I have always struggled with Azamara Cruises because it had a pretty solid product, but no direction and nothing that made it distinguishable. Honestly, I have said to its parent, Celebrity Cruises, that with Oceania Cruises having such a solid product with consistently excellent delivery of cuisine, service and itineraries, there was little motivation to select the lesser marketed and unknown Azamara.
That has all changed...and I preface it by stating that Larry Pimental and his staff have picked over Oceania, Regent, Seabourn, Silversea, Crystal and SeaDream and pulled elements from each, tweaking their selected concepts in ways that they believe will provide a far improved cruise experience which touches upon, but does not pretend to be, luxury.
First Azamara is now Azamara Club Cruises. This is obviously a play off of the "country club" marketing of Oceania and the recent emphasis on "country club casual" by many lines.
Second, they have taken the approach of making the product more inclusive....something I have said was essential to distinguish it from Oceania - who operates identical ships. So now
1. Gratuities are included.
2. Wines with meals complimentary.
3. Bottled water, specialty coffees and teas are included.
4. Shuttle buses will be provided (where available) between the port and town at no charge. 5. Self-service laundries are complimentary.
6. Specialty restaurant dining will be complimentary for suite passengers.
These are pretty much the things that Oceania makes money on and (as you know I have told you) can make an Oceania cruise more expensive than a Seabourn cruise if you are traveling in an sort of suite accommodation.
Third, while Azamara has always had solid cuisine, it is, ala SeaDream, incorporating more of the cuisine of where the ship is visiting in its dining menus. Complimenting that is its emphasis on local wines - some of which are not readily available elsewhere because the vinters either do not have sufficient qualities or simply do not market for foreign distribution. (The other night I enjoyed a bottle of Slovenian wine I purchased on my last cruise. It was bittersweet because I know I cannot purchase it here in the U.S. and I want more of it...and it has great memories associated with it.)
Fourth, there will be many more overnight stays. This, to me, is a tricky one. For me, other than say Barcelona, Venice or Istanbul, there are not many ports that I - as a seasoned traveler - want to overnight in when embarking or disembarking. I may be in the overall minority, but there is great value for many knowing that if their flight is late they can still make the ship...and the need to purchase a pre- or post-cruise hotel or a very early private car to the airport on disembarkation becomes a real cost savings. Also, there will be a beefing up of shore excursions as the additional time will permit more unique and in depth experiences. (These will be at extra cost, however.)
What is refreshing is the Fifth point: Prices are going to be higher. All of this luxury comes at a cost. While higher prices may make Azamara Club unaffordable to many, the average target passengers are aged 45 to 60 with a household income of approximately $300,000 per year. One thing to keep in mind is that the vast majority of the accommodations are cabins with very small bathrooms (and tiny showers). As with SeaDream (Pimental's former baby), I am sure the focus is on making the rest of the onboard experience at a sufficiently high level as to reduce the impact of this shortcoming. Note: I firmly believe that being honest with the market and saying you are raising the prices to make this a more inclusive product is the way to go. The concept of "free, free, free" added to high prices, ala Regent Seven Seas Cruises, is to many offensive; especially the astute.
There is, alas, a Sixth point: Children. As with Oceania, Azamara Club specifically does not encourage children and touts that it has no facilities for children. However, children are welcome to book and, in a very significant difference, if there are a sufficient number of children on board, Azamara Club will provide youth counselors. This, to me is huge. Not only does this open up Azamara Club to many of the demographically targeted folks who have children, it provides a bit of protection for those who do not want to have children onboard with nothing to do disturbing their cruise.
Here is something to think about: December 14th is the day prices are going to increase. If you act quickly, you can lock in some really spectacular cruises in 2010 and 2011 that will have all these added amenities...and you can do so at the present lower prices. It is like receiving a very significant discount for doing today that which you might well do later.
Showing posts with label Azamara. Show all posts
Showing posts with label Azamara. Show all posts
Wednesday, December 9, 2009
Monday, July 6, 2009
Azamara's New "Celebrity" - Pimental To Take The Reigns -UPDATED
Since its launch Azamara Cruise Line has been neither fish nor fowl. It is a wonderful product, but has been stuck in sort of abyss between Celebrity (its premium brand "owner") and Oceania (an ultra-premium competitor operating virtually identical ships but with a much stronger brand identity).
With limited marketing on top of that, I unfortunately have heard "What is Azamara?" much more than "Great Itineraries. Great Price." Royal Caribbean (owner of Celebrity and, therefore, Azamara) has, obviously, also heard the same things and had decided to shake things up a bit.
Although not officially announced yet (now it is!), the word is that Larry Pimental, the former head of SeaDream Yacht Club, is going to be taking over the reigns (or, better, finally someone will specifically be taking them!) and will report directly to Royal Caribbean, while Celebrity will merely be providing the operational support. He is now the President and CEO of Azamara Cruises.
While there is no question that operating a 648 passenger upscale ship is far different from the 100 passenger luxury SeaDream Yachts, Pimental also brings his experience as the head of Seabourn (when it was in its infancy) and the decision to bring in the ill-matched 748 passenger Seabourn Sun onboard. As a result, there can be no question that Pimental "gets" the differences and understand how the product needs to be differentiated from both the luxury market and the 2,000 - 3,000 passenger cruise ship market.
I have listened to Pimental's energetic approach and almost gospel-like enthusiasm for SeaDream (before the financial problems of its owner caused a relationship-ending riff), so I have no question that he has some sort of vision and will be working hard to make it happen. My concern, though, is how he will meld with a cruise behemoth when he has spent so many of the last years working in a boutique setting.
