Cruise lines and travel agents have reported that bookings and prices have improved over the lows of 2009, but one negative trend may be emerging — an increase in cancellations.
Bill Smith, Crystal Cruises’ senior vice president of sales, said that 75% of new bookings were canceling before the deposit date.
"Even in 2009 and 2010, when business wasn’t that good, I kept looking at the gross new bookings that we were making and they were always high," he said. "But 75% canceled out.
The good news is there is business out there and people are thinking about taking a cruise and are interested enough to make the booking. … Something’s happening between the initial contact the agent has with the guest and the deposit period and final payment."
Smith also said there has been an increase in the number of people that cancel after making a deposit, but at a lower rate.
Virtuoso, noting an uptick in cancellations of booked cruises, introduced a slogan to try and combat this called "You sold ’em, now hold ’em."
It started with a webinar that encourages Virtuoso members to take bookings the distance.
"It’s a pragmatic way to get them to hang onto a booking," said Mark Kammerer, vice president of cruise for Virtuoso. "You’ve done the work — now work on keeping this booking instead of putting time into getting a new one."
Kammerer said Virtuoso encourages agents "to work with clients on what they might do ashore, getting people to put themselves into the vacation as opposed to reconsidering it."
Kammerer said cancellations have a negative impact on both cruise lines and sellers.
"If the inventory comes back out, it’s harder to sell than before," he said. In addition, cancellations affect Virtuoso’s overrides.
Some industry leaders have said that reduced penalties for cancellations and reduced deposit requirements might have increased consumers’ likelihood to cancel.
"We gave them more reason and more opportunities to cancel," said Smith, adding that Crystal will change back its reduced-deposit program in 2011. "A lot of those policies that we changed in 2009, the clients are still taking advantage of that and getting out of it."
Susan Reder, president of Frosch Classic Cruise and Travel in Woodland Hills, Calif., said that her agency had not experienced an abnormal number of cancellations, but that consumer behavior has been changed by the many deals on the market and the reduced penalties.
"Many cruise lines have come up with lenient deposits and don’t charge a cancellation fee up until final payment is due," she said.
As a result, clients "have a very long time to figure out if they can even afford the vacation."
"Also, many people want to take the air credit to reduce the package and think they can use miles points," Reder said. "So deposits are made sometimes a year in advance and then when final payment comes due, many clients feel that they cannot afford the vacation."
Eric Maryanov, president of All-Travel, also said that cancellations had not increased beyond expected levels, but said that in general, cruise lines "over-expect" on non-deposited, held space.
"I understand their frustration," he said. "It’s inventory that’s tied up at any given time that doesn’t come into fruition."
Mark Conroy, Regent’s president, said that cancellations have stayed consistent.
He said it is common for agents to book one client on several ships so that they can present several options to the clients.
"They will then present the options to the guest and book one and either just let the option on the others expire or hopefully call us and cancel the space they are not going to use," he said.
Smith thinks agents are losing contact with their clients.
"How much are you talking to people between the time of deposit and when they drop-off?" he asked. "Too many agents think it’s done and they lose contact with the client.
"What we are talking to agents about is continuing that conversation and communication and not thinking that the client is going to make the final payment without that. There are just too many other factors influencing a client’s decision-making process: the stock market, the oil spill, the volcano, whatever it is."
Conroy agreed. "Agents need to stay in touch with guests and get them involved in planning their trip. The more time they invest in planning the trip, the less likely they are to cancel," he said.
