundamentals of the package holiday also remain robust. When consumers are unsure, they will look for value, security and strong brands.

So what lies ahead in 2009, and what should we be doing about it?

Firstly, be prepared for the toughest trading conditions we have ever seen. The best way to approach this is to trade harder than ever before. There is plenty of evidence to show that those operators and retailers who are out there fighting for every sale, promoting hard and chasing down databases are still seeing the business come in.

It is not a time for shrinking violets. If you decide to keep your head down and wait till things get better then you will be left way behind. So promote harder than ever before and find innovative and cost-effective ways of doing it.

Secondly, let’s all remember the value of the tour operator/travel agent partnerships. Both parties need each other more than ever before. So it’s not a time for negotiating the last ounce of margin – it’s about working more closely than ever before. I have always thought it nuts that retailers and tour operators do not share databases of their mutual customers.

Most of us mail them independently which costs twice as much as it should. A little more trust here would go a long way – make sense with a better proposition for our mutual customers and save a significant amount of money. So working together has never been more important.

Thirdly – and most importantly – lets not slip one inch on service and quality. Cutting corners here won’t help in the longer term. So lets keep investing in our people, lets keep innovating our products lets try harder than ever to offer spectacular service.

Oh – and for every travel agent in the land – the answer lies in selling more cruises. They do ‘exactly what it says on the tin’ and your customers can be guaranteed value, outstanding quality and a great holiday.

Adele Parry, director, TR4 Travel

The market will be challenging in 2009. I am expecting to see a pick-up in business in the new year, but am cautious about the volumes in January unless there is an immediate boost in consumer confidence.

Previous recessions have seen consumers foregoing purchases – but not their holidays. I expect there could be a move to a later booking market.

The successful agent will be proactive and, above all, aware of their customer base. They will target individual segments, focusing, for example, on all-inclusive holidays for families, who will be looking for value and assistance in budgeting for their holiday.

The over-50s, many of whom have the time and disposable income, will be a target market, but we must not stereotype them. We should also focus on long haul, activity holidays and cruise, for example.

We have finalised our business and financial plans and fully expect that, while it will not be an easy market, by this time next year we will have achieved our sales and financial targets.

Martin Hay, homeworker, GoCruise

The downturn in enquiries and bookings that began in the autumn of 2008 will continue and may even accelerate as unemployment gathers pace and house prices fall through much of 2009.

People will still book, but the number of holidays and short breaks they take will reduce as discretionary spending is curtailed – especially as consumers are put off by the prospect of rising prices and sharply declining exchange rates.

The traditional January and February peak booking season should lead to a brief respite in the above, but people will book later than usual and will be looking for extraordinary levels of value – cruiselines will come under strong pressure to reduce prices further to ensure their ships actually sail full.

The summer of 2008 saw the lethal combination of soaring fuel prices and early signs of the economic downturn. This led to a number of airline failures, mergers and the acquisitions of weaker competitors. Although fuel prices have fallen sharply, rapidly declining economic conditions suggest some consolidation and/or failure in the cruise sector is possible, if not likely.

In the agency sector, those with high fixed overheads and low margins will find it tough. Some – possibly a few familiar names – will not make it through the year. As a homeworker, I benefit from having relatively low overheads, but I have sought to contain costs, fought to retain margin while investing tactically in several cost-effective local marketing initiatives for the new year.