I am looking forward tothe formal announcement and hearing what the vision is.
With limited marketing on top of that, I unfortunately have heard "What is Azamara?" much more than "Great Itineraries. Great Price." Royal Caribbean (owner of Celebrity and, therefore, Azamara) has, obviously, also heard the same things and had decided to shake things up a bit.
Although not officially announced yet (now it is!), the word is that Larry Pimental, the former head of SeaDream Yacht Club, is going to be taking over the reigns (or, better, finally someone will specifically be taking them!) and will report directly to Royal Caribbean, while Celebrity will merely be providing the operational support. He is now the President and CEO of Azamara Cruises.
While there is no question that operating a 648 passenger upscale ship is far different from the 100 passenger luxury SeaDream Yachts, Pimental also brings his experience as the head of Seabourn (when it was in its infancy) and the decision to bring in the ill-matched 748 passenger Seabourn Sun onboard. As a result, there can be no question that Pimental "gets" the differences and understand how the product needs to be differentiated from both the luxury market and the 2,000 - 3,000 passenger cruise ship market.
I have listened to Pimental's energetic approach and almost gospel-like enthusiasm for SeaDream (before the financial problems of its owner caused a relationship-ending riff), so I have no question that he has some sort of vision and will be working hard to make it happen. My concern, though, is how he will meld with a cruise behemoth when he has spent so many of the last years working in a boutique setting.
I am looking forward to
Friday, April 3, 2009
Silversea - Improperly Discounting Its 15% Pre-Pay Discount?
One of my readers asked my opinion on Silversea's now discounting a cruise he purchased long ago so much so that the 15% discount he received for pre-paying many months early is now no discount at all...but rather a significant cost (due to loss of his income on his money). Is there enough "discounting" in that sentence?
Back in November 2008 I wrote a blog entry Silversea - Lost at Sea? wherein I discussed a number of issues concerning my about Silversea. One of my biggest concerns was every...and I mean every...indication that cash flow was being coming a very real concern. This was further discussed in my blog entry Silversea - A Call From The Captain.
The fact is that when a cruise line is giving you a very significant discount for early payment you really have to know that it is not manna from heaven. It is, without question, a way to get your money earlier then the cruise line (or whomever) is actually entitled. I find this in my legal world as a "red flag" when done by a contractor (yacht, commercial or residential). There is no question that YOUR money is going to be used to pay the line's (or contractor's) OTHER obligations.
Now, I don't believe it is the same, but it is not dissimilar to a Ponzi scheme where the next investors pay the prior investor's "income" because the prior investor's money wasn't actually invested...or not as it should have been. Cruise Value Center failed a few months ago when new bookings stopped coming in at the same rate they had been. As a result the NEW money was insufficient to pay for the OLD obligations.
I do want to pause and note that Crystal Cruises has, for quite a while, offered a slight discount for early payment (around 3.5% versus Silversea's 15%). Crystal's figure is essentially consistent with giving a guest a slightly better return than they would get from a safe investment. To me this is a good marketing tactic because it emotionally and financially vests their guest in the upcoming cruise (less thought of canceling an already paid for cruise) while being logically related to normal finances.
So, do I believe Silversea is going to go to bat and provide some additional benefits for those expecting a true 15% additional discount since its inability to attract sufficient passengers required a further discounting of its fares? Probably not. And that is not because Silversea wants to treat you like you were just scammed, because it was not its intention! It probably will not respond because it can't; either directly because of its own cash demands or it then runs down yet another slippery slope of further discounts. Hopefully it will consider at least a couple of complimentary dinners in its extra charge restaurants...but that will eat into its onboard revenue (assuming the restaurants are running at full capacity).
It is not a pretty picture. I wish I could find something good to say. Silversea has been a very good product until recently. Most of my clients, possibly in part because of my philosophy (a caveat), just are not willing to book Silversea. There are other options out there. For luxury, there is no question from anyone that Seabourn is either as good or better. For itineraries, Seabourn and Oceania (and Azamara - should we not forget this line!) are suitable or better alternatives. So many are left with little motivation to find logic in risking their cruise, if not their money, on Silversea.
Hopefully...and I am hopeful...this will change.
Back in November 2008 I wrote a blog entry Silversea - Lost at Sea? wherein I discussed a number of issues concerning my about Silversea. One of my biggest concerns was every...and I mean every...indication that cash flow was being coming a very real concern. This was further discussed in my blog entry Silversea - A Call From The Captain.
The fact is that when a cruise line is giving you a very significant discount for early payment you really have to know that it is not manna from heaven. It is, without question, a way to get your money earlier then the cruise line (or whomever) is actually entitled. I find this in my legal world as a "red flag" when done by a contractor (yacht, commercial or residential). There is no question that YOUR money is going to be used to pay the line's (or contractor's) OTHER obligations.
Now, I don't believe it is the same, but it is not dissimilar to a Ponzi scheme where the next investors pay the prior investor's "income" because the prior investor's money wasn't actually invested...or not as it should have been. Cruise Value Center failed a few months ago when new bookings stopped coming in at the same rate they had been. As a result the NEW money was insufficient to pay for the OLD obligations.
I do want to pause and note that Crystal Cruises has, for quite a while, offered a slight discount for early payment (around 3.5% versus Silversea's 15%). Crystal's figure is essentially consistent with giving a guest a slightly better return than they would get from a safe investment. To me this is a good marketing tactic because it emotionally and financially vests their guest in the upcoming cruise (less thought of canceling an already paid for cruise) while being logically related to normal finances.
