Caught in the maelstrom of Europe’s sovereign debt crisis, Greece-based Louis Cruises is hedging its bets that 2012 will bring more stability to its operations following a year of market chaos fed by civil unrest, widespread strikes and the specter of the government’s financial ruin.
“Greece is going through a harsh austerity program, and when the country is confronted with cuts in wages, additional taxations and issues about security in the workplace, one can expect that some part of the population will protest,” observed Pythagoras Nagos, commercial manager of Louis Cruises.
The line, based in Piraeus, Greece, is owned by Louis Plc, a public company headquartered in Cyprus.
Nagos was in the U.S. last week, making routine sales calls to the companies that help market the nine-ship line to North Americans. But the times and challenges are anything but routine, and in an interview with Travel Weekly, he provided an inside look at how a cruise line operating in the euro zone is navigating the recent economic meltdown.
Exacerbating the challenge is the fact that the line sails only in the Mediterranean and Aegean, two popular cruising areas that have attracted large numbers of ships owned by deep-pocketed and high-frills competitors based in the U.S.
So how does a foreign cruise line with older, smaller ships and higher cruise fares compete for the American greenback against newbuilds that despite offering rock-climbing walls, Broadway shows, ziplines and water parks can charge lower prices?
“We have no newbuilds,” Nagos said. “Some of our ships are 25 to 30 years old, and we are more expensive, so we watch very closely how these lines are marketing themselves. The larger the ship, the more [the cruise line] can play with their yields, putting last-minute deals on the Internet, for example. One can say that the tactics used by the big-market players are inventive, but one cannot reinvent the wheel.”
There’s more to selling cruises than just the hardware, he said: “There’s the software, too, the human capital, meaning [personal service], and the itinerary. And while our ships are not new, they are very nice, in a classic style.”
Of the line’s nine ships, two are chartered to U.K.-based Thomson Cruises; two have published sailings in the Eastern Med and the Aegean for 2012 under the Louis flag; and the remaining five do not yet have published cruises for next year.
Nagos said one of the five, the Louis Orient Queen, will operate Aegean and Greek Island cruises from Cyprus, but specific itineraries are not yet available. Two of the five vessels, he said, are “laid up” while the line looks for charter or sale opportunities.
From a marketing perspective, Nagos said Louis Cruises relies on its “tour operator-oriented” product, with the vast majority of U.S. bookings coming through tour wholesalers that package a Louis sailing with a land program.
“Cruises in Greece are major components of the packages tour operators offer in Europe,” Nagos said, citing partnerships with firms such as Trafalgar, Insight Vacations and other brands under the Travel Corp. umbrella and those operating as part of the Globus family of brands.
He said the same is true of Latin American operators, which offer similar combinations of land and cruise packages.
Over the years, North Americans have supported Louis Cruises’ product, comprising about 30% of passengers. Latin Americans represent about 16%, and Greeks about 13%, Nagos said. The remainder are other Europeans, plus a smattering of Australians and Asians.
American vacationers who are headed to the Eastern Mediterranean and booked on a Louis program typically spend between 10 and 16 days there, with three or four nights on a Louis ship, he said.
“The idea for us is not to keep them on the ship, like the [North American] lines,” he said. “We have shorter cruises, but we will do usually two ports a day so that the passenger is getting more out of the destination. And we make money from the excursions.”
A four-night cruise from Athens on Louis Cruises’ Majesty, for example, operates a very different itinerary than Western lines do. On a sailing departing May 14, the ship leaves Athens at 11 a.m. and calls at Mykonos later that day.
Kusadasi, Turkey, and Patmos, Greece, are port calls the next day, one in the morning and one in the afternoon. Rhodes is a full-day call on the third day, and on the final full day of the cruise, both Crete and Santorini are port calls.
“So we are taking passengers to six destinations in four nights,” Nagos said. “We are destination-focused.”
The per-person fare for the four-night cruise starts at $695.
By comparison, Norwegian Cruise Line markets a seven-day Eastern Mediterranean and Greek Islands cruise aboard the Norwegian Jade from Venice with rates from $729 per person. It features four port calls.
Noticeably absent from the core source markets is the U.K.
“The British market for us used to be quite strong, but currently it is not so important,” Nagos said, though he added, “it is important for our hotel business,” a reference to sister brand Louis Hotels, which owns 15 hotels in Greece and 12 in Cyprus.
Over the years, he said, “Greece as a destination was oversold by British operators. It’s an issue of not being totally in fashion right now. The Brits tend to prefer more of their own brands, or they like the Western Med, [sailing] from Barcelona, for example, and North Africa.”
The company markets its products in dollars here and in Australia and the Far East but uses the euro in Latin America and, of course, in Europe.
“We don’t price in dollars in Latin America, mostly because those countries, such as Brazil, have close economic ties to Spain and Portugal,” he said, both of which are euro-zone countries. “There!” he joked. “I have given away a company secret.”
No crystal ball
Looking ahead to 2012, Nagos said, “I am not keeping a crystal ball in my hands; I cannot be a prophet. But the basic competitiveness of Greece remains untouched. Sun, islands, culture, archaeology.”
And the demonstrations that have rocked Greece aren’t so shocking anymore, Nagos insisted, since now “there are protests across the globe, even in your own Wall Street.”
The Occupy movement illustrates to the traveling public that European and other countries are not alone in their citizens’ frustration with government and economic issues, he said.
“In the coming year, if Greece’s reputation improves, it will again be seen as a safe destination in the mind of travelers, and we will face a better season,” Nagos predicted. The 2011 season, he said, ended “satisfactorily. … It could have been better, it could have been worse.”
Now that Greece has its new coalition government, he added, “the worst is over, and we are more optimistic about the year to come.”
The country, however, has yet to approve its second European Union bailout, worth about $180 billion, a prerequisite to avoiding bankruptcy. Greece is slated to hold national elections in February.
“We have to work hard to put Greece on the map again as a good destination,” Nagos said. “Once the issue of the state debts is over, things will again start running like it was some years ago. If it takes one, two, four years, it cannot be predicted now.”
Follow Donna Tunney on Twitter @dttravelweekly.