Cruise CEO warns that the good times won't roll forever

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Norwegian Cruise Line Holdings CEO Frank Del Rio addressed agents at the Signature Travel Network 2018 Owners' Meeting.
Norwegian Cruise Line Holdings CEO Frank Del Rio addressed agents at the Signature Travel Network 2018 Owners' Meeting. Photo Credit: Jamie Biesiada

AMELIA ISLAND, Fla. -- The cruise industry is doing exceptionally well, said Norwegian Cruise Line Holdings CEO Frank Del Rio, but advisers should take steps to prepare now in case the U.S. is close to another recession.

While the current "Goldilocks economy" is a boon for cruise lines and advisers alike, it won't last forever, Del Rio said in an address to agents at the Signature Travel Network 2018 Owners' Meeting at the Ritz-Carlton here on Friday.

He encouraged agents to maximize repeat business, emphasize value and not price, prepare to reorganize resources and ensure databases are current. 

Del Rio also urged agents to target millennials. Baby boomers are cruise lines' bread and butter today, but the influence of millennials will continue to grow.

The cruise industry today is benefiting from unprecedentedly strong demand and record booking volume, Del Rio said. Customers are booking earlier than ever and the cruise lines have strong pricing power. 

Del Rio said Oceania Cruises and Regent Seven Seas Cruises plan to raise prices on their 2019 sailings as of Oct. 1. Oceania will raise prices on 67% of all 2019 sailings, and Regent will raise prices on 92%, he said.

He attributed the cruise industry's good fortune to a high level of global consumer confidence, low unemployment, rising wages, record-high stock market values and low interest rates. Also, President Trump's tax cuts have helped the economy, and there has been very little negative impact of geopolitical events on travel in recent months.

There is also a high level of consumer satisfaction with cruise lines, Del Rio said. Cruise lines are investing millions of dollars to renovate ships and spending a lot of money marketing their product.

Del Rio urged agents to capitalize on the strong economic environment by selling product from suppliers that pay them the highest commission. He also urged them to book clients well in advance; many advisers are selling 2020 and 2021 sailings.

"Consumers are making a bet today on the future," Del Rio said. "As the booking curve elongates, they're making a bet even further into the future." 

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