So, do I believe Silversea is going to go to bat and provide some additional benefits for those expecting a true 15% additional discount since its inability to attract sufficient passengers required a further discounting of its fares? Probably not. And that is not because Silversea wants to treat you like you were just scammed, because it was not its intention! It probably will not respond because it can't; either directly because of its own cash demands or it then runs down yet another slippery slope of further discounts. Hopefully it will consider at least a couple of complimentary dinners in its extra charge restaurants...but that will eat into its onboard revenue (assuming the restaurants are running at full capacity).
It is not a pretty picture. I wish I could find something good to say. Silversea has been a very good product until recently. Most of my clients, possibly in part because of my philosophy (a caveat), just are not willing to book Silversea. There are other options out there. For luxury, there is no question from anyone that Seabourn is either as good or better. For itineraries, Seabourn and Oceania (and Azamara - should we not forget this line!) are suitable or better alternatives. So many are left with little motivation to find logic in risking their cruise, if not their money, on Silversea.
Hopefully...and I am hopeful...this will change.
Monday, March 2, 2009
Azamara Zigs While Oceania and Regent Zag - Airfare No Longer Included in Price
Azamara Cruises, which is the more upscale line operated by Celebrity and similar in many respects to Oceania, has decided to unbundle air from its pricing. According to Dondra Ritzenthaler, Celebrity’s senior vice president of sales, more than half of their guests have opted to take the air credit and book their own air.
Personally, I find this to be refreshing. I cannot tell you how many times I have told clients that "free air" is not "free" and, after doing the pricing, they see that up to $500+ in air-related taxes can be added on to that "free" air.
I find that clients are looking not just to the bottom line, but to ways to see if the bottom line can lowered through different pricing strategies. For me, the best way to do this is by unbundling the air...and tours.
Personally, I find this to be refreshing. I cannot tell you how many times I have told clients that "free air" is not "free" and, after doing the pricing, they see that up to $500+ in air-related taxes can be added on to that "free" air.
I find that clients are looking not just to the bottom line, but to ways to see if the bottom line can lowered through different pricing strategies. For me, the best way to do this is by unbundling the air...and tours.
Here is what Azamara is now offering:
Thursday, February 26, 2009
Oceania Cruises - Ship Inspection of the Regatta Made Me Smile...Really.
I flew down to Miami yesterday to do a ship inspection of the Oceania Regatta; one of three virtually identical ships operated by Oceania Cruise Lines. I was not really expecting it to be very interesting - from an inspection point of view - since I had previously inspected the Azamara Journey...which is a sistership in a former life as part of Renaissance Cruise Lines. Being the skeptic I am I was, however, wondering if I could get some real input and feel as to the effect of Apollo Management's impact on the Oceania product and approach...and how the "Prestige Cruise Holdings owns Oceania and Regent" affects same, and what downsides exist, if any (as it relates to Oceania).
Verdict: I literally came away with a smile. Honestly. As a was walking out of the terminal one of the security guards stopped me and said, "You look like you had a good time. Nice smile."
For those of you not familiar with the ships, they are mid-size ships holding 684 passengers with some suites, but mostly fairly compact cabins. As Oceania emphasizes, it is NOT a luxury cruise line, but a premium one. The cabins (with or without balconies) are small at 164 square feet, but are tastefully well designed and comfortable save two major flaws: extremely small bathrooms with "overly friendly" shower curtains and mini-sofas that just aren't comfortable. (The Penthouse and higher suites do not suffer from either of these flaws and, in fact, have bathtubs, plenty of room and comfortable furniture.) Personally, I like the cabin finishes better on Azamara, but not enough to really have it as a factor when choosing which line to cruise.
You will pay as you go for water, drinks and liquor. There are no complimentary shuttle buses into town. You will pay gratuities (unless you book one of its special promotions before the end of March 2009). Smoking is forbidden and children are specifically discouraged. Men can cruise for weeks without ever donning a jacket, though many do wear sport coats to dinner. Other than the specialty restaurants, it is open seating.
The public spaces are very nice with a country club feel (i.e. casual but elegant), two specialty restaurants (Polo for steak and Toscano for Italian, but without additional charge for either) plus the main dining room and the casual venue, which has a portion (even outdoors) transformed to a tapas restaurant in the evenings. There are very nice cabanas which you can rent for a day or an entire cruise that give you a fairly luxurious retreat.
The food I had was very good. Now, while I know a bit of a show is put on for travel agents, what was served does indicate what Oceania does with its cuisine. We started with a nice serving of caviar over a potato terrine of sorts, followed by lobster risotto, beef fillet and a chocolate dessert. What my impressions were are very Jacques Pepin (who designed the menu): Good quality ingredients served in a simple, honest way that looks and tastes good. My beef was ordered medium rare and it was served medium rare...and cut with a fork. (By way of comparison I found the presentation, flavors and taste to be superior to its sister line, Regent Seven Seas.)
A note on service: It appears to be solid, but not as polished as one would expect on a luxury line. Oceania not being a luxury line would seem to make this an irrelevant observation, right? Well, the overall impression is such that you cannot help but consider same. (That is a compliment.)
Okay, so you are reading this and saying, "This doesn't sound like the Eric I know." Well, here goes...A nice cabin and a good meal does not make me smile. People make me smile. The people on Oceania from the room stewardesses to the Chief Financial Officer were warm, friendly and, most importantly, were proud of their product and were absolutely beaming with the personal pride of being on a team that wants to do the best they possibly can. For me, even if things are not perfect, if someone is genuinely giving their all and want to improve what they do, I willingly embrace any minor slip-ups because they are part of a very productive process.
