I graduated from North Carolina State University with a degree in chemical engineering. Over the years, I've had the opportunity to work in a number of industries including consumer products, synthetic fibers, petroleum, petrochemical and more.
I don't believe I know of any industry, certainly not the ones with which I was associated, that is as pummeled and battered by forces beyond its control as the travel industry in general and the cruise industry in particular.
Some years ago, a study of consumer discretionary spending in tough economic times found that a vacation was the first thing cut. Studies in 2007 by Money Magazine and AAA indicated that the average family would spend $1,600 on vacation. A study in 2012 by the National Association of State Boards of Accountancy found that the average had dropped to just over $1,400, perhaps reflecting continued lingering recession effects. So when a brutal winter hit in 2014, those who reported heating and utility bills $1,000 or more higher than 2013 likely pulled back on vacation plans or eliminated a vacation altogether.
A recent Facebook thread had contributors discussing the effect of the Affordable Care Act on their family income. One person commented that health care coverage had increased by $500 per month and they were going to have to cancel their vacation this year. Queries to other agents revealed some of them likewise had had prospects comment on how higher insurance premiums have impacted their vacation plans.
It even affects doctors, one of whom told me he was cutting back on vacation plans because he and his partners are now required to have an escrow account equal to six months' operating expenses.
How many vacations were reduced, curtailed or outright eliminated? I have no way to know. What I do know is that vacation suppliers face lower sales as the result of events not of their doing.
It isn't as if there haven't been unfortunate events over the last two years that have played a part in lower cruise line sales and earnings performance.
As we'll see, these events and other incidents have a decided effect on consumer perception of the cruise industry as a whole. I think they negatively impact cruise sales to a key segment of the population: the first-time cruise passenger.
Kim Komando hosts what some call the top talk radio program in the nation based on the popularity of personal computers and all things digital. She has thousands of followers and over 165,000 "likes" on Facebook. In early March, she posted:
"We were playing a game last night. The question that all had to answer was -- What is the first word that comes to your mind when someone mentions 'Cruise Ship'?"
In three days (a long-running thread by Facebook standards) there were 784 responses. While not a carefully crafted survey of randomly selected participants using random-digit dialing or other scientific methods, the results cannot be dismissed given the number of responses.
An analysis of the posts proved interesting. Some responses (12%) had no relevance to the intent of the question but were included nonetheless. That said, here's what I found:
• 58% of the responses were negative.
• 61% of those responses dealt with sickness, using such descriptive phrases as "germ bucket," "dirty," "unsanitary" and some too descriptive to print. Perhaps the most interesting were the 10 responses that mentioned Legionnaires' disease, likely in reference to the outbreak aboard the Celebrity Horizon 20 years ago.
• 25% were fearful of some disaster, mentioning people going overboard, Titanic, Poseidon and even the Achille Lauro hijacking from nearly 30 years ago.
• 13% were classified as "other" including feeling herded, crowded, bored, too expensive and no security.
• 30% of the responses were positive.
• 45% specifically mentioned fun.
• 44% mentioned specific cruise lines by name or by implication with "The Love Boat," a TV series that ended 28 years ago, leading the way with 61% of those line-specific responses.
• 11% mentioned warmth, relaxation and luxury.
I came away with two key takeaways:
• People have long memories about all things cruise-related, good or bad.
• The majority of the negative responses almost certainly came from those who have never cruised before.
Conversations with cruise line executives and others knowledgeable of the industry lead me to conclude that the roughly 50/50 ratio of past passengers to first-time cruisers that characterized the contemporary cruise market some 15 or 20 years ago more than likely is more heavily weighted toward past passengers today. One source suggests the ratio may be as high as 67/33, although I think the ratio may be more like 55/45 for the industry as a whole.
Were there a way to maintain the absolute number of past passengers of the 21 million or so who will cruise and grow the number of first-time cruisers to shift that ratio to 52/48, it would mean 1.2 million more first-time cruise passengers annually.
One executive, whose company is a leader in travel retailer support, noted that this was an opportunity for retailers to excel by differentiating the various lines clearly and succinctly, improving the likelihood of making a sale. And I agree totally, because that is indeed the function that travel consultants serve best.
The difficulty lies in getting to the place retailers can do that which they do well. To use a baseball analogy, the player with the highest batting average doesn't do well if he never gets up to bat. If retailers never get to speak to the prospect, they can't sell them.
Unless and until the industry comes to grips with negative attitudes toward cruise vacations and stimulates interest by first-time cruisers, it is going to be a challenge to improve sales and profits.
This is not something a single cruise line, however large, can accomplish by itself. It is time for CLIA member cruise lines, and CLIA as a body, to do whatever is necessary to address and dispel these concerns, especially all those relative to becoming ill on a cruise. I don't see significant pricing and profitability improvement until it's done.
Charlie and Sherrie Funk own Just Cruisin' Plus in Brentwood, Tenn., and have provided agent and agency-owner training throughout North America on every facet of travel agency operations. They are two of nine travel agent members of the CLIA Hall of Fame.