Future growth in the UK cruise market is dependent on improving prices at a time when lines are under increasing cost pressures, according to Carnival UK chief David Dingle.
He warned UK Cruise Convention delegates that the continuing success of the UK sector could be jeopardised unless cruise companies and agents work together to improve pricing.
The multi-national dollar-based cruise giants are looking more to the Continent for profitable growth where they can see more rapid demand with income paid in strong euros rather than “underwhelming” sterling.
“With fuel costs inexorably rising, ex-UK cruises shoulder a hard burden as ships rush south at high speeds to the Mediterranean sun,” the Carnival UK chief executive told the Cruise Convention Columbus Day dinner last night. “Maybe it is no accident that there is no meaningful capacity growth ex-UK for summer 2012. Maybe the cruise industry’s current view of the UK is more one of satisfaction than of unbridled excitement.”
Dingle warned that cruise corporations will be “even more considered” in how they commit to any one market with less capacity in the wings and a greater focus on drving profits from existing fleets.
He used this argument to seek to justify his company’s commission cut to 5%, saying that the whole industry has a responsibility “to diminish the notion amongst our customers that our fares will always be reduced”.
Dingle added: “I for one believe that however it has come about, most agents will welcome the end of ungainly throat-cutting as commissions are shredded to chase bookings and will welcome the chance, once again, to sell on service rather than on price.”
He urged agents to improve pricing through protecting margins while cruise lines can use yield management to control more of the selling prices.
“This allows us to raise prices more effectively – and we will all benefit,” Dingle argued.
Dingle went on to reiterate his believe that the cost of fuel, which will most likely double in the next ten years through regulation irrespective of the unpredictable price of cruide oil, will mean that ships will need to sail more slowly.
The outcome for ex-UK cruising will be more sea days and increasing calls at ports closer to home resulting in the ship becoming the destination itself. “The future of cruising will be to look to the finest destinations of all – our ships,” Dingle predicted.