I had a very enjoyable lunch with the Prestige Cruise Holding's Director of Communications, Chief Financial Officer and others. We discussed Oceania's philosophy, efforts during refits, happiness of the crew, etc. I even was introduced to a couple of very happy former Seabourn folks (who spoke with such kind words about Seabourn!). To be sure, however, I made sure that we spoke of some of the issues regarding Regent, the interrelationship, etc. What I walked away with was these are the sort of people I, personally, want to do business with. And, if I want to do business with them, it gives me great comfort in encouraging my clients to cruise with Oceania.
I close with the inevitable comparison: Oceania versus Regent. To me this is not even close:
1. Food: This is, hands down, to Oceania. Not only did I have a meal onboard, I snooped around and saw what was being offered to the paying passengers. I know that Oceania spends more per passenger on quality ingredients than Regent does. I understand and appreciate the philosophy of an elegant piece of beef fillet you can cut with a fork trumps a giant rib eye falling off of a plate.
2. Service: I used the term once before, "Comfortable in its own skin" and Oceania's service is just that. It is solid, but imperfect. But is offered with a smile, a desire to do it better each and every time and with an intangible warmth. Regent struggles with uneven service, confused waiters and a lack of polish. It is working on "it", but Oceania has "it".
3. Itineraries: This is not even close. Check out Oceania's itineraries. If you want to see the world, they are so much stronger than Regent's.
4. Cabins: Regent is must stronger, even in most suites. It is, to me, the only "ace in the hole" Regent has. That said, the Penthouses on Oceania are nice, though the bathrooms (even with a tub) are a bit spartan. The upper suites are competitive, though.
5. Ships: If you take the Regent Navigator out of the mix, the pubic areas are both fine. I do find that most of Oceania's public spaces are more to my liking...with the caveat that I have not been back on the Regent ships since their recent refit. The style of Oceania works for me, but I would not chose or dismiss either line because of their public areas.
6. Value: If you read this far you know the answer: Oceania by far. You could not possibly drink enough or pay enough in gratuities to even begin to justify the price difference.
So, if you are looking for a value cruise or prefer to pay ala carte (non-drinkers, for example), take a good look at Oceania. I am confident you will like what you see...especially for the price.
Verdict: I literally came away with a smile. Honestly. As a was walking out of the terminal one of the security guards stopped me and said, "You look like you had a good time. Nice smile."
For those of you not familiar with the ships, they are mid-size ships holding 684 passengers with some suites, but mostly fairly compact cabins. As Oceania emphasizes, it is NOT a luxury cruise line, but a premium one. The cabins (with or without balconies) are small at 164 square feet, but are tastefully well designed and comfortable save two major flaws: extremely small bathrooms with "overly friendly" shower curtains and mini-sofas that just aren't comfortable. (The Penthouse and higher suites do not suffer from either of these flaws and, in fact, have bathtubs, plenty of room and comfortable furniture.) Personally, I like the cabin finishes better on Azamara, but not enough to really have it as a factor when choosing which line to cruise.
You will pay as you go for water, drinks and liquor. There are no complimentary shuttle buses into town. You will pay gratuities (unless you book one of its special promotions before the end of March 2009). Smoking is forbidden and children are specifically discouraged. Men can cruise for weeks without ever donning a jacket, though many do wear sport coats to dinner. Other than the specialty restaurants, it is open seating.
The public spaces are very nice with a country club feel (i.e. casual but elegant), two specialty restaurants (Polo for steak and Toscano for Italian, but without additional charge for either) plus the main dining room and the casual venue, which has a portion (even outdoors) transformed to a tapas restaurant in the evenings. There are very nice cabanas which you can rent for a day or an entire cruise that give you a fairly luxurious retreat.
The food I had was very good. Now, while I know a bit of a show is put on for travel agents, what was served does indicate what Oceania does with its cuisine. We started with a nice serving of caviar over a potato terrine of sorts, followed by lobster risotto, beef fillet and a chocolate dessert. What my impressions were are very Jacques Pepin (who designed the menu): Good quality ingredients served in a simple, honest way that looks and tastes good. My beef was ordered medium rare and it was served medium rare...and cut with a fork. (By way of comparison I found the presentation, flavors and taste to be superior to its sister line, Regent Seven Seas.)
A note on service: It appears to be solid, but not as polished as one would expect on a luxury line. Oceania not being a luxury line would seem to make this an irrelevant observation, right? Well, the overall impression is such that you cannot help but consider same. (That is a compliment.)
Okay, so you are reading this and saying, "This doesn't sound like the Eric I know." Well, here goes...A nice cabin and a good meal does not make me smile. People make me smile. The people on Oceania from the room stewardesses to the Chief Financial Officer were warm, friendly and, most importantly, were proud of their product and were absolutely beaming with the personal pride of being on a team that wants to do the best they possibly can. For me, even if things are not perfect, if someone is genuinely giving their all and want to improve what they do, I willingly embrace any minor slip-ups because they are part of a very productive process.
I had a very enjoyable lunch with the Prestige Cruise Holding's Director of Communications, Chief Financial Officer and others. We discussed Oceania's philosophy, efforts during refits, happiness of the crew, etc. I even was introduced to a couple of very happy former Seabourn folks (who spoke with such kind words about Seabourn!). To be sure, however, I made sure that we spoke of some of the issues regarding Regent, the interrelationship, etc. What I walked away with was these are the sort of people I, personally, want to do business with. And, if I want to do business with them, it gives me great comfort in encouraging my clients to cruise with Oceania.
I close with the inevitable comparison: Oceania versus Regent. To me this is not even close:
1. Food: This is, hands down, to Oceania. Not only did I have a meal onboard, I snooped around and saw what was being offered to the paying passengers. I know that Oceania spends more per passenger on quality ingredients than Regent does. I understand and appreciate the philosophy of an elegant piece of beef fillet you can cut with a fork trumps a giant rib eye falling off of a plate.
