Tom Stieghorst
To stimulate booking interest, Norwegian Cruise Line has again reduced deposits to $1, giving some travel agents heartburn.
The promotion was first tried in March. It is being trotted out again. From June 22-28, deposits are only $1 on over 200 sailings.
In a question and answer session with agents onboard the Norwegian Bliss in May, Norwegian president Andy Stuart took some flack from travel sellers upset about the high cancellation rates that come with $1 deposits.
The cancellation rates are double or sometimes triple those of standard deposits, one agent complained. "When it comes to final payment, they don't have the money," he said.
Stuart acknowledged that clients sometimes don't follow through and that means more work for agents, more churn, and prospective business that doesn't confirm.
"My response is we generate huge interest in the brand, we drove new customers in and together we've got to work at making that business stick," Stuart said. "And it won't be as sticky as the non-$1 deposit but I guarantee we all will have driven more business after that $1 promotion than without it."
In its latest promotion, Norwegian has applied the $1 deposits to a couple of products, including cruises to Cuba during the hurricane season. It also lists New York-Bermuda, New York-Bahamas/Florida and Western Caribbean from New Orleans among the eligible itineraries. The promo applies to mini-suite categories and below, and not to full suites or The Haven bookings.
Stuart said that after running the $1 deposit promotion in March, executives were shocked at the response.
"The $1 deposit drove four times the volume that we would have experienced without it just measuring prior weeks of demand," Stuart said.
"We have been very cautious with it," he added. "It's not going to be a weekly promotion with us. But sometimes when you want to juice interest, you want to juice demand, it's going to be a promotion that has some value. You're going to see it from time to time, maybe once or twice a year we look at that promotion."
Stuart concluded the May commentary by saying that while it was early to judge full results, the initial equation was a no-brainer: "We're seeing about a 10% higher rate of cancellation on that business, on a 400% growth in business."