strategies to take advantage of the boom in cruises

3

To know the market

INDEX

To choose the business model

Choose the tool that best suits your business

1

2

3

a. A booming market: what is going to happen in the next decade?

b. Types of cruises: which cruises do passengers prefer?

c. Trends in the market: what cruise passenger profiles are we going to find?

a. Hybrid Model

b. Online Model

c. Face-to-face Model

1

To know the market To understand the needs of the client and achieve solid business agreements

The cruise line industry is the fastest growing sector within the global tourism market. 2019 has been a year of growth in terms of the supply of berths and the capacity of the industry, as many cruise line companies have launched new mega ships with greater space and size, which ultimately translates into a greater volume of passengers.

In a market which retains great growth potential, the cruise line industry is already a consolidated sector with more than 400 cruise ships, 122 new ships under construction, more than 3000 base ports and almost a hundred cruise line companies operating and offering a differentiated product that increasin-gly seeks to provide unique services and experiences to the traveller.

All indicators support the upward trend. The repetition rate and fidelity of cruise

passengers is high within the industry, with 9 out of 10 passengers wanting to repeat

their cruise vacations.

However, before entering into this adventure, you have to take into ac-count that the uniqueness and added value that characterizes a cruise trip also entails a particular complexity in its sales process, and understanding all its details, formulas and characteristics, is not an easy task.

But without a doubt, the wide variety of options and experiences that this product can offer, makes it a unique tourist product. That is why, to get the most out of it and take advantage of the trend, the first thing you should do is to know the market and its wide variety of options, analyse your customer to understand their needs and desires and finally, achieve solid business agreements with the cruise line companies that you would like to work with.

a. A booming market: what is going to happen in the next decade?The sector in figures

10 years ago, there were 17 million people who chose the cruise option to travel. A decade later, there are already 30 million passengers who enjoy this journey crossing our oceans, seas and rivers on a daily basis.

The data that supports the upward trend of the cruise market speaks for itself: if in 10 years the cruise industry has increased its passengers by 40% and multiplied its offer of berths, what is going to happen in the next decade?

40 MILLION CRUISE PASSENGERS

BY 2028

2019 PASSENGER CAPACITY SNAPSHOT2019 = 30 Millions Passenger Expected to Cruise

CLIA Global Ocean Cruise Passengers (In Millions)

17.9

2009

19.1

2010

20.5

2011

20.9

2012

21.3

2013

22.3

2014

23.0

2015

25.2

2016

26.7

2017

28.5

2018

30

2019p

30

0

5

10

15

20

25

p = projection

SOURCE: CRUISE LINES INTERNATIONAL ASSOCIATION

Over the next decade, the construction of a hundred ships is expected to add almost a total of 500 cruise-liners crossing our seas, oceans and rivers. With the construction of larger ships, with greater capacity, but also being more sustainable and energy efficient, the supply of berths will exceed one million over the next 10 years.

The cruise sector still retains significant growth potential. Today, this industry represents only 2% of the 1.4 billion tourists who travel around the world every year and also, in 2018, it generated 134 billion dollars worldwide.

Global cruise capacity and passenger growth

37m

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20162017

20182019

20202021

20222023

20242025

20262027

20282029

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Pas

sen

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rs

21m

1.2m

0.5m

0.6m

0.7m

0.9m

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SOURCE: A.R. PEISLEY (CRUISE ANALYSTS) LTD

For decades, North America, with the US and Canada at the helm, remains on the thro-ne as the main issuing market for cruise passengers with 40% of the global share. In addition, it is expected that it will continue to maintain the reign in the coming decades and reach 21 million passengers by 2027.

The profile of the American passenger is the oldest of the three main issuing markets; in this case, we talk about a cruise passenger over 50 years old.

The key markets of the sector

1. North America

However, special attention should be paid to younger people over 30 years of age, which is the fastest growing target group in recent years in this market, a trend that is fully aligned with the global predisposition of the sec-tor that indicates a growth in demand for cruise ships amongst younger people.

