The cruise industry has been likened to the Wild West in terms of its immaturity and potential for growth.
The term was coined by NCL CEO Kevin Sheehan as part of a debate with Carnival UK chief executive David Dingle during the first day of the UK Cruise Convention in Southampton.
Sheehan, in the convention venue of Southampton with new giant ship Norwegian Epic, described the cruise sector as “under penetrated” with huge opportunities for further expansion.
Dingle agreed, denying that there was over-capacity in the sector.
The industry is only able to add capacity at a rate of around seven per cent a year with only four major shipyards available to build cruise ships, yet the demand in Europe alone is growing at an annual rate of 15 per cent, he explained.
Sheehan told delegates that more new to cruise passengers will be attracted with continuing investment by cruise lines.
Dingle said business was coming back after pricing dropped by five per cent group-wide last year in the teeth of the economic downturn.
“We have got a good chunk of that back in 2010 and booking levels are in good shape,” he said, adding that 2011 levels were tracking a similar curve to this year.
Sheehan said 2010 had started strongly for NCL with an unprecedented wave peak booking period.
But the “fear factor” of 2008-09 had re-emerged with the consumer in the past six to seven weeks, which he attributed to the Gulf of Mexico oil leak, the volcanic ash cloud disruption and economic volatility.
The two cruise line chiefs disagreed over the importance of destinations in the cruise mix.
Dingle, when asked about the choice that cruising offers, said the cruise experience itself was the priority.
“It’s more in the cruise experience itself than the destinations,” he said.
But Sheehan described locations and destinations as being “extremely important” as this gave a “double benefit” of what the cruise ship has to offer and the places it visits.
He called on agents to keep engaging with customers as the internet will start to make inroads into consumer booking behaviour, albeit from a tiny base.
Dingle described his company’s relationship with agents as a “strength rather than a weakness” and emphasised the importance of third party endorsement.
But when questioned on the cost of paying commissions in return for agency distribution and how the money earned from cruise lines can be used by agents to fund discounts, Dingle said: “It would be nice if people retained more of their commission.”
However, he qualified his comment by adding that he did not see any degradation of his business as a result of retail discounting.