Something must be wrong, thought Richard Fain. Following a meeting with travel agents attending a Signature Travel Network "boot camp" in Fort Lauderdale on June 6, the chairman and CEO of Royal Caribbean Cruises Ltd. stared at the inbox on his iPhone in disbelief. He must have somehow gone offline, he thought: Only four emails had come in during the 90-minute meeting.
He checked his settings. Everything looked fine. He sent himself a test email, which appeared in his inbox almost immediately.
Only then did he realize that, far from something being wrong, it meant that everything was going according to plan. Like himself, thousands of the people who were most likely to send him email -- his executive team and his sales, marketing and communications staffs -- were also meeting with travel agents.
Last week, as part of the company's "Royal Is Loyal to You Always" campaign, a large percentage of RCCL employees who weren't at sea were calling on travel agents. About 7,000 agency calls worldwide were planned for just one day, and Fain was personally going to complete 4/7000ths of them.
I joined him that day just after the Signature event, riding along in his Prius between calls and observing the company's messaging and candid exchanges with agents.
During the 45-minute drive to our next stop, Sand and C Travel in Boynton Beach, Fla., he said there was an element of nostalgia in making these agency visits.
"I used to call on agencies, somewhat randomly, when I had extra time in cities," he said. "Vicki [Freed, senior vice president of sales and trade support] is in California today, calling on agencies she used to call on when she was just starting out."
Fain arrived at Sand and C Travel bearing gifts: cupcakes for the staff and the news that Royal Caribbean International was offering bonus commission of $25 to $100, depending upon the length of the cruise, for that Thursday and Friday. He was also giving advance notice about a three-day "Wow Sale" that begins today, with 50% deposit reductions and up to $200 in shipboard credits.
Typically, there's no advance notice for Wow Sales because the line doesn't want to encourage agents to postpone bookings. This one also lasts three days rather than the standard two.
A third component of the coordinated sales effort was a high-profile sponsorship of Broadway's Tony Awards, which aired last night. A two-and-a-half-minute segment from the musical "Hairspray" was broadcast live from the Oasis of the Seas.
There were other reasons why Fain might have felt particularly nostalgic when calling on Sand and C Travel. In some ways, the agency seems happily stuck in a time warp. It's a brick-and-mortar agency in a strip mall, and its owners, Alan and Cathy Rosen, sheepishly admit that they're not really focused on technology and haven't updated their website in years. They get a fair amount of walk-in traffic, keep their racks filled with brochures and employ a roomful of agents who counsel clients face-to-face.
While this model might seem anachronistic to some, it's still effective enough that theirs was the only agency in the nation to receive a joint visit by Fain and Royal Caribbean International President and CEO Adam Goldstein. Laura Hodges, Royal Caribbean International's director of national accounts for North America sales, also joined.
The three entered the agency together, shook hands with agents, admired a large photo of the Oasis of the Seas along one wall, then settled with the Rosens into a conference room.
Although the agency visits/bonus commission/Tonys sponsorship/Wow Sale effort is a carefully orchestrated event within the longer "Royal Is Loyal to You Always" campaign, Fain began by saying, "Although Laura might put the emphasis on 'loyal,' I put the emphasis on 'always.' Working with travel agents is in our DNA. It's who we are, were and always will be."
After Fain went over the details of the campaign, Goldstein asked how the agency was doing.
A little slow, Alan replied. In fact, he said, last month was the worst in a couple of years, with the biggest falloff occurring with groups. "What do you see?" he asked in turn.
"This is obviously a difficult year," Goldstein replied, "but the ships continue to sail full."
Alan asked if Royal's executives were concerned about having so many ships committed to Europe for 2013 and 2014, given the economic issues there and higher airfares.
"We will always look at where ships are and where they will be," Fain replied. Economic conditions are cyclical, he continued, and although the current economic situation is a longer cycle than has been seen previously, it's part of a cycle nonetheless.
Although southern Europe was suffering, Fain added, the U.S. was, relatively speaking, doing well, and northern Europe was doing very well. "As much as you can say the world is flat [as a result of globalization], you still see diversification."
Still, he conceded that "the banking situation and concerns that came out of the tragedy in Italy," a reference to the Costa Concordia, constituted a "double-whammy."
