Sample incentives for 2012
Azamara Club Cruises
• 50% off published fares
• 50% off shore excursions
• Air credits up to $2,000 per person
Crystal Cruises • 2-for-1 fares
• “Book Now” savings up to $2,000 per couple
• Free air or air credit ($300 to $3,600, depending on destination)
Oceania Cruises • 2-for-1 fares*
• Free air
• Additional bonus savings per stateroom
Regent Seven Seas Cruises • 2-for-1 fares*
• Free air, excursions and hotel package
• Additional bonus savings per stateroom
• Up to 50% off Europe cruises
• Up to 60% off select sailings
• Onboard spending credits up to $2,500
• Free air
Windstar Cruises • Free two-night hotel stays in Caribbean and Costa Rica
• 15% off bookings made 180 days before departure
* 2-for-1 fares on these lines have been offered for several years.
Source: Individual cruise lines and/or their websites.
Hedging their bets against a recurrence of the kinds of economic and geopolitical disruptions that forced widespread, last-minute discounting in recent years, several luxury cruise lines are rolling out aggressive early-booking deals on 2012 sailings.
For most, it’s a new strategy to build a more solid foundation of advance bookings, coupled with the hope that they won’t have to discount again later. The deals include incentives such as 50% or higher discounts off published fares, free airfare, thousands in bonus savings per stateroom and hefty onboard spending credits.
The deadlines vary by line; most require reservations by Oct. 31, Nov. 30 or Dec. 31.
In some cases, the deals fall within a hair’s- breadth of matching higher-category cabins on a premium or mass-market brand.
For example, an 11-night Azamara Club Cruises voyage on the Journey, sailing from Rouen, France, to Amsterdam on May 6, was priced last week at $2,799 per person for an interior stateroom.
On the same day, a 12-night Holland America Line cruise, sailing roundtrip from Amsterdam aboard the Eurodam on May 21, offered a fare of $2,399 per person. That was for a balcony stateroom and one additional cruise night, but Azamara is also including air credits and other amenities.
“This is one of the first times I can remember the luxury lines having sales this quarter, leading into the next year,” said Ross Spalding, president of Princeton, N.J.-based Crown Cruise Vacations and its luxury unit, Crown Cruise Collection.
“It’s tight out there,” Spalding said. “People are being very careful with their money, and if the deal isn’t good enough, they’ll look elsewhere; maybe they’ll book a suite on a mass-market line, or they won’t book as high of a suite on a luxury line.”
Moreover, he said, the deals apply well into next year’s season.
“We’re seeing some incredible fares for cruises not just in early 2012 but a year from now,” Spalding said. “We got a notice from Silversea the other day [for] 60% off. That’s unheard of.”
He added that upscale clients who book early tend to spend more onboard, “so when luxury lines have to cut prices close in to departure, like many of them ended up doing last year, the kind of client they’re getting probably won’t spend as much once they get on the ship.”
The deals seem to be attracting passengers. Spalding said his agency’s luxury line bookings are greater now for 2012 than they were this time last year for 2011 cruises, even though the volatile stock market is affecting clients’ decisions.
“Personally I think Wall Street is the determining factor,” he said. “People are skittish. We recently had clients cancel a world cruise because of the economy.”
Susan Reder, president of Frosch Classic Cruise and Travel in Woodland Hills, Calif., agreed.
“We’re doing really well right now with luxury cruises in 2012,” she said. “But I seriously don’t know what to expect with this stock market. It’s been such a yo-yo. And if the market is lousy going into the fourth quarter, I don’t know what happens.”
Reder said she could not remember the luxury lines rolling out substantial early booking discounts in previous years.
For some upscale lines, big promotional savings, such as half-off published fares, are nothing new. For example, Oceania Cruises has been offering its 2-for-1 pricing since its inception in 2003, said spokesman Gary Gerbino, and Regent Seven Seas Cruises began marketing the same savings in 2009.
Both lines, owned by Prestige Cruise Holdings, are offering 2012 fare promotions that vary by cruise region and departure date, Gerbino said.
But Azamara Club Cruises President Larry Pimentel said discounts do not necessarily mean the cruise line is getting less revenue.
“It all depends on how the lines set their brochure rates to begin with,” Pimentel said. “Ours have gone up in [recent years], but so have our net yields, and that’s because our product changed. We included more things such as wine, shuttles to the city centers, bottles of water and other values.”
In addition to offering air credits, Azamara Club Cruises is promoting 50% off published rates, and it has reduced the cost of pre-booked excursions by 50%.
The savings were put into place, Pimentel said, largely because of “a confluence of global economic challenges.”
“Everybody in the U.S. who pays attention to any of the metric data about the economy can feel it has been challenged,” he said. “Retail sales have been struggling in certain sectors, and if we look at the [last] recession, it’s been elongated and deeper.”
Pimentel said the economic data, coupled with lower home sales and the decline in home values, has led to a new consumer sentiment: a “recalibration of thinking” about the sector of luxury.
“It goes beyond the cruise industry,” Pimentel said. “The conspicuous consumption is not there. Today’s consumers, even the wealthy ones, are accustomed to great offers. … Wealthy consumers don’t want to be seen as the people who overpaid.”
As for supply, he pointed out that luxury lines have added capacity during the last few years. Ships were ordered when the economy was robust and delivered when it wasn’t.
“That puts downward pressure on pricing,” Pimentel said, adding, “I think what’s happening is that we want the foundation to be solid. Let’s get them booked. We can raise fares as easily as we can go in the opposite direction.”
And it’s also possible, he noted, that some economic or geopolitical disruption could force the luxury lines to discount again closer in to 2012 departures.
“Ship happens,” he quipped. “The good thing about the cruise business is that we float. We can move out of the way [of an unforeseen event]. It’s conceivable it could happen, that we’d have to lower rates again.”
That’s not good for the agent or the client, said Bill Smith, Virtuoso’s vice president of cruise sales and exclusive product.
“Luxury lines always try to avoid cutting fares at the last minute,” Smith said. “It’s very confusing in the marketplace when pricing is lowered. People sometimes buy six months out, and then a month before the sailing they see the price go down. The luxury guys are more sensitive to that, because most of their business comes from repeat clients, like 55%, and that relationship is important.”
At the luxury level, most of the lines will contact the booking agent and protect the client at the new rate, or they’ll offer an upgrade, he said.
Smith said he anticipated that the luxury lines would “ratchet up” the fares as the ships begin to fill up.
Even amid serious economic challenges, Pimentel said he’s optimistic about 2012.
“It was a very tough 2011, and we will still hit our budget,” he said. “I think the luxury cruise market as a whole — not just Azamara Club Cruises but all of the luxury lines — provides extraordinary value. They are great products for agents to sell. We’ve hit rough waters before and managed to navigate them, and we will again this time.”