Cruise Fishing for MICE By Tom Stieghorst / April 02, 2014 Share 1 -- When the global economy melted down in 2008, many corporate meetings ground to a halt as the charge card spending and fancy surroundings at many resorts left the appearance of being out of step with the times. Today, that spending has started to resume, including on ships where cruise lines are touting the arrival of bigger, more diverse and more entertaining vessels since the last go-around. Cruise lines are part of an industrywide push to generate more business from the corporate sector, where expense control can take a back seat to business objectives, yielding healthy profits. With enticing new hardware, cruise lines are tapping interest among big corporations such as Anheuser-Busch InBev, which chartered the brand-new Norwegian Getaway to become the Bud Light Hotel at this year's Super Bowl in New York. "We had 1 billion [media] impressions from the Bud Light Hotel experience," said Norwegian Cruise Line CEO Kevin Sheehan. But despite their big-toy advantage, cruise lines struggle to get their share of the $280 billion market for meetings, incentives, conferences and exhibitions (MICE). They're often dismissed as leisure venues or as unsuitable places to do business. "For many meeting planners, cruising is still an enigma," said Sean Mahoney, vice president of corporate and incentive sales for Silversea Cruises. "They don't know it, so they avoid it. It gets them out of their comfort zone." CLIA wants to change that and has identified business meetings as a potential growth area for the industry. It has formed a task force of 13 cruise lines that target the meetings sector. In a joint survey with the Society of Incentive and Travel Executives (SITE), a trade association for meetings professionals, CLIA found that cruise lines are included routinely in only 16.3% of requests for proposal by meetings sponsors. The survey, released in January, found that 32% of planners were unaware of meetings spaces on ships, and 28.4% were unaware of ship capabilities. That lack of knowledge exists despite what many cruise officials say is a decided cost/value advantage for meetings at sea. "You can't duplicate what we can offer people on a ship," said Joyce Landry, president of Landry & Kling, a Miami agency that has long specialized in meetings and incentive cruises. In a detailed 2009 analysis comparing a cruise with a convention hotel in Orlando, Landry & Kling found that it cost about $335,200 to host a four-day meeting for 200 people at the hotel vs. $225,000 on the ship. Meals, entertainment, receptions and audiovisual charges were all either cheaper or included on the cruise, while gratuities and taxes were more expensive. Beyond the tangible advantage, a cruise is an exciting and stimulating change of pace that tends to encourage meeting attendance and reflects well on meetings planners, said Ann Sedgwick, vice president of charter, corporate and incentive sales at Carnival Cruise Lines. "We see the overall attendee or guest satisfaction level is very high," Sedgwick said. Cruise lines say they have an even better story to tell than before the recession with the advent of bigger ships and more global itineraries. Recent deliveries like the Norwegian Getaway and Royal Princess are the biggest ships yet to sail for their respective lines. In addition to larger meetings spaces, they offer a number of specialty restaurants that can be used for private events and more activities to do after the business of the day finishes. Royal Caribbean International's Oasis and Allure of the Seas are the epitome of the trend. More than rooms, they have whole "neighborhoods" that can be roped off for exclusive use. The Boardwalk interior area of the two ships can accommodate up to 1,500 people, said Lori Cassidy, director of corporate, incentive and charter sales at Royal. "We've got some venues that are unique to our brand," Cassidy said. "With the ships getting bigger and having more options like that, it really has been a great sales tool for us." Larger ships mean bigger meetings can take place onboard without being conspicuous to the leisure guests. Occasionally, a business group will charter an entire Royal ship. Last year, a large restaurant company chartered the Allure of the Seas for its annual owner/operator conference. The group had 3,500 attendees onboard the 5,400-passenger ship. "We did a lot of simulcasting onboard the ship, used the main theater, Studio B and the Royal Promenade to simulcast a lot of the general sessions," Cassidy said. "It was very meeting-intensive, so there was a lot that had to go into it." In another example, a law firm chartered the Liberty of the Seas for its global partners meeting in Barcelona for four nights. "They were pulling people from all over the world," Cassidy said. "There's not a hotel in London or Paris or anywhere in that vicinity that could house the 1,700 people they needed to bring together. So it was a perfect option for them." Cruise lines are also venturing farther afield, which can dovetail with the increasingly global reach of business. "I'm seeing a lot more of the exotic side [like] Australia," Cassidy said. "Asia's really starting to beef up with all the growth in that market." Landry said she was recently called by a sporting goods company with factories in Cambodia. "They wanted to take a cruise on the Mekong to actually visit all the different factories," she said, adding that "it's very possible" given the increased number of ships on the rivers of southeast Asia. "It's actually a convenient way to get around to places that were very remote and expensive to get to." Another rapidly evolving area crucial for drawing business meetings is Internet connectivity. Cruise lines are investing substantially in more WiFi capacity, and one way to make that pay is to do more meetings. The slow and intermittent access of the past is being replaced by near-universal WiFi on ships and at higher speeds. "That's really important to corporate travelers [who] want to stay connected at all times," Cassidy said. Many ships offer dedicated conference rooms with high-tech audiovisual gear, and they can use theater spaces for meetings, outfitted with state-of-the-art sound and lighting systems. Business groups can be lucrative because they prioritize quality, Landry