The star destination is still the Caribbean, although the boom of the expedition cruises has been noted in this market and is the destination that has become more and more attractive for these consumers who want to navi-gate to these hidden retreats such as the Antarctic, the Arctic, the Galapagos or Greenland.

2. Europe:

The European market has grown by 5.5% in

recent years, reaching 7.1 million passengers

with Germany being the largest cruise line passenger market in Europe with 31%, followed by the United Kingdom with 27%, Italy with 12% and in fourth position, Spain with 7%. The fastest growing European regions in 2018 were Portugal and Russia with 24% and 14% respectively.

According to the latest data, more and more Europeans travel within their own geographi-cal area and their favourite destinations are the Central and West Mediterranean, followed by Northern Europe, leaving the Caribbean in third position. The Canary Islands which has grown by 10%, is becoming the favourite destination for the most popular cruise passengers; 52% of Ger-mans and 36% of Britons are inclined towards travelling to these Spanish islands.

Europeans prefer cruises between 7 - 8 days and have an average age of 50 years. Amongst them, the youngest are the Italians, of 46 years and the oldest are the Germans and British, who are the main European cruise passengers.

31%

27%

12%

7% 7%

Germany

UK

Italy

Spain France

TOP 5countries with most cruise

passengers in Europe

SOURCE: CRUISE LINES INTERNATIONAL ASSOCIATION

3. Asia and the Pacific

has become one of the great promising markets for the industry.

with a 20% share of the issuing market, this region has grown by leaps and bounds at an annual average of 33%, with 775,000 passengers in 2012 to more than 5 million in 2019. Without a doubt, Asian and the Pacific

That is why the main cruise line companies are developing ambi-tious strategies to enter these issuing markets, adapting the product culturally to the needs of this region, which sees each time, a more extended middle class and greater purchasing power.

Investment in this market is multilateral and local administrations are also opting for solid infrastructures to be able to absorb their full poten-tial. Currently, Asia has more than 300 destinations, around 20 markets, with China being the main passenger issuer with more than 2 million cruise passengers and Japan the country with the most destination ports.

In this region, 79 ships sail via 39 different cruise line companies that make up a total of almost 2000 itineraries. Given the potential of this market, cruise line companies increasingly invest in destinations in the area to be able to captivate the first timers of the market and thus in-crease the number of cruise passengers even more since it is easier to try this product if they have it on their doorstep.

Another feature of this market is the passenger profile that remains younger than in the successor regions; in this case, 4 out of 10 cruise passengers are below 40 years.

For decades, North America has remained on the throne as the main issuing market

for cruise passengers with 40% of the global share, followed by Europe that grows year after year with 25% and thirdly Asia and

Pacific (with 20 % of the share of the issuing market) that has grown by leaps and bounds at an annual average rate of 33%, becoming

one of the markets with the greatest promise within the industry.

Principle issuing markets (by number of passengers):

North America

Europe

Asia and Pacific

South America

Others

14,2

38,4%

15,1%

14,2%

9,4%

4%

7,17

5,7

0,93

0,47

Caribbean

Asia - Pacific

Central and West Mediterranean

Northern Europe

Australia, New Zealand and Pacific

68% of cruise passengers indicate that the destination is the most important factor that influences their decision making when choosing their vacations.

Principle destinations (by number of passengers)

Fuente: Cruise Industry News – Cruise Lines 2019 Q3 Breakdown: By the NumbersCLIA – Cruise Line International Association - 2019 : CRUISE TRENDS & INDUSTRY OUTLOOK

Average passenger age

Average passenger revenue per day

Average passenger revenue per day (on board + tour)

calculation made based on the revenue of the three most important

cruise line companies

calculation made based on the revenue of the three most important cruise line companies. Q3 2019 data

* calculation made based on the revenue of the three most important cruise line

companies. Q3 2019 data

million Passengers

billion of total production worldwide

47 years

223,60$

59,25$ 28,5

$ 134

Average cruise duration

Average passenger revenue per day (ticket)