Shedding further light on Royal Caribbean International's rationale for sticking to Europe, Goldstein noted that "Europeans get considerably more vacation time, yet we haven't penetrated that market" in proportion to that available time.
Fain summed up the year so far: "Yields are not rising as quickly as we would have hoped, but they are still rising. How many industries could get this double hit, and the worst that happens is that prices don't rise as fast as we had hoped?"
Still, he acknowledged, the situation is tougher for travel agents. "You have a higher percentage of fixed costs," he said. "A little bit on the top end can make a big difference. We know that, and hope the bonus commission helps."
Was there something RCCL could do different, or better? he asked the Rosens.
After praising RCCL as "the best" from a marketing perspective, Alan said, "We have some frustration on the back-office side of things."
Goldstein confirmed to Fain that "Alan has been memorably vocal on that topic."
"We're working on that," Fain replied, "working on enhancements that will make you a lot more productive. New systems are well under way."
The conversation shifted to the Rosens' demographic, which is reflective of nearby retirement communities. Goldstein asked if grandparents were paying for the whole trip in multigenerational bookings.
Yes, Cathy said.
Are they booking the family suites? Fain asked.
Not so much, Alan said.
"There's only one bathroom," Cathy explained. "It's an issue."
Hodges asked which RCCL promotions got the phones ringing.
"The air promotion to Europe with Celebrity," Alan replied.
"That was very successful," Fain said. "It's almost psychological. People are so focused on the airfare that if we have a promotion around air, it makes a difference. But if people think that airfare is too expensive compared to the cruise fare, maybe we should ask how much more they want to pay for the cruise to get the balance right."
Alan laughed but stuck with the topic. "When they see the cruise is $699, and the airfare is $1,100, it's difficult. It's like going to buy a car for one price, then finding out it's going to cost a lot more. No one wants to do that. It's probably our biggest problem."
The meeting ended, photos were taken beneath the Oasis photo, then Hodges, Fain and I got back in the Prius.
The next stop was Coral Springs. We arrived at Cruise Planners, a franchise home agent host. Vicki Garcia, the group's executive vice president of sales and marketing, had invited about a dozen agents to come and meet with Fain over lunch.
In his introductory remarks, Fain expanded on the "Always" campaign and RCCL's commitment to agents: Reliance on agents, he said, "is why we're able to buy expensive ships. People talk about win-win situations. Most win-wins are BS. Trust me, this relationship is a win-win."
This group of agents also expressed concern about airfares to Europe, then moved on to the Caribbean.
"The transatlantic repositioning on Princess had so many ports," one agent said. "It sold out in five days. Where's the 10-day Royal deep Caribbean sailing?"
"Maybe we're overly cautious," Fain conceded. "Repositioning voyages traditionally don't do so well, and our inclination is to get it over as quickly as possible. But our thinking on this is evolving."
Regarding the Oasis and Allure, which sail the Caribbean, one agent said her clients "love the ships, hate the itineraries."
Fain suggested there might be some changes, but added: "We won't talk about things to come; we only announce things when we're sure."
He used the same answer to deflect questions about the two Sunshine-class ships that will enter service in 2014 and 2015.
When Fain asked, "What could we do better?" an agent asked him to bring back a protection plan for early bookers who might see prices drop after they've locked in. "Could you even do it like Carnival, with shipboard credit?" he asked.
Fain said RCCL was trying a different approach. "What drove complaints were dinner conversations where guests would find out how much other guests had paid," he said.
"We're trying a city-specific program. If we were to find out, for example, that we only had five people from Cincinnati booked on a sailing, we would offer a promotional price on air to that market, and offer the same deal [retroactively] to the five who had already booked. That way, everyone's paying the same for the cruise. People expect to pay different prices for air."
One agent expressed appreciation that Fain was participating in the agent calls. "I can't think of any other industry where I could sit down with the chairman of a multibillion-dollar business," he said.
"We do understand, deep in our hearts, where our bread is buttered," Fain replied. He smiled. "We are cold-hearted businesspeople, and we do what makes us money." Email Arnie Weissmann at email@example.com and follow him on Twitter.