How cruise lines can become total vacation providers

IBS Software's Asish Koshy explains what factors cruise companies should consider
How cruise lines can become total vacation providers

By Guest |

Newlywed, overfed or nearly dead – the cruise industry has for long been fighting such stereotypes about its customer base. But perceptions are clearly changing because the average cruise passenger is now in their mid-40s, which suggests that an influx of millennials and Generation Z travellers have joined the mix. Cruise providers themselves seem to be supporting this trend in a very active manner, tailoring onboard offerings and the passenger experience to suit this segment better than it did in the past. Some of the key levers in this regard are duration of the cruise, thematic offerings, price points, distinction of luxury levels, variety of embarkation and disembarkation options, all of which impact the quality of the guest experience and factor into travellers’ purchasing decisions.

Although Cruise Lines International Association (CLIA) predicts that around 28 million passengers are expected to cruise in 2018, the industry is still a relatively small segment in the global tourism market. However, it is one of the fastest growing sectors and industry titans are openly bullish about the prospects, as was evident during the State of the Industry session at the Seatrade Cruise Global event held in Fort Lauderdale, Florida earlier this year.

One key unique selling point of a cruise for customers is how effectively it can integrate a variety of vacation elements into one core offering – a cruise is the best way to experience life and relaxation all in one holiday. By anticipating customer needs, cruise lines have been able to innovate and develop exciting new itineraries, smart ship designs and more attractive shoreside activities that cater to various types of passengers.

According to CLIA, its member cruise lines are set to launch as many as 27 new ships in 2018 and debut a much greater number in subsequent years. This rise in supply points to further diversification of the target customer base and consequently, a wider range of offerings to meet the needs of clients across the spectrum – from newly married couples to young families, solo travellers, groups of friends to retirees. The shifting demands are forcing the cruise lines to contemplate changes to their business models and many are increasingly positioning themselves as tour operators. There is a greater focus on providing door-to-door operations or using an alternative appellation of a ‘total vacation provider’ who can take care of all of a guest’s needs from the moment they leave their doorstep, to the moment they return.

While it’s a logical evolution for cruise-only operators to transform into total vacation providers, it’s a process that has its share of difficulties. Not only do these companies need to change their mindsets, but they also need to deal with an exponential increase in a range of travel products and master their nuances. The vacation components, whether they are pre-cruise, post-cruise or onboard products, must be bundled in ways that offer the desired level of flexibility to the spectrum of target customer segments. Based on the dynamicity of demand from various segments, the level of risk to be taken for a travel component has to be determined. In other words, cruise companies must contract some components in bulk, but they can obtain others dynamically from third-party specialists and calibrate the relative allocation of risk has regularly.

Based on the anticipated and changing needs of the travel audience, new sources of specialist content must be integrated and introduced on the fly. Last but not the least, those working in the high-touch sales channels must be adequately educated to provide consultative selling of the ultimate vacation experience in a highly personalised way. In certain key cruise markets, the challenge of distributing cruise line offerings (especially packages) is compounded by the fact that the predominant channel of sale (travel agencies) use old generation technology and heavily proprietary, less understood data exchange formats. However, cruise lines cannot neglect travel agents as a distribution channel because there is a clear relationship between the involvement of a travel agent in the reservation process and the likelihood of a cruise passenger to choose to return for a cruise on their next vacation. Hence, it’s crucial for cruise lines to ensure proper technological inclusion of the travel agent into the distribution chain.

In this context, access to the right technology becomes vital for the ensuing success of the cruise line. Next generation digital platforms such as iTravel are conceptualised to enable smoother transformation of a cruise line from selling cruise-only or cruise-centric products to providing an entire vacation experience. Such platforms allow creation of cruise-inclusive itineraries for the mass market, as well as tailored or personalised offerings for a set of individuals. Meanwhile, business rules can be used to determine the type of product sources that should be considered when cruise lines are constructing their offers. During the shopping process, cruise lines can display both cruise-only and cruise-inclusive package offerings. They could show the fare for each cruise after pre-applying certain ancillaries, such as shore-excursions and onboard activities. Additional ancillaries could also be shown at this stage. Once the cruise is secured, various cross-sell recommendations can be displayed such as air and rail transfers, or pre- and post-cruise stays in hotels. It is quite evident that without access to the right technology, it is challenging for cruise lines to achieve their vision of being a total vacation provider.

We are certainly witnessing exciting times for the cruise industry. As the cruise industry becomes increasingly mainstream, it will challenge flying or interrailing as a method for travellers to explore the world, while gaining great value for their money. Technology will, yet again, be a key determining factor as to whether cruise lines will be able to take advantage of the new opportunities and ultimately remain relevant to the diverse spectrum of travellers.

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