Economic impact 2018

7 days

164,35$

million passengers

million passengers

million passengers

million passengers

million passengers

40%

25%

20%

3,3%

1,7%

SOURCE : CRUISE LINES INTERNATIONAL ASSOCIATION

SOURCES:

CRUISE LINE INTERNATIONAL ASSOCIATION*CRUISE INDUSTRY NEWS**

*

**

**

**

*

*

*

The main cruise line companies within the industry

The industry is led by 5 companies that control 90% of the market share:

Carnival Corporation

it is the world’s largest cruise operator. This large corporation has more than 40% market share in the entire industry, with 105 ships encompassing different brands such as: Carnival, Costa, Princess, Aida, Holland America, P&O, P&O Australis, Cunard Line and Seabourn.

Royal Caribbean Cruises

it is the second largest cruise line company worldwide and has the largest ship ever built, the Symphony of the Seas, with a capacity for 5400 passengers. Royal Caribbean Cruises has a market share of more than 20% and a total of 63 ships. This company has amongst its networks brands: Royal Caribbean, Celebrity Cruises and Azamara Cruises. It also has interests in brands such as TUI, Pullmantur, CDF - Croisieres De France, SkySea and Silversea.

Norwegian Cruise Line

with almost 10% market share, this company operates under brands such as Norwegian, Oceania and Regent that offer 27 ships with a capacity of almost 55,000 berths.

MSC Cruises

with 8% of the market share and 17 ships in circulation, the cruise line company only operates with its MSC Cruises brand and has the most ambitious forecast for the construction of new ships.

Genting Hong Kong

as we have seen previously, the Asia-Pacific market is very promising, so much so that one of the cruise line companies born directly from that market is in the TOP 5 of the global industry companies. With 9 ships in circulation and brands such as Star Cruises, Dream and Crystal, this cruise line company is close to achieving 5% of the global market share.

Fuente: 2018 Cruise Industry presented by Cruise Industry NewsFuente: Cruise Industry News Special Report – 2019 Edition

b) Types of cruises: which cruises do passengers prefer?

Like any market in the expansion and maturation phase, there is a tendency

to differentiate and diversify products to offer more alternatives and thus

convince those who have not yet tried the product, and to stimulate the repetition of

the habitual ones.

That is why, as we have seen, the main cruise operators have different brands to reach diffe-rent market niches.

This variety is one of the biggest attractions of the product since it is a great opportunity for all travel agencies that can easily adapt the pro-duct to their customer.

From luxury cruises to promotional cruises

There are some cruise line companies specializing in exclusivity and luxury without the need to envy five-star hotels. For example, Seabourn, Silversea, Cunard, Windstar or Princess.

In general, these are small boats, some of them even sailboats, with excellent service, focusing on customer service, with ample space for passengers, a high-level of cuisine and a very complete all-inclusive product. Itineraries tend to be longer with more nights in ports and exotic destinations which large ships do not reach. They also offer exceptional and unique experiences such as helicopter flights, a night at the opera or tickets to the finals of a tennis Grand Slam.

On the other hand, there are economic or more commercial cruises that offer high quality services and facilities with very competitive prices for all customers. This would be the case of the largest and most popular cruise line companies such as Carnival, Costa, Pullmantur or MSC.

The luxury cruise niche is a growing sector. Currently, it has 600,000

passengers and 51 ships operating and it is forecasted to exceed 1,000,000

passengers and 85 ships by 2027.

From going around the world to mini-cruises

Travelling around the world is a dream for many people and there are already some cruise line companies, such as Oceania, MSC or COSTA, that offer this unforgettable, all-inclusive expe-rience and with all the comforts of touring the world aboard a cruise.

The ship ´The World´ deserves a special men-tion: a floating community that travels the world offering the possibility of renting or buying cabins or apartments. Each of these luxury rooms or apartments, as owned properties, are between 1.2 and 7.5 million dollars and the lucky ones can embark on the ship at any port to en-joy a vacation.

