Worldwide, tour operations collect more revenue than cruise lines (approximately $35 billion vs. $29.3 billion). But though tour ops may have the market share, in the U.S. they do not have the proportionate mind share among travel agents.
CLIA, the cruise lines' marketing organization, has done a tremendous job focusing travel agents on selling cruises. CLIA currently has a larger agent membership than any travel agent organization, including ASTA.
Though it collects less revenue in aggregate, the cruise industry has certain advantages over organized tour operators. Cruise lines are highly consolidated: The brands of three corporations -- Carnival Corp., Royal Caribbean Cruises Ltd. and Norwegian Cruise Line -- account for the vast majority of U.S. cruise sales. And importantly, cruise line margins are significantly higher than those of tour operators.
The highly fragmented world of tour operators, alas, seems to have more trade associations worldwide than the cruise industry has sizeable cruise companies. And if tour ops wanted to create a parallel marketing organization to CLIA, only a handful of them have the resources to contribute meaningfully to a marketing war chest.
Richard Launder is president of the Travel Corporation USA, one of those companies that could contribute meaningfully to a marketing war chest. Travel Corp. owns Trafalgar, Insight, Contiki, Uniworld, Brendan, African Travel and Red Carnation Hotels, among other properties. And Launder is hoping that a simple nine-word question will more than level the playing field in the battle for agents' attention.
Travel Corp. is devising a campaign around what Launder calls a "super-qualifying" question for travel agents to ask clients who are considering a European cruise: Is your priority to cruise or to see Europe?
"If the priority is to cruise, then clearly they [cruise lines] would get the sale," Launder said. But if the answer is "to see Europe," he believes the tour segment will get the business.
"Over the last several years, we've watched the number of European cruise ships increase, and they've developed their business very well," he told me in a conference call that also included Insight President Marc Kazlauskas and Trafalgar President Paul Wiseman. "On the tour side, as an industry, we haven't done enough to counter that with an argument about why touring, instead of cruising."
Launder noted that more than 70% of Trafalgar and Insight guests have previously been on a blue water cruise.
"It's the same people who tour and cruise," he said. "People don't cruise every year but will take other types of vacations. We're talking largely to the same people. In the case of cruising, the ship is the destination; in the case of tours, the destination is the destination. We can certainly make that case for Europe."
Kazlauskas added that "cruising is a great vacation. Everybody knows it. But it's an overview vacation. The [cruise] lines want you to stay on the ship and spend money on the ship. The tour spends more time in the destination and gets you inside the destination. Ninety percent of Europe is more than 100 miles from a cruise port. And you get involved in a way that you just cannot get on a cruise. No matter what they say, they do not have the authentic, engaging experience you get on a tour."
Launder has created collateral material both to guide frontline agents through the cruise-or-tour discussion and for agents to hand to consumers. But what he'd really like to see is more tour operators joining him to push the message.
"This is not just about Travel Corp. taking on the cruise vs. tour debate," he said. "This is bigger. It's about the travel category. We need the support of Globus, Tauck, Collette and others. We're talking to a very big audience of consumers and travel agents."
Launder said he spoke to new U.S. Tour Operators Association (and former CLIA) President Terry Dale about coordinating and helping the USTOA fund the message among tour operators. In the USTOA, Launder said, "you've got very small FIT companies, you've got river cruising, you've got large operators. Terry can facilitate."
Dale was at Travel Weekly's LeisureWorld 2011 and Home Based Travel Agent Show last week, and I asked him what role the USTOA might play in Launder's scheme. Cautioning that he had only been on the job for two weeks (and that those weeks were consumed by Egypt-related issues), he said it was "absolutely" something he personally believes in. But he added that he'd have to gauge whether members would want to engage in the campaign collectively.
Also at the Travel Weekly conference was Scott Nisbet, CEO of Travel Corp.'s archrival, the Globus Family of Brands. I asked him whether he would join with Travel Corp. in an organized tour operator initiative comparing tours and cruises.
"It's a good tactic to embrace," he responded. "On a tour to Rome, you don't wake up and have breakfast in the Italian-theme restaurant of a cruise ship. You're in a cafe in Rome."
Like Launder, he pointed out that "there's a huge commission story" behind any message to travel agents that would motivate them to explore whether a client should be on a cruise or a tour.
Nisbet said he would work with others to get the message out and has "a lot of respect for Terry. He could put focus on this."
But would Nisbet work directly with his biggest competitor, Travel Corp.? I asked if he'd take a call from Launder on the subject. "Absolutely," he replied.
Trafalgar's Wiseman said, "We acknowledge that the cruise lines have enough marketing power among them to create consumer interest in a cruise. The reality is that agents will receive more inquiries about cruising than about tours. That's reality. But the agent has two choices: They take that order as it stands, or they don't. We're encouraging them to think about other options."
And therein lies the subtle brilliance of this tactic. The operators admit they are outgunned by the consumer-direct marketing prowess of cruise lines. But if they succeed in focusing agents on the tour-vs.-cruise question, they can sit back and let the cruise lines drive consumers into travel agencies, where agents wait to ask the "super-qualifying question."
To be effective, Launder knows operators must unite behind the cause. "It's not selling the concept [to other operators] that is hard," Launder said. "It's the next step, coming together with your competitors to work on behalf of a product category. That's harder. But we've got to put aside our competitive issues, and Terry can play an important role to facilitate that."
OK, Terry. Egypt's resolved. Launder, it appears, is proposing the agenda for week three.
Email Arnie Weissmann at [email protected] and follow him on Twitter.