Hard Choices Better Value

Destinations make a cruise. When a passenger makes the decision to go on this kind of holiday, there are many factors to consider, such as food, quality of service and comfort. While these are certainly important to passengers, the main driver for choosing to cruise is the appeal of the places they will visit.

Cruise operators face intense pressure to choose the right destinations for their target markets, while differentiating themselves from their competitors. The process is complicated, involving the management of numerous relationships with ports, constant evaluation of and the intelligent interpretation of passengers’ preferences.

Changing passenger requirements in terms of destinations, the ongoing development of new ports and the growing pressure on cruise lines to set themselves apart from the competition means that itinerary planning – to add variety and innovation to routes and the choice of destinations year after year – is an endless process.

“The more options we have in terms of destinations, the more flexibility we have in our product offering,” says Diana Block, associate vice president of deployment and itinerary planning for Royal Caribbean Cruise International, who manages relationships with over 200 ports for two brands.

Across the two brands she deals with, Block is continuing their reputation for adding new destinations on itineraries and fostering development opportunities with ports new to the cruise industry. Busy planning the 2008/09 season, she faces many hard decisions to balance the factors that decide which ports the fleets will visit.

For Celebrity Cruises, adding new destinations is a fundamental part of its market offering, so exploring new opportunities and relationships is a big part of Block’s job. “We are considering new opportunities all the time, which come to us through many channels,” she says. “I have a long list of ports that are recommended to me, which I then have to evaluate. My past is everyone’s future. We have just finished planning for 2007/08 and Celebrity Cruises is set to visit at least 40 new destinations.”

Ten of these new destinations form the line’s move into the Australia/New Zealand market. The move came not only on the back of customer interest, but also from the initiative taken by the ports in the region, which together approached Celebrity with presentations of their facilities and ready-to-go itineraries that gave a flavour of what is on offer.

“They presented a package and I have experienced it personally,” says Block. “Some competitors were already in the region, so we knew it had potential, but the actions of ports and destinations there in approaching us convinced us that it was a win-win situation.”

GROWING OPPORTUNITIES