For those who have the busiest schedules and do not have many days available to disconnect, many companies offer the option of enjoying mini-cruises that are between 1 and 6 days long. This is an ideal way to enhance the product test experience for the most sceptical customer and it also provides them with the option of short breaks, allowing them to step off the treadmill just for a few days.

From the Tierra del Fuego Fjords to the Danube river

cruise ships no longer only travel the oceans, now they also sail through the heart of the great European capitals and there are even rail cruises such as the Orient Express and the Trans-Si-berian, which are luxury vintage trains that can provide and offer all the comforts of a cruise.

There are also river cruises specially targeted at Millennials, which traditionally is not the public for this specific market. The Uniworld river crui-ses have been precisely developed to attract this generation with outdoor experiences such as hi-king or bicycle rides and services with on-board entertainment such as the silent discotheque with headphones, DJ´s and private cooking and cocktail classes, as well as gym, yoga sessions and internet access.

Politours, Panavision, CroisiEurope or Amawa-terways are other companies who specialize in river cruises.

Expedition cruises is another cruise niche. An example is Australis cruise line that takes you through the narrow fjords of Tierra del Fuego and southern channels. But not only the most specia-lized brands dare to offer the most adventurous expeditions, also the most popular cruise lines companies are exploring this niche that current-ly has a total of 84 ships. For example, Celebrity Cruises with Xpedition in the Galapagos.

The expedition cruise niche is at its peak with 12 new ships that began sailing in 2019. There are currently 279,000 passengers journeying into the most hidden

and naturally beautiful retreats of the earth and these numbers are expected to double by 2027,

approaching more than half a million passengers.

From family cruises to singles cruises

cruises with children are great for families. Not only do they focus on children, but they also organize activities for adults.

These cruises place a lot of importance on on-board entertainment to capitalize on on-board time as much as possible and offer options for the whole family, including free promotions for children. Examples of such family cruises are Royal Caribbean, NCL or Disney Cruises.

The family-oriented cruises are very large ships which are very attractive and full of constant novelties with a lot of entertainment on board and a wide variety on offer for children.

On the other hand, thematic cruises have become one of the biggest trends in the industry. There are already several cruise line companies, of all sizes, that focus on a very segmented audience with very specific interests to offer mono thematic cruises and thus capitalize on that target.

There are multiple types of cruises available according to the type of client, we can find a thematic cruise of a rock festival, with an exclusive cruise for single people to make new contacts or another focused on a younger cus-tomer that is finishing university studies or have their ´ End of Course trip´.

An example of this is the “Megacruise” of Norwegian Cruise Line that offers live rock festivals with leading artists such as Megadeth, with all the comfort of a cruise while touring different cities. For fashion lovers, Cunard offers the “Transatlantic Fashion Week” that has catwalks of the best designers.

c) Trends in the market: what cruise passenger profiles are we going to find?

Cruise line companies have been working for years to ensure that the purchase of a cruise is the acquisition of a unique experience for the traveller. They are in a constant phase of trend analysis and, in their products, they add expe-riences so that people start getting younger and younger to live these experiences and that the new generations are the cruise passengers of tomorrow.

The search for experiences as a form of travel, is entering the world of cruises through Generation Z who will soon supersede the Millennials as the main consumers.

This new generation is characterized by the

constant search for travel opportunities and enjoy unforgettable experiences. For this reason, they are attracted to having multiple destinations and thematic cruises at their fingertips such as mu-sic festivals at sea. This activity always leaves a record of their experiences in the digital world through social networks, such as Instagram.

Depending on the generation, the influencing reasons behind choosing a cruise as a form of travel are different; the older ones, the Baby Boo-mers, are more influenced by the destinations and the itineraries, on the other hand the Millen-nials, a generation with great purchasing power, take into account the cost of the cruise and the entertainment on board.

