In The News: President Matthew Eichhorst on How Cruises Will Restart

 

The article was published February 24, 2021 in WIT (Web in Travel)

CRUISES may be stalled for the moment but positive search data in fourth quarter 2020, signifying substantial pent-up demand, has promoted Expedia Cruises to launch a new suite of tools to support cruise lines, franchise partners and Vacation Consultants as they navigate recovery this year.

According to Expedia, early indications from this year suggest interest is still strong. In January there was a +35% increase in US searches compared with the month before, for cruises in 2021. There was particular interest for travel dates in May, June and July 2021, with the Caribbean and Bahamas being the two most searched destinations for these months, an indication of travellers’ willingness to cruise again this summer.

The new tools are part of a bigger focus on an omnichannel strategy that brings cruise supply onto one platform, aimed at boosting visibility and conversion for cruise lines on Expedia Group sites. Its data shows that when an agent handles a booking, the transaction size is typically bigger because travellers choose destinations that are further away, and book more premium categories versus unassisted online bookings.

For example, in 2019, the average booking value was 84% higher when US travelers booked via agent-assisted retail channels than via online channels. In Q4 2020, this number had increased to 145% higher, an indication that agent-assisted bookings are driving increasingly larger demand.

Matthew Eichhorst, President, Expedia Cruises, said the launch of the new tools was timely because “cruise itineraries are shifting all the time in line with new restrictions and protocols, and we’re expecting that agents will be asked to add new itineraries for travelers at short notice”.

“The new tools are designed to help travel agents manage this highly evolving situation seamlessly, as well helping to connect pockets of demand with the suppliers as needed. So for example, we’ve developed a new agent Cruise Search Results (CSR) view, also known as the grid view, a direct result from partners’ feedback on having a more agent-focused experience so they can more efficiently shop and compare cruises on behalf of their customers.

“We’ve also worked on an enhanced Date Picker tool to navigate across years – an important update given the expectation of booster years in 2022 & 2023 for the cruise industry. We’ve also developed ways for agents to review and report on applicable Future Cruise Credits that guests may have on file to help them rebook their travel.  The tools are available in North America for now, a natural focus for us given the concentration of demand in this region for cruises.”

Digitisation accelerated, omni-channel strategy needed to manage vast, complex industry

He said that Covid has accelerated the digitisation of the cruise business, as it has done across all travel sectors. “We’re absolutely seeing that the industry is becoming increasingly digitized, although we recognize the sustained importance of offline players too. What we can say for certain is that the world of cruise inventory, both offline and online, is vast and complex for both travelers and suppliers operating in the industry, and so we’ve responded to that by developed a new omni-channel strategy.

“It improves the traveller experience by providing more options to purchase on their preferred method (in-store, mobile, web, phone, or all four) while also helping to increase visibility and conversion for our cruise partners.”

Asked if it would also swing the pendulum towards more direct distribution by cruise lines – as has been seen in Singapore where companies such as Dream Cruises and Royal Caribbean have reported more direct sales for their “cruises to nowhere”, Eichhorst said, “Interestingly we’re hearing the opposite from a number of our cruise partners in the industry; given the challenging times and complexity of demand at the moment, many cruise lines do not have the capacity nor do they want to be in the business of taking all the bookings direct.

“Right now, we’re helping to connect the dots between pockets of demand to supply and are in close contact with our cruise line partners to identify their needs. We’re also helping to respond to a number of questions travelers have about evolving safety protocols on the ships and how the general guest  experience will evolve in the future.”

“Phenomenal” demand for world cruises in 2022/2023, past cruisers to drive initial recovery

As for how he sees cruise recovery taking shape and if there will be a move towards shorter cruises and smaller ships, Eichhorst commented, “Originally, it looked like smaller ships and shorter itineraries were the path to a restart, however with the rollout of vaccines and a longer than anticipated No Sail Order, premium and luxury looks like it will recover faster.

“The industry is also seeing phenomenal demand for world cruises in 2022 and 2023. For example, Oceania Cruises recently announced that their 180-day world cruise for 2023 sold out in a single day and we’ve seen a spike in demand for world cruises on our platform too.

“Anecdotally, we’re also hearing that cruises will start off shorter as the industry restarts, four to five days, to private islands where the cruise lines can control the entire environment and ensure safety and hygiene. Then, as consumers get more comfortable with the experience, and the cruise lines refine their protocols, the number of days is expected to increase.

“I believe past cruisers will drive the initial recovery, and it will be largely country-based cruises and domestic demand that will power the restart. We’re already seeing it in certain markets – Italians cruising in Italy, Germans cruising the Mosel river, and it looks like Singapore, Australia and New Zealand will follow a similar trend. We’re also likely to see the concept of ‘ship bubbles’ for shore tours in the early days to ensure that cruise lines can manage the health and safety element very carefully.

“Beyond the initial restart, I think there’s a strong possibility for the industry to harness new demand by targeting first-time cruisers. More people than ever are desperate to take a vacation and many of them are interested in cruising as the safety protocols will often be better than a land vacation, at least in the short to medium term. It’s also easier to manage testing than in other parts of the industry – there’s only one door in and out of the ship to field passengers through, so I think that will be powerful in building confidence to cruise again.”

Asked why Expedia Cruises has not been active in Asia, considered a promising market by major cruise lines, he said, “A large part of it is that there’s still a lot of untapped opportunity in North America for the cruise industry. In addition, the distribution model in Asia is quite different and so would require a slightly different strategy and approach. For example, in Asia, retailers buy large blocks of cabins in advance and then reselling, and different regulations in certain markets and so on, so it hasn’t really been a focus area for us thus far, but it’s certainly interesting to look at the similarities and differences in strategies across different regions.”

As for how it balances Expedia’s sustainability goals with those of the cruise industry given that the perception is that the cruise industry is one of the worse polluters, he said, “There is a huge amount of work the industry is doing at the moment to address this, from exhaust scrubbers and banning plastic bottles on-board, to advancements in hulls to reduce friction in the water and recycling at sea.

“The industry’s main body, CLIA (Cruise Lines International Association) released some great information about it. In addition to this industry-wide effort, all major cruise lines have individual sustainability goals and there are advancements in areas such as LNG (liquefied natural gas) ships that use a liquid form of natural gas as fuel to power ships, replacing heavy fuel oil. With all this in the works, I believe that this industry has the potential to become a leader versus a follower in sustainability efforts.”

• Featured image credit: LisaStrachan/Getty Images