2. Service: I used the term once before, "Comfortable in its own skin" and Oceania's service is just that. It is solid, but imperfect. But is offered with a smile, a desire to do it better each and every time and with an intangible warmth. Regent struggles with uneven service, confused waiters and a lack of polish. It is working on "it", but Oceania has "it".
3. Itineraries: This is not even close. Check out Oceania's itineraries. If you want to see the world, they are so much stronger than Regent's.
4. Cabins: Regent is must stronger, even in most suites. It is, to me, the only "ace in the hole" Regent has. That said, the Penthouses on Oceania are nice, though the bathrooms (even with a tub) are a bit spartan. The upper suites are competitive, though.
5. Ships: If you take the Regent Navigator out of the mix, the pubic areas are both fine. I do find that most of Oceania's public spaces are more to my liking...with the caveat that I have not been back on the Regent ships since their recent refit. The style of Oceania works for me, but I would not chose or dismiss either line because of their public areas.
6. Value: If you read this far you know the answer: Oceania by far. You could not possibly drink enough or pay enough in gratuities to even begin to justify the price difference.
So, if you are looking for a value cruise or prefer to pay ala carte (non-drinkers, for example), take a good look at Oceania. I am confident you will like what you see...especially for the price.
Tuesday, January 13, 2009
Regent Seven Seas To Give Travel Agents Commissions on "Non-Commissionable Fees"
In a move specifically designed to encourage travel agents to move their clients over to Regent Seven Seas Cruises, the cruise line announced today that it has dropped all Non-Commissionable Fees other than for some limited items such as airfares.
What does this mean for you, the cruising public? It may mean something or it may mean nothing. Let me explain.
Cruise fares are generally broken down into 3 parts: base cruise fare, NCFs and taxes. The term Non-Commissionable Fees started to be used a few years ago when the use of the term "Port Charges" came under fire...and caused some legal issues...because passengers that missed a port started demanding the "port charges" be refunded; and then it was discovered that "Port Charges" were not only charges made by the port.
Over time cruise lines started to use the NCFs as a way to reduce travel agent commissions. While there always has been a mystery as to how NCFs are determined, two things are certain: It is more than "port charges" and there is no commission paid. So what happens is that the cruise line, especially in a time of ever reducing prices, increases the percentage of the total cruise fare which are categorized as NCFs and therefore drive down the amount of commission paid to the travel agent. [One mass market line (which I do not believe I have ever written about) got so aggressive with NCFs that travel agents were literally looking at commissions of less than $100 on veranda cabins on 7 day cruises...before any agency discounts were given.]
So with Regent eliminating the NCFs the travel agent booking a Regent cruise will, theoretically, receive more commissions. But, in reality, it does not really amount to huge dollars per cruise. For example, if a travel agent is making a 10% commission (industry standard base rate) and there are $500 in NCFs suite, it amounts to $50.00 in additional commissions.
To be fair, Regent is not the first luxury cruise line that has tried to "sweeten the pot" for its travel agents in this struggling economy. A few months ago Silversea did a similar thing, in a different way, by giving travel agents a 25% commission on certain sailings.
My concern is this: Why would an honorable travel agent push a client onto a Regent cruise when the one the client desires is on Silversea or Seabourn or Azamara? Why would a travel agent do it for $50...or $100...or for any amount? Yes we are in business to earn a living, but to me the key is that we are to "earn" that living; not dupe clients into taking cruises that really do not meet their desires!
I do appreciate that Regent is trying to find a legitimate way to give a nod and a boost to its travel agents...and that is appreciated. What is of concern to me is that the motivation. As Mark Conroy, President of Regent, is quoted in Travel Weekly as stating, "We think it gives the agent one more reason to sell us versus the other guy."
I am sorry, for me it does not. I know it may seem I am oh so skewed toward Seabourn, but try this on for size: While Regent is trying to increase sales by lining the travel agents' pockets with a little bit more cash, Seabourn is running 60% off sales on its slower selling cruises...keeping more cash in its guests' pockets and generating more commissions for its travel agents through those sales. (To be fair to Regent, it also has gone "tour inclusive" on some of its 2009, and it was just announced all of its 2010, cruises so there is added value for its guests as well.)
Finally, I do agree with Regent that there should not be any NCFs and most every travel agent will agree with me on this. I hope all of the cruise lines drop the NCFs...or at least limited them to actual port charges. But make no mistake, the motivation should be it is a good business practice; not a motivator to push clients one way or another.
What does this mean for you, the cruising public? It may mean something or it may mean nothing. Let me explain.
Cruise fares are generally broken down into 3 parts: base cruise fare, NCFs and taxes. The term Non-Commissionable Fees started to be used a few years ago when the use of the term "Port Charges" came under fire...and caused some legal issues...because passengers that missed a port started demanding the "port charges" be refunded; and then it was discovered that "Port Charges" were not only charges made by the port.
Over time cruise lines started to use the NCFs as a way to reduce travel agent commissions. While there always has been a mystery as to how NCFs are determined, two things are certain: It is more than "port charges" and there is no commission paid. So what happens is that the cruise line, especially in a time of ever reducing prices, increases the percentage of the total cruise fare which are categorized as NCFs and therefore drive down the amount of commission paid to the travel agent. [One mass market line (which I do not believe I have ever written about) got so aggressive with NCFs that travel agents were literally looking at commissions of less than $100 on veranda cabins on 7 day cruises...before any agency discounts were given.]