said. "They're not looking for the kind of deals the individual traveler is looking for. However, they are very smart buyers and procurers." Companies increasingly send proposals through purchasing departments that scrutinize them for savings. And meetings planners are looking for ways to document return on investment. Katina Athanasiou, vice president of charter sales for Prestige Cruise Holdings, parent to Oceania Cruises and Regent Seven Seas Cruises, said the 2008 recession forced suppliers to deliver more for less. "We've had to work diligently to help show significant value while still remaining within their budget," she said of potential business customers. But corporate travelers typically book the more expensive suites on the ship first, have a better retention rate than other groups, help fill ships early to support higher leisure fares and are attractive repeat cruise candidates because of their above-average incomes. What's more, after cutting the best deal they can, Landry said, "then they're apt to spend more onboard because they're either entertaining or they've got their top customers onboard." Luxury lines are significant players in business meetings because their all-inclusive products are a good fit for corporate events. They also are favored for incentive trips, which reward salespeople, managers and others with trips for peak performance. Laurie Lukasek, director of proposal development at Maritz Travel in St. Louis, a large incentive program specialist, said, "Our incentives like to do charters on the small luxury ships, and we also do groups on the larger ships of 3,000 or 4,000 passengers." Lukasek said cruises make good venues for group recognition because "you've kind of got a captive audience. It's very contained, so if the incentive includes any type of messaging that an executive wants to give, his people are close together." Regent Seven Seas was approached for a sales-reward cruise a couple years ago for a corporate client that chartered not one but two of its ships for seven days in Europe. "It was large for the luxury sector for cruises, but they really wanted a luxury program," Athanasiou said. "It was 1,200 people -- 500 and 700 -- on two of our vessels that operated side by side in tandem at every port of call." Most deals of that scale are done directly with the cruise lines or through highly specialized planners or agents. But retail agents can get a share of meetings business, too, cruise executives say. "It's really understanding the opportunities that exist in their local communities, becoming more knowledgeable about meetings, incentives and events, reading some of the trade publications," Cassidy said. "It's not rocket science by any means." Helpful magazines include Meetings & Conventions, Successful Meetings, Incentive and Smart Meetings, said Cassidy, who also suggests getting involved in two trade groups: SITE and Meeting Planners International. (Note: Meetings & Conventions, Successful Meetings and Incentive are all owned by Northstar Travel Media, the parent of Travel Weekly. Smart Meetings is published by Bright Business Media.) CLIA also has training for agents, such as "Cruising -- The Ultimate Incentive," a course taught at live regional seminars or webinars and also available online. SITE is offering a certification program in cruise incentives for the first time this year, administered through CLIA. Larger travel networks often have a dedicated department or specialist for business groups. That can be a resource, but it can also dilute the agent's commission, said Linda Allen, an independent agent in Harrison, Ark., who works with host agency Brownell Travel. Allen said knowledge of contracts, tax laws and international cruise fare rules make business cruises hard to do as an occasional booking. "It is a whole different skill set," she said. Landry said some cruise lines that are strong in corporate might have a staffer in an agency's area that can offer localized help. There's no doubt business meetings and incentives are a niche; some estimate it at 5% or less of the group market as a whole. And while individual lines say revenue from the niche grew by double digits in the past two years, there's no overall industry estimate of growth. A few stumbling blocks remain for the expansion of the meetings business at sea. Unlike hotel rooms, ship cabins are intended for double occupancy, so single guests pay a premium for most cabins, increasing the overall cost. "In a corporate meeting, the meetings that work the best are typically ones where they have corporate spouses or they're doubling people up, and that's a challenge," Landry said. Another difficult fit is the trade show-type meeting that needs tens of thousands of square feet of open floor, or meetings with dozens of concurrent breakout sessions, each of which requires a meeting room. Because most cruise ships are foreign-flagged, meetings expenses are not tax-deductible as they are on land. That can be a sticking point, although cruise lines said it doesn't come up much because even without deductibility, cruise meetings are less expensive than on land. When one U.S.-flagged ship, the Hawaiian-based Pride of America, went into drydock last year, Norwegian Cruise Line converted its circular, multilevel meeting auditorium into suites. "I don't think they attracted as much [meetings] business as they thought they would with the taxation issue," Landry said. Conferences that are too meeting-intensive are another dubious fit for cruise ships, Landry said, because it is frustrating to be on a fully outfitted ship with no time to enjoy it. "If it is an intense meeting agenda, you have to plan to make sure the balance is there," Landry said, by perhaps having two full meeting days offset by a day or two of play in port. But the biggest obstacle of all remains the lack of familiarity of many meetings planners with the cruise industry. "They're just not aware of what the industry has to offer today," Cassidy said. "We're more than just a vacation option." She said getting planners onboard was key to understanding the sector's potential. "Once people see it and can touch it and feel it, they get it," Cassidy said. "The biggest challenge is getting people to take the time to even go look at the vessel." Follow Tom Stieghorst on Twitter @tstravelweekly.