Commission cuts, higher late prices and a changing world

Nathan Philpot, sales and marketing director of Fred. Olsen Cruise Lines, comments on the cruise market.  He was previously a specialist cruise agent and set up The Luxury Cruise Company while a Director at WEXAS.

How are sales for 2013 going? What do you see as the reason for the market being slow?

The main reason why the industry may appear down year-on-year is due to a change in booking patterns. Booking lead times have moved by nearly a month, which means that, at any point in time, you have a month’s worth of sales missing; this will catch up as the departure year progresses. That said, we are very happy with the start to 2013 – we were up in February and slightly down in January (mostly down to coming out with our promotional sales later than last year). We also had a successful early sales period in August and September 2012 for 2013 departures, with our free ‘All-inclusive’ campaign.

Are figures comparable with last year, the year before?

I don’t think that you can compare figures year-on-year very easily anymore. The acceleration in shorter booking lead times means that the world has changed very quickly.

Are there any steps you can take to stop late booking.  If so, what?

Yes. There is still a great deal of demand for cruise, as witnessed by another record booking year and, compared to other types of holiday, cruise remains a great product. We need to take this into consideration and appreciate that there is latent late demand that will flow through into bookings; we just need to get used to the new booking patterns. We have begun increasing prices closer to departure based on this, and some potential bookers may be surprised to find that leaving it late may result in higher prices.

Do you feel your policy of no discounting and capped commission has had any effect on sales. If so, what?

Most agents are discovering through experience that they are far more profitable now selling Fred. Olsen Cruise Lines – our only concern is that agents realise that they can do half the sales and make the same amount of money, which was clearly never our intention! We hope that more agents who currently do not sell cruise will begin to sell Fred. Olsen, knowing that there is a significant cash margin, which is not eroded by discounting to win business from other agents.

What is selling best ?

We are finding that customers are looking for amazing experiences and new, unusual destinations. Our ‘Norway Winter’ cruises – ‘In Search of the Northern Lights’ – have performed well, but it is a limited market; we have been very surprised by the demand for Dakar, Senegal and West Africa. Customers also keep telling us that they want to spend more time in the destinations that we visit, so Baltic cruises that include overnight stopovers in St. Petersburg and other cities are very popular.

Where do you see the areas for growth in cruise and has Fred Olsen any specific plans?

We have lots of exciting plans. The last 12 months have seen many new initiatives, such as Canary and West Africa fly-cruising, ‘All-inclusive’ cruises, ‘Northern Lights’, and more special-interest cruises, through our multi-award-winning Vistas onboard enrichment programme; highlights include ‘Gardening’ with Charlie Dimmock, ‘Ballroom Dancing’ with Edwina Currie, and a ‘Spying’ themed cruise with a real ex-MI6 agent, for those inspired by espionage thrillers such as ‘Skyfall’. It’s too early to share any details of other initiatives, but watch this space!