So with Regent eliminating the NCFs the travel agent booking a Regent cruise will, theoretically, receive more commissions. But, in reality, it does not really amount to huge dollars per cruise. For example, if a travel agent is making a 10% commission (industry standard base rate) and there are $500 in NCFs suite, it amounts to $50.00 in additional commissions.
To be fair, Regent is not the first luxury cruise line that has tried to "sweeten the pot" for its travel agents in this struggling economy. A few months ago Silversea did a similar thing, in a different way, by giving travel agents a 25% commission on certain sailings.
My concern is this: Why would an honorable travel agent push a client onto a Regent cruise when the one the client desires is on Silversea or Seabourn or Azamara? Why would a travel agent do it for $50...or $100...or for any amount? Yes we are in business to earn a living, but to me the key is that we are to "earn" that living; not dupe clients into taking cruises that really do not meet their desires!
I do appreciate that Regent is trying to find a legitimate way to give a nod and a boost to its travel agents...and that is appreciated. What is of concern to me is that the motivation. As Mark Conroy, President of Regent, is quoted in Travel Weekly as stating, "We think it gives the agent one more reason to sell us versus the other guy."
I am sorry, for me it does not. I know it may seem I am oh so skewed toward Seabourn, but try this on for size: While Regent is trying to increase sales by lining the travel agents' pockets with a little bit more cash, Seabourn is running 60% off sales on its slower selling cruises...keeping more cash in its guests' pockets and generating more commissions for its travel agents through those sales. (To be fair to Regent, it also has gone "tour inclusive" on some of its 2009, and it was just announced all of its 2010, cruises so there is added value for its guests as well.)
Finally, I do agree with Regent that there should not be any NCFs and most every travel agent will agree with me on this. I hope all of the cruise lines drop the NCFs...or at least limited them to actual port charges. But make no mistake, the motivation should be it is a good business practice; not a motivator to push clients one way or another.
Tuesday, November 11, 2008
Use Caution and Common Sense When Booking Your Cruise
Folks, let's face it. There are a number of travel agency business models that just aren't working in our new economy.
I found out that last evening that one of the largest online agencies has effectively closed up shop with millions of dollars of debt and a number of cash paying clients (even luxury clients) apparently hung out to dry with no cruise and no money. What is truly disturbing is that its website is still functioning while its phones ring off the hook unanswered.
Before I go on: I don't care what any other travel agency tells you, USE A CREDIT CARD NO MATTER WHAT. If you have an expensive cruise and need to pay in installments, do it. If you are concerned about "showing" cash, find another solution. In this environment there are big and small travel agencies really under the gun. If you use a credit card (not a debit card) you have real protection regardless if there is a problem with the travel agency or the cruise line. I would also caution that the credit card charge should be directly with the cruise line rather than the travel agency. Ask. Don't Assume!
Clearly, travel agencies that depend on high volume/low profit cruises to fund their day-to-day cash flow needs are really suffering...and struggling. When an agency is making $50 net on an NCL or Carnival cruise there has to be lot of bookings to keep the lights on. What has happened, unfortunately, is that many of these lower cost reservations just stopped being made due to loss of job security, home equity and overall fear of what is yet to come.
Part of the reason for the problem is that the retention rate for their clients is less than 20%...because price, not service, is pretty much the singular draw to these agencies. I call this the "Love 'em and Leave 'em" approach. So with a low repeat rate and no real way to draw in new clients, these "Love 'em and Leave 'em" agencies are now trying to figure out how to stay in business, but they are for the most part "One Trick Ponies".
Yes there are those individuals that purchase their luxury cruises on Seabourn, Silversea, Regent Seven Seas and Crystal...even Oceania and Azamara...from these discounters. They are, with only a couple of exceptions, really not getting a lower price and suffer with lesser service and now, to be sure, insecurities.
I know of no legitimate way to quickly take a "sell low cost, heavily discounted, cruises" model and turn it into a working model of a travel agency that creates loyalty and stability through good pricing (while not giving the cruises away) with great customer service.
So when looking to book your next cruise, or even maintain your present bookings, please be sure to be cautious. You might just even consider canceling your bookings deposited with cash or having them transferred to an agency you have faith will be there down the road. Now is the time to be sure you are getting the most for your dollar, not just what seems like the best price.
Remember, if it seems to good to be true, it probably is.
I found out that last evening that one of the largest online agencies has effectively closed up shop with millions of dollars of debt and a number of cash paying clients (even luxury clients) apparently hung out to dry with no cruise and no money. What is truly disturbing is that its website is still functioning while its phones ring off the hook unanswered.
Before I go on: I don't care what any other travel agency tells you, USE A CREDIT CARD NO MATTER WHAT. If you have an expensive cruise and need to pay in installments, do it. If you are concerned about "showing" cash, find another solution. In this environment there are big and small travel agencies really under the gun. If you use a credit card (not a debit card) you have real protection regardless if there is a problem with the travel agency or the cruise line. I would also caution that the credit card charge should be directly with the cruise line rather than the travel agency. Ask. Don't Assume!
Clearly, travel agencies that depend on high volume/low profit cruises to fund their day-to-day cash flow needs are really suffering...and struggling. When an agency is making $50 net on an NCL or Carnival cruise there has to be lot of bookings to keep the lights on. What has happened, unfortunately, is that many of these lower cost reservations just stopped being made due to loss of job security, home equity and overall fear of what is yet to come.
Part of the reason for the problem is that the retention rate for their clients is less than 20%...because price, not service, is pretty much the singular draw to these agencies. I call this the "Love 'em and Leave 'em" approach. So with a low repeat rate and no real way to draw in new clients, these "Love 'em and Leave 'em" agencies are now trying to figure out how to stay in business, but they are for the most part "One Trick Ponies".
