Enabling Cruise Lines to be Total Vacation Providers
"Newlywed", "overfed" or "nearly dead" – the cruise industry has for long been fighting such stereotypes about its customer base. But perceptions are clearly changing, and the average cruise passenger is now in the mid-40s; strongly suggesting an influx of millennials and Gen Z into the mix. Cruise providers themselves seem to be supporting this trend in a very active manner, by 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 embark/disembark options, which go into the purchase decision and impact quality of the experience.
With around 28 million passengers expected to cruise in 2018, the industry is still a relatively small segment of global tourism. 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 earlier this year.
Aiming to be Total Vacation Providers
One key USP of the cruise industry, from a customer perspective, is how it effectively integrates a variety of vacation elements into one core offering; in other words, 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 through the development of exciting new itineraries, smart ship designs and more attractive shore-side activities to cater to various types of passengers.
According to Cruise Lines International Association (CLIA), as many as 27 new ships are scheduled to be launched in 2018 (by CLIA members alone) and 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 to singles to groups of friends to retirees. The shifting demands are forcing the cruise lines to contemplate changes to their business models. Increasingly, cruise lines are positioning themselves as tour operators. There is a greater focus on providing door-to-door operations or to use an alternative appellation of a "total vacation provider" who can take care of all your needs from the moment you leave your doorsteps till the time you return from vacation.
Increased process complexity
Transforming from a cruise-only operator to a total vacation provider, whilst a logical evolution, is not without its share of difficulties. Besides the mind-set change required, the range of travel products to be dealt with and whose nuances are to be mastered increases exponentially. The vacation components whether it be pre-post or on-board products have to be so bundled to offer the desired level of flexibility to the spectrum of target 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 i.e. some components have to be bulk contracted whilst others are obtained dynamically from third party specialists and the relative allocation of risk has to be calibrated regularly.
Based on the anticipated and changing needs of the travel audience, new sources of specialist content have to be integrated and introduced on the fly.Last but not the least the high touch sales channels have to be adequately educated in consultative selling of the ultimate vacation experience in a highly personalized way. In certain key cruise markets, the challenge of distributing cruise line offerings (esp. packages) is compounded by the fact that the predominant channel of sale (i.e. travel agencies) use old generation technology and heavily proprietary, less understood data exchange formats.
On the other hand, the importance of travel agents as a distribution channel cannot be neglected 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 his/her next vacation. Hence, it is of vital importance to ensure proper technological inclusion of the travel agent into the distribution chain.
Digital platforms to the fore
In this context, access to the right technology becomes extremely vital for the ensuing success of the cruise line. Next generation digital platforms such as iTravel are conceptualized 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 mass market as well as tailored/personalized offerings for a set of individuals. Business rules can determine the type of product sources to be considered in the construction of an offer. We are certainly witnessing exciting times for the cruise industry. As the cruise industry becomes increasingly mainstream, it will challenge flying or inter-railing as a method of exploring the world while also providing great value for money. Technology will yet again be a key determinant on whether cruise lines are able to take advantage of the new opportunities and ultimately remain relevant to the diverse spectrum of travelers.
Asish Z Koshy is the Head of Travel & Cruise business at IBS. He is an accomplished & passionate leader with more than 20 years of experience in the travel industry and comes with significant experience in enabling business transformation through use of technology.
He has conceptualized a number of game changing products for the travel industry that have been successfully adopted by major global brands. He enjoys travelling, reading non-fiction books and a game of badminton. Asish is a founding member of IBS.