The way to travel by cruise is also changing and the expectation of the cruise passengers is to have access to the latest technology whilst on-board the ships. In the same way, travelling alone is beginning to gain certain popularity.

The cruise escapes the seasonality and little by little, there are more passengers who prefer to enjoy a holiday in the sun in winter or a cold ge-taway in summer. Accessibility to hard-to-reach destinations also attract new cruise passengers seeking exclusive and remote destinations (eg: Galapagos or Antarctic Islands) while preferring to travel in a conscious way and valuing contact with the local cultural, whilst respecting the envi-ronment.

2

Choosing the business modelIdentify opportunities and choose the optimum way of selling cruises

There is no written rule on the best way to sell cruises as all of this will depend on the situation, strengths, threats and

opportunities of each of the businesses.

The key is to carry out an exhaustive analysis of each of these blocks and opt for the most appropriate model, aligned with the business.

Following are some of the most popular models used by agencies:

Hybrid ModelThe key to this business model lies within these steps

The opportunities we see in this business, which during its sales process combine online and automated sales techniques with offline and more conventional sales techniques, are to enhance cross selling and up selling.

After automatically capturing the initial interest of the client, the lead transcends to the virtual world and the client receives personalized attention from the travel agent, who guides them through their purchase process in order to increase the profitabili-ty of the opportunity of a Sale, whilst meeting specific needs.

This user, who ends up making the purchase by phone, origina-tes through an online search. In a search of our website, the user has already placed a first filter related to the purchase, to provide information about the destination, departure month and even the cruise in which they are interested in.

Subsequently, through the request for a quote, the agency still contacts you with a ´hot´call, to evaluate interest, support you in the decision process, refine your choice and offer you other peri-pheral products (cross selling) or higher profitability (up selling ) in order to have more control over the conversion ratio.

To achieve effective and efficient guidance, it is essential that the travel agent immediately, makes the entire cruise promotions available known to the client in order to offer the best alternative to the client.

In addition to being experts in terms of knowledge of the pro-duct, these agents need commercial and sales skills to be able to persuade and understand what the customer needs, putting them first.

Many factors influence the sales process, but one of them is customer impulsiveness at that time. The faster we give the user the information and all the data they need, the more we can take advantage of the time window in which the client is more sensiti-ve and more impulsive.

Online activity

The agency has a web page that informs of its cruise offers.

Capture of online traffic

Through a comprehensive strategy of digital marketing, communi-cation and press, the agency attracts online traffic to its website.

Generation of interest

With a persuasive design, offering the best user experience and attractive offers to capture the user’s attention.

Request for quotation / information

The user chooses a cruise with a departure, destination, date, port of embarkation and specific category and sends a

request for a quote or more information to the agency.

Call by the commercial agent

When the agency receives the lead online, it personally contacts the user through a call.

1

2

3

4

5

Online Model

The online sale is very price oriented, therefore, the agency’s margin will be low as it will have to give part of its commission to lower the price, and consequently, its margin will be lower. As this channel works at a price and the margins are low, the only formula to make it sustaina-ble is to move to quantity and reach a larger audience and therefore, a large number of potential customers.

The deep knowledge of online marketing techniques is essential to execute this type of model as the whole model is based on a sin-gle-channel process where the reservation begins and ends within an online platform, without the support or direct expertise of a travel agent.

Among others, this model works for that type of repeater and loyal cus-tomer, who knows the product and the brand and does not pose any problem or fear of carrying out the entire process online with only the support of technology and explanations of the associated tool to make the reservation.

The benefit of this model lies in the minimum structural costs associated with

it, in addition to adequate technology, very precise marketing actions and

constant monitoring.

In some ways, it is a model that can also include the guidance of the travel agent during the sales process but the business offers the ability to priori-tize the option of having an online approach first with the user, and making the total reservation of their cruise through the web page. For personal advice, these businesses can use chats or a support phone line.