Yes there are those individuals that purchase their luxury cruises on Seabourn, Silversea, Regent Seven Seas and Crystal...even Oceania and Azamara...from these discounters. They are, with only a couple of exceptions, really not getting a lower price and suffer with lesser service and now, to be sure, insecurities.
I know of no legitimate way to quickly take a "sell low cost, heavily discounted, cruises" model and turn it into a working model of a travel agency that creates loyalty and stability through good pricing (while not giving the cruises away) with great customer service.
So when looking to book your next cruise, or even maintain your present bookings, please be sure to be cautious. You might just even consider canceling your bookings deposited with cash or having them transferred to an agency you have faith will be there down the road. Now is the time to be sure you are getting the most for your dollar, not just what seems like the best price.
Remember, if it seems to good to be true, it probably is.
Wednesday, October 29, 2008
Troubled Waters on the Luxury Cruise Front...And A Safe Harbor: Seabourn
Over the past days I have seen a number of troubling things happening in the luxury cruise market. I preface my comments below by stating just because it is "troubling" it doesn't mean it is a disaster. So please take a breath and then read on....
One of my Seabourn client's wrote two weeks ago, "These markets are taking their toll though. people are scared on the ship and the talk at dinner is often about the "market." Thought we could get away."
But just yesterday, upon her return, the email was remarkably different:
"We are back from another perfect Seabourn experience. The weather was magnificent, food seemed more delicious than ever and we had a great time. It is the ideal vacation for us. So ideal that I'm sure you know by now, along with [our friends], we have already signed up for the next trip."
With the concept of "Is taking...or even thinking of taking...a luxury cruise at a time like this?" at the fore of most people's minds, the cruise lines are feeling the pinch. The question becomes, from the guest's perspective, how much trouble are the cruise lines? That is not, in most cases, an easy question to answer.
Case in point: Royal Caribbean/Celebrity/Azamara, etc. (albeit not luxury lines). This week it announced record 3rd quarter earnings, but great concern for the future. This raised concerns over cash flow. Fortunately, it assured the markets by announcing it has $1.4 Billion dollars in cash and no need for new financing.
But on the luxury front the story, at least for some, MAY be a bit different:
First, Regent pushed off its heavily touted new ship, then it announced the ending of its relationship with the Paul Gauguin and now rumors abound that its $40 million dollar refurbishment of two of its three ships will be cut back (though this has not been confirmed.) and its third ship, Navigator, will be waiting about 2 more years for any upgrades...if at all. While all this may well be prudent business (a good thing), it is evidence that reliance on the perception of their being a high profit/cash flow "gravy train" in luxury cruising may have been a bit too much.
Then , Crystal announced a very generous reworking of its booking policies so that you cancel within 45 days of departure without incurring penalty. To me this signaled a concern for getting people to book cruises they were "just not sure about" and to get them onboard the ships...to, in part, generate onboard revenue. There is a great truth that once someone books a cruise they become emotionally invested and, therefore, are less likely to cancel it even if times get rough. It did not concern me much since it does not seek to keep your cash if you cancel.
Then Silversea came out with drastically discounted cruises...and a 25% travel agent commission on close in sailings. (I did not previously mention the amount, but it quickly was spread publicly over the internet, so what the heck.) This is a clear cry for cash. To me, and honestly to most of my clients I have spoken to about it, it is a Red Flag that Silversea may be in serious trouble. A cruise line cannot sell a $10,000 cruise at a 40-50% discount (OK, it is really at a 35% discount, since a 10% Early Booking Savings already applied) and then discount it another 25% for the travel agent's (frankly, perverse) commission. The result, at least for me, has been interesting: Not a single booking. Rather, the questions are uniformly, "I am uncomfortable booking with Silversea. Will my deposit and final payment be protected? Do I need added insurance...and from whom? Will my cruise actually take place?"
Now SeaDream has announced a "Cancel Anytime Within 48 Hours of Departure and Get a 100% Credit" toward a future cruise within 18 months thereafter. This is, again, very scary...and SeaDream is quite a fine product. SeaDream had always prided itself on its charter schedule being its base. But charters are drying up as corporations are not making the same profits and perceptions of such expenditures are presently more negative then positive. Being a unique product it is not the easiest cruise experience to get people to consider and, honestly, not many travel agents even think about SeaDream as an option. With its new program, a more aggressive play on the new Crystal approach, SeaDream will keep your cash so that it operates today with a (hopefully) positive cash flow and worry about what cruise you take later. Clearly this short-term strategy is worrisome.
Seabourn has, at least for now, taken a different approach. Ala Tiffany's and Louis Vuitton, it is taking the approach of Stability. It has not changed its deposit policy. It has not changed its cancellation policy. It has not offered travel agents any increased (or absurd) commissions. Has Seabourn reduced some amenities? Yes, such as the less-and-less popular once a cruise complimentary tours. Seabourn has done, possibly with a bit more aggressiveness, what it has always done when there is a slower selling sailing: It has offered a better deal...but never "giving away the store". For example, its $1,000 off on any 2009 Med Sailing is a way to lower its prices for some and to, possibly, attract new business. (Truth be told, that promotion has caused me more headaches than happiness because the vast majority of my clients already had a better deal since they were on 14 day or longer cruises or on Club Signature Value sailing offering 50% off.)
