A lesson from the Concordia

By Charlie Funk
Charlie FunkI have long maintained that professional travel retailers serve their suppliers in ways far beyond the reservation process, and after exploring sales activity in the wake of the Costa Concordia accident, I think my belief has been validated.

In my last column, which ran on Feb. 2, I recounted how in the days after the accident, a reporter for a national newspaper had tried hard to get me to predict that the incident would have a disastrous effect on cruise bookings. I finally agreed that there would likely be some impact, the crucial question being one of magnitude. 

In the succeeding weeks, I went to great lengths to stay in touch with other agency owners all across the U.S. -- agencies ranging from about $2 million to more than $100 million in annual sales volume -- to be sure I was getting a relatively reliable sample of cruise booking trends.

Frequent updates from these retailers indicated that there had been 1) no noticeable cancellation impact as a result of the Concordia; and 2) no noticeable impact on new bookings. Indeed, following our agency's annual vacation show at the end of January, the number of new bookings with a value greater than $5,000 was higher than ever, as were bookings of more than $10,000. Even bookings in excess of $30,000 have become more commonplace.

Maybe, I began to think, the Concordia was going to be a nonissue from a bookings standpoint.

But then Carnival Corp. executives offered investor guidance, warning of a mid-teens percentage drop in new bookings among all Carnival brands, on top of any decrease in Costa bookings.

Maybe, I thought, all the things agents had told me about sales during the previous week were no longer representative. After all, if bookings for some of the world's leading cruise lines were off by that much, surely retailers had to be seeing a drop, as well.

So I made the rounds again, asking the same questions. The answers came back the same: no noticeable change. Obviously, I was missing something, but what?
A week later, Royal Caribbean Cruises Ltd. announced earnings that exceeded analysts' estimates, but the company also warned that bookings were off by midteen percentages for their brands.

Back to the phones. But just as before, no retailer reported a falloff in bookings. Indeed, they were all reporting that bookings were stronger, if anything.

Talk about being as lost as a ball in high weeds! What was going on?
In the weeks after the accident, Royal Caribbean International and Carnival Cruise Lines had pulled all their TV ads, removing much of the stimulus for consumers to call. Maybe that was the cause of the drop reported by the cruise lines.

Part of the booking decrease was clearly coming from source markets outside the U.S., but it occurred to me that much of the rest of the drop might be the result of fewer direct bookings with the cruise lines.

While cruise line advertising includes a generic reference to calling a travel agent, it is far and away easier to remember the name of the company running the ad than the name of a travel agency. Plus, the ads usually provide ways to contact the cruise line fairly prominently, which would appeal greatly to first-time cruise prospects.

That was it! I thought. The booking falloff at the cruise lines was probably mostly first-time cruisers; retailers were having better results because they were booking past guests.

Or maybe not.

The agency owners with whom I spoke reported that a substantial number of bookings (some in the range of 50% or better) were with first-time clients or clients who had been in their database awhile but had never booked before.

What now, Sherlock?

How was it possible that suppliers' first-time guest bookings were down but so many retailers' first-time bookings were up, or at least holding steady?

I believe I stumbled on the answer when one of our agents had four prospects in our office discussing Alaskan cruises. When it was mentioned how close the ships come to the shore in the Inside Passage, one of the four noticeably stiffened and asked what the chances of running aground were. It took quite some time, but the issue was dealt with calmly and logically and -- most importantly -- to the prospect's satisfaction.

Retailers are perceived by consumers as being independent third parties that can be depended on to offer unbiased advice on the vacation of a lifetime, whereas suppliers' agents are seen as having a bias toward their employer that colors the advice they give.

Whatever the reason, it is apparent that travel retailers have been of measurable value in maintaining booking momentum over the last month, at least for the rather small sample I surveyed.

However much longer the reported booking slump continues, I believe the cruise lines will have to realize when it is over that retail travel professionals led the way by working even more closely with suppliers. Those suppliers that have proactively supported the retail community are well positioned to capitalize on those efforts.

As long as there is a single passenger unaccounted for, or as long as images of the Concordia offer mute reminders of a rare but deadly event, those suppliers will benefit greatly from the work that professional retailers do on their behalf.

Charlie and Sherrie Funk own Just Cruisin' Plus in Brentwood, Tenn., and have provided agent and agency-owner training throughout North America on every facet of travel agency operations. They are the authors of several books, including "A Recipe for Travel Agency Success," "Creating a Blueprint for Growing Your Agency" and "You're Invited," a complete guide to hosting consumer travel events. 
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