However, the reservation is merely online and tools such as the payment gateway or the search and reservation engine are essential. That is why the website must be clear, simple and focused on the key indicators to monitor all metrics and be in the constant process of optimization. The search and reservation engine must also be user-friendly, secure and offer the relevant information to the user.

Without a doubt, positioning a website which is optimized and capable of offering a good user experience combined with online marketing tech-niques such as online advertising, retargeting, social ads, chatbots and a good email automation strategy etc., will help us automate our sales flow, but above all to convince the user that at the time of the search, they make the decision to purchase based on simplicity, engagement, and trust.

Acquisition online

actions

Lead caption

Engagement in the web

Cruise booking engine

Booking online

Face-to-face Model

Today, more than ever, the advisory capacity of travel agents is es-sential for the tourism business. Above all, taking into account that the cruise product is not an easy to understand item and due to the wide variety of promotions that exist and to the increase in first-time cruise passengers who require more information than others.

In addition, it is a complex tourist product as the reservation itself can become a combination that also includes other tourist products, such as a hotel, a transfer or a plane.

The structural costs of this model are higher than the others as the investment to implement a physical agency or invest in a franchise and then provide it with the necessary technology to manage all reserva-tions is relevant, and that is why it is not a model of Business suitable for all budgets.

However, if your vision allows you to opt for this route you should also keep in mind that the travel agent must have at its disposal the tools to offer the entire number of cruise combinations and promotions availa-ble instantaneously and quickly in in order to offer advice on quality.

In short, regardless of the model chosen you will always need the best technology

to provide your sales channel with a flexible, agile and simple process.

A recent study in Spain revealed that digital natives physically return to

the agency for professional guidance.

Travel agent seeks through the cruise

booking tool

Commercial visit is closed

Customer visits the shop

3

Choose the tool that best suits your business

Dedicate time advising and not searching

regardless of the type of cruises they have decided to sell, their buyer or the business model that they have chosen to implement.

Technology serves to reach a wide variety of promotions organized by region, product, ships and other parameters in an automated way. Travel agencies have the opportuni-ty to improve their performance, expanding their product portfolio and incorporating automated technologies into their operations.

IST has been working with cruise line companies for 20 years. Each of them has its own idiosyncrasies and throu-gh understanding the business rules of each one, we enable them to converge onto a platform, making them available to the agent which is the added value that IST brings to the industry.

The cruise business is in full expansion throughout the world and travel agents who want to sell them have to have the appropriate technology to facilitate a more efficient sale, if not, they will incur significant costs.

In an increasingly diversified market full of variants, travel

agents need tools that allow them to sell and not to spend time

searching for products,

IST consolidates and is connected to 95% of the cruise line promotions that exist in the market, placing them on a platform within reach of the agent, in real time and through a simple ´click´.

Agencia de viajes

Integraciones API / Soluciones integralesAPI integrations / Integral solutions

Travel agencies

There are different types of flexible solutions and all of them adapt to the needs of the client. API integrations, such as the FIBOS solution, a unique XML messaging that con-nects with more than 30 cruise line companies in real-time. This solution provides the travel agency with the raw material to make a tool according to its brand criteria, with its own flow, adapted to its internal systems and with a lot of flexibility to modify it at any time according to its conversion ratios. It is a strategic investment as it takes time to im-plement.

On the other hand, there are integral solutions, such as the Cruise Browser, which is a search engine and sales of cruises tool that allows easy and fast integration with tra-vel agencies, allowing them to centralize the entire supply of cruise line companies in one place without incurring technological development costs. In short, in the case of an agency where the cruise is another item, a search engine can be uploaded to any websi-te providing a perfect solution.

For more than 20 years, the mission of IST has been to facilitate these sales and make the exchange between

the agency and the cruise lines companies more efficient, ensuring that all of its solutions adapt to any

business model, type of agency and type of user.

(+34) 935 001 226

e.marketing@istinfor.com

www.ist-cruisetech.com

Barcelona, Spain.

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