Will Seabourn be making better or different deals? My guess is: Yes, but with a caveat. When you are not taking drastic actions (because you do not need to: Stability), you can tailor your promotions to the then existing market (subject to forecasting sailing performance). So will there be some offers for complimentary upgrades? Sure. Will there be added values? I am confident there will be. But will it give you a sense of desperation? I am confident it will not.
Seabourn is mostly concerned with the long term...because it has no short term need for cash. Yes, it wants full ships and, after being spoiled with, consistently selling out cruises, the concept of empty suites is a bit hard to come to grips with...but a few empty suites does not create a disaster. Plain and simple: Seabourn is focused on keeping "luxury" luxury.
When I think of Seabourn I keep thinking of the old commercial, "We Make Money the Old Fashion Way. We Earn It!"
How does it make you feel?
One of my Seabourn client's wrote two weeks ago, "These markets are taking their toll though. people are scared on the ship and the talk at dinner is often about the "market." Thought we could get away."
But just yesterday, upon her return, the email was remarkably different:
"We are back from another perfect Seabourn experience. The weather was magnificent, food seemed more delicious than ever and we had a great time. It is the ideal vacation for us. So ideal that I'm sure you know by now, along with [our friends], we have already signed up for the next trip."
With the concept of "Is taking...or even thinking of taking...a luxury cruise at a time like this?" at the fore of most people's minds, the cruise lines are feeling the pinch. The question becomes, from the guest's perspective, how much trouble are the cruise lines? That is not, in most cases, an easy question to answer.
Case in point: Royal Caribbean/Celebrity/Azamara, etc. (albeit not luxury lines). This week it announced record 3rd quarter earnings, but great concern for the future. This raised concerns over cash flow. Fortunately, it assured the markets by announcing it has $1.4 Billion dollars in cash and no need for new financing.
But on the luxury front the story, at least for some, MAY be a bit different:
First, Regent pushed off its heavily touted new ship, then it announced the ending of its relationship with the Paul Gauguin and now rumors abound that its $40 million dollar refurbishment of two of its three ships will be cut back (though this has not been confirmed.) and its third ship, Navigator, will be waiting about 2 more years for any upgrades...if at all. While all this may well be prudent business (a good thing), it is evidence that reliance on the perception of their being a high profit/cash flow "gravy train" in luxury cruising may have been a bit too much.
Then , Crystal announced a very generous reworking of its booking policies so that you cancel within 45 days of departure without incurring penalty. To me this signaled a concern for getting people to book cruises they were "just not sure about" and to get them onboard the ships...to, in part, generate onboard revenue. There is a great truth that once someone books a cruise they become emotionally invested and, therefore, are less likely to cancel it even if times get rough. It did not concern me much since it does not seek to keep your cash if you cancel.
Then Silversea came out with drastically discounted cruises...and a 25% travel agent commission on close in sailings. (I did not previously mention the amount, but it quickly was spread publicly over the internet, so what the heck.) This is a clear cry for cash. To me, and honestly to most of my clients I have spoken to about it, it is a Red Flag that Silversea may be in serious trouble. A cruise line cannot sell a $10,000 cruise at a 40-50% discount (OK, it is really at a 35% discount, since a 10% Early Booking Savings already applied) and then discount it another 25% for the travel agent's (frankly, perverse) commission. The result, at least for me, has been interesting: Not a single booking. Rather, the questions are uniformly, "I am uncomfortable booking with Silversea. Will my deposit and final payment be protected? Do I need added insurance...and from whom? Will my cruise actually take place?"
Now SeaDream has announced a "Cancel Anytime Within 48 Hours of Departure and Get a 100% Credit" toward a future cruise within 18 months thereafter. This is, again, very scary...and SeaDream is quite a fine product. SeaDream had always prided itself on its charter schedule being its base. But charters are drying up as corporations are not making the same profits and perceptions of such expenditures are presently more negative then positive. Being a unique product it is not the easiest cruise experience to get people to consider and, honestly, not many travel agents even think about SeaDream as an option. With its new program, a more aggressive play on the new Crystal approach, SeaDream will keep your cash so that it operates today with a (hopefully) positive cash flow and worry about what cruise you take later. Clearly this short-term strategy is worrisome.
Seabourn has, at least for now, taken a different approach. Ala Tiffany's and Louis Vuitton, it is taking the approach of Stability. It has not changed its deposit policy. It has not changed its cancellation policy. It has not offered travel agents any increased (or absurd) commissions. Has Seabourn reduced some amenities? Yes, such as the less-and-less popular once a cruise complimentary tours. Seabourn has done, possibly with a bit more aggressiveness, what it has always done when there is a slower selling sailing: It has offered a better deal...but never "giving away the store". For example, its $1,000 off on any 2009 Med Sailing is a way to lower its prices for some and to, possibly, attract new business. (Truth be told, that promotion has caused me more headaches than happiness because the vast majority of my clients already had a better deal since they were on 14 day or longer cruises or on Club Signature Value sailing offering 50% off.)
Will Seabourn be making better or different deals? My guess is: Yes, but with a caveat. When you are not taking drastic actions (because you do not need to: Stability), you can tailor your promotions to the then existing market (subject to forecasting sailing performance). So will there be some offers for complimentary upgrades? Sure. Will there be added values? I am confident there will be. But will it give you a sense of desperation? I am confident it will not.
Seabourn is mostly concerned with the long term...because it has no short term need for cash. Yes, it wants full ships and, after being spoiled with, consistently selling out cruises, the concept of empty suites is a bit hard to come to grips with...but a few empty suites does not create a disaster. Plain and simple: Seabourn is focused on keeping "luxury" luxury.
When I think of Seabourn I keep thinking of the old commercial, "We Make Money the Old Fashion Way. We Earn It!"
How does it make you feel?
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