Can cruise follow other sectors with a drive to online?

It may come as a surprise that one of the sectors of the travel industry with the most potential to grow has to a large extent let the online revolution pass it by.

The cruising boom in recent years has led to an increased focus by cruiselines on traditional travel agency distribution channels, rather than creating all-singing all-dancing websites.

Only recently David Dingle, chief executive of the UK’s largest cruise company Carnival UK, admitted as much, telling senior executives there was a need for the sector to improve online distribute strategies.

To put this into context, just 3% of Carnival UK’s bookings for its P&O Cruises, Princess Cruises, Ocean Village and Cunard Line brands are made by consumers booking cruises direct on their websites. In comparison, 27% of all Thomas Cook’s bookings – “departed passengers” rather than sales – are made online.

But with 1.5 million British holidaymakers taking a cruise last year, and a further 39 ships on order between now and 2012, the question is whether there will be a switch in cruiselines’ approach to develop the potential of the web.

The signs are larger cruise brands are already taking notice of web-savvy mature cruisers.

In May P&O Cruises’ website was relaunched after a complete rebuild by digital agency Yucca. Creative technology director Richie Jones said: “The primary focus has been the shift to consumer bookings. From a usability point of view it’s a huge change funnelling users through to the conversion stage.”

Since then the site has increased booking conversions by consumers by 14% from a small base. But Jones confirmed: “They [P&O] really see the web channel as key to growth. The biggest spender online is a silver surfer.”

Similarly, the agency has been employed to improve online search traffic for Ocean Village, which at 8% has the highest proportion of bookings made direct online in the Carnival organisation. “There are people converting to £50,000 cruises online on Ocean Village’s site,” added Jones.

Other cruiselines are also making small steps to develop their sites, although the focus is largely on improving search capability, content and trade-related functions such as product training.

Norwegian Cruise Line, which gets 80%-90% of sales from the trade, said its focus for the next 12 months is to improve its site’s look and feel with extra functionality such as virtual ship tours.

Head of marketing Claire Riches said: “There will be a shift at some point but it’s a very small percentage of people who book online. At the moment we need to bring our product to life online. The web can communicate our product much better than brochures do. There are so many opportunities; online bookability is just part of it.”

Although cruise-only products can be booked on ncl.co.uk, full bookability for cruise holidays is unlikely to be available until next year.

Riches admitted many repeat customers were already ready for the change. “There has been assumption customers are not ready but as people retire they are more likely to be online because they have more time. There is a lot more we could do. We are all looking at the web in terms of content and automation. I see it being a gradual change.”

One of the fastest-growing niches is river cruising and cruiselines in that sector agree will be needed.

Viking River Cruises UK managing director Wendy Atkin-Smith said: “We find customers are pretty clued up and do their research on the web. Why should we be surprised they are internet savvy? Cruiselines will have to evolve if they want to be open to everyone.”

Consumers can only book cruises, rather than fly-cruise packages, through vikingrivercruises.co.uk but online bookings are already double this time last year, mainly for short European cruises.

Atkin-Smith added: “Call volumes to our call centre are up but bookings through the call centre are down. We look at technology and how it can support our travel partners – we still see them as number one.

“If we want to make our site truly bookable we will have to offer the whole air package, otherwise we will just frustrate people. I would think we will have to do that in the imminent future.”

However, for the sector in general it appears there is no likelihood of a switch in booking patterns for the short to medium term. Cruiselines argue their decision to largely ignore the direct-sell market is linked to customers’ needs for advice because, as with other complex products, it is a far harder sell online.

As a result technology development has focused on trade bookings through global distribution systems or third-party specialists, such as Amadeus and Traveltek, to create bookable web-based systems for agents or their customers.

Agent cruise booking engine Amadeus Cruise is fed product by 18 cruiselines and has up to 18,000 UK agent users.

Robert Chamberlain, director of its cruise, ferry and insurance business unit, said: “In the industry today around 60% of cruises globally are booked over the telephone. The rest are through automated cruise booking engines and top of the list in terms of volumes are global distribution systems, but there is a growing trend over the last three to four years for direct bookings to increase.”

He predicts growth of online direct bookings as customers become more confident. “There are enough options for there to be growth and migration from the phone to automation over the next two to five years,” he said.

In the US, 20%-25% of cruises are booked directly by passengers with cruiselines. “For the most part this number seems to have stabilised,” he added.

But he argued the recession will increase UK consumers’ reliance on agents to book cruises. “There is more reliance on agents than ever before in difficult economic times and cruiselines will want to embrace that relationship more.”

His view coincides with that of most cruiselines which claim that apart from some experienced cruisers, holidaymakers will continue to research cruises online and book offline with an agent.

Cruiselines for their part have wasted no time in encouraging their agent partners instead to book online to reap the cost-cutting benefits and allow call centres to handle more complex bookings.

Complete Cruise Solution head of sales Mark Pilkington said the company had largely succeeded. “It’s the exception rather than the rule where agents phone us to make a booking. The vast majority book either direct on completecruisesolution.com or via Amadeus Cruise.”

Five years ago most of CCS’ bookings were over the telephone but investment in completecruisesolution.com over the last two years has made the switch possible, said Pilkington.

The change had also improved life for the agent, he added. “Big agents have realised they can increase productivity and customer service as it’s better to complete the sale when customers call them. Accuracy has gone up as agents are putting in customers’ names themselves when booking.”

Pilkington is adamant there are no plans to move away from the trade. “We feel committed to agents so we have no plans to increase direct business. I would imagine over time the proportion of direct business booking online will increase. But that will be at the expense of direct business that books over the phone rather than of other channels.”

But there is an even better reason why the switch to direct sales may not happen – price.

Large cruise specialists can afford to offer more competitive prices than cruiselines by slashing commission earnings to just a few percent, and cruiselines too will offer more attractive deals just for agent partners.

Pilkington added: “If customers get better prices from the agent than direct we do not see people moving away from the agent. There are a number of offers, such as onboard credit, that do not exist direct.”

Chamberlain agreed, adding agents could often upsell customers more effectively. “Cruiselines have already realised the yields [from trade bookings] are usually higher than direct bookings because agents have incentives to upsell the product and offer a higher category cabin that is more appealing than when you book direct, when they may just take the order as requested.”

With such a large untapped market of new-to-cruise passengers, better-priced deals through the trade and potentially higher margin sales coming via agents, there is little chance of a significant shift in booking patterns in the short-term until the sector becomes more mature.

And any thoughts cruiselines may be putting off the inevitable just because of an agent backlash are simply untrue, according to Dingle, who said: “Agents are quite mature enough to see the bigger picture.”

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