Concordia's Effect on Cruise Sales Explored

| Monday, 06 Feb. 2012

Last week we saw a wide discrepancy in reports of cruise sales after the Concordia incident. Both Carnival Corp. and Royal Caribbean noted in quarterly reports a distinct drop in demand for cruises immediately after the ship foundered.

But Michelle Fee, the CEO and co-founder of CruisePlanners (named the number one cruise travel franchise by Entrepreneur Magazine for the last nine years) coordinates and tracks the sales of over 700 travel agents and she said overall monthly sales for January 2012 actually increased by 20%.

 

CruiseMates: Hi Michelle. There have been conflicting reports about the effect of Concordia on cruise sales. Carnival Corp. (which owns Costa, Carnival Cruise Lines and several other big brands) was first to announce sales dropped off sharply. However, Carnival Corp. does not break out sales figures for individual cruise lines, so the Costa sales, which we naturally expect to be down, would be included in that statement. But then Royal Caribbean, Carnival's competitor, also said its sales were negatively impacted by Concordia. But to the contrary, several cruise agencies such as your own reported that sales were more robust than ever. How do you quantify that?

Michelle Fee: Well, I think you need to look at all of those statements more closely. Our December 2011 and January 2012, were the best ever… both were up year over year. I just tallied January 2012 and it was up 20% over 2011.

The cruise lines agree the first quarter of 2011 was already well-sold, and that cruise pricing was already much stronger this year than last year at the same time – and that it remains higher even with the Concordia effect. They also say that long term sales in the summer and next year are ahead of schedule.

The weakness in cruise sales is in the second quarter. For cruise shoppers when sales are soft it usually means there are bargains available; right now for cruises sailing this April through June.

CruiseMates: What kind of effect did the Concordia tragedy have on cruise sales at your member agencies?

Michelle Fee: We were in the midst of a very strong recovery. Last December was the strongest we have ever seen, and the momentum going into the beginning of wave season (the traditionally strongest cruise booking period every year starting in January) was just phenomenal. Even with the Concordia incident we ended up with January sales 20% higher than in 2011, but it undoubtedly would have been even higher.

CruiseMates: What happened to your agents when the Concordia news broke out?

Michelle Fee: First, the phones went nearly dead for two solid days. It seemed people were just watching and trying to figure things out. The only call we got were from the non-cruise experienced people, asking us if they should cancel. They seemed to have more concern that doubt. When we explained to them the true safety record of the cruise industry, they were reassured.

CruiseMates: What steps did you take when you first heard about Concordia?

Michelle Fee: Because we always give our member agencies full support we immediately sent out guidelines on how to deal with safety questions and the possibility that we might get a number of requests to cancel cruises.

CruiseMates: Did you get many cancellations?

Michelle Fee: We only got a few cancellations, and they were all non cruise-experienced people who received a full refund.

CruiseMates: Was there a cancellation penalty still in effect even with Concordia?

Michelle Fee: Yes, the cancellation penalty was still in effect, but no one who was in the cancellation period cancelled their cruises.

Note: When a cruise is booked a deposit of $100 to $250 is taken depending on the length of the cruise. Full payment for the cruise is due sometime between 60 to 90 days before the sail date. If a customer chooses to cancel a cruise after full payment has been made there is a penalty imposed. For example a cancellation before 60 days out means a full refund, including the deposit. 46 to 60 days out the cruiser loses his deposit only, 30 to 45 days out the cruiser loses his deposit or 50% of the total fare, whichever is greater, 15 to 29 days out the penalty is 75% or the deposit, whichever is greater, and at 14 days or less its 100% of the cruise fare.

CruiseMates: How long will Concordia remain a factor?

Michelle Fee: Certainly for as long as it stays in the media. Unfortunately, this is the year of the Titanic Centennial, so while coverage is dying down now, I expect those Concordia images will come back around April 11.

CruiseMates: If the soft demand in cruises results in bargains this year, where do you expect to see them?

Michelle Fee: Because the accident happened in Europe there is a lot more coverage over there, so that is where sales are softest. Plus, Europeans are far less cruise experienced than Americans, so this means a greater fear factor. I would expect to see the most bargains in the Mediterranean this summer. The only problem for Americans wanting to go to Europe is the airfare, so book early. Airfare almost never gets cheaper as the dates get closer. Alaska is already selling well and the Caribbean has all of the new ships, so it is also selling well.

CruiseMates: The newness of a ship makes a difference?

Michelle Fee: When you have new ships like Oasis and Norwegian Epic it is a factor. People used to call us and ask to cruise a certain region. Now they call and say they want to sail a specific ship.

CruiseMates: What surprised you most about the Concordia incident?

Michelle Fee: What surprised me most were the complications that came from evacuating a listing (tilted at an angle) ship. I think this will likely be the focus of the upcoming safety reviews.

In fact – ships and their evacuation procedures are currently designed to be performed from an upright position, with lifeboats on both sides of the ship. Concordia listed so badly that most of the evacuation was executed down one side of the ship. It only took about two hours, but it was complicated and dangerous. However, it is noteworthy that if the ship had stopped when it first struck the rocks, as current safety protocol dictates, it is very possible the ship could have been completely and safely evacuated from an upright position.

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