Cruise Lines Weathering Financial Storm

Cruise Lines Weathering Financial Storm

There may be continuing turmoil in the financial markets but it appears the recessionary squalls we are all experiencing at the moment have yet to throw cruising off course.

I base this view on the first hard evidence to emerge about the state of bookings for 2009 cruise holidays and the results of a consumer poll which suggests that we intend spending at least as much as last year on our annual break.

While cruise companies are by no means immune to the current economic uncertainty, they appear to be more than weathering the storm, helped by price cuts to stimulate bookings.

Carnival UK, the umbrella group responsible for major brands such as P&O Cruises, Cunard Line, Ocean Village and Princess Cruises in the UK, has just reported a whopping rise in sales.

Helped by cruise prices being cut by between five and ten per cent and the early release of sailing programmes, booking levels were up in the traditional January/February peak travel industry sales period by as much as 30 per cent year-on-year depending on the brand.

Sales of Cunard Line are currently up by 50%, for example, and overall capacity across the group for 2009 is already 85% sold – a pretty remarkable performance by any measure at a time when people tend to be booking later due to financial uncertainties.

The inclusive nature of cruises coupled with keen pricing such an almost unheard of before sale by Cunard comes at a time when tour operators have cut 2009 capacity by 16 per cent and raised prices by ten per cent.

This has helped to narrow the gap between land-based holidays and cruises while highlighting the value attributes offered by cruise holidays, according to Carnival UK commercial director Peter Shanks.

Moving forward, there also appears to be a reluctance by people to drop their annual holiday spend.

A YouGov poll of more than 2,100 people for Carnival UK found that even during the economic downturn, 78% of 45-54 year olds aim to spend as much if not more on their holiday this year.

Nearly a third plan to spend more, while less than one in four (22%) expect to spend less, the research found.

The cruise business has been fortuitously helped by cruise capacity from UK ports for 2009 being pegged at last year’s levels with no new ships being introduced.

While there will be an additional seven per cent growth in 2010 with the introduction of P&O Cruises’ new vessel Azura for the summer, Cunard’s Queen Elizabeth at the end of year and a new Solstice-class vessel from Celebrity Cruises, this comes against average annual UK industry growth of 12%.

Of course, cruise lines are keen to encourage early booking as much as possible and tend to incentivise customers willing to commit a year or more ahead of their departure with additional discounts and other value-added offers.

Activity of this nature will start kicking off this month (March) with the publication of cruise brochures for 2010 and beyond.

New ships always attract particular interest as soon as the sailings go on sale, and this month will be no exception as P&O Cruises’ hopes Azura’s ‘on sale’ day will top the 19,000 bookings taken in a single day for sister ship Ventura in 2007.

Details of Queen Elizabeth are also to be unveiled in the middle of the month, sparking fresh interest in Cunard which will return to a three-ship fleet by the end of next year.

They won’t be alone, as information on new itineraries, destinations and on board refinements are released by cruise companies across the board as they seek to maintain the momentum that saw a record 1.5 million British people take a cruise in 2008.

Personally, I can’t wait to hear all the latest news from what appears to be an enduringly buoyant industry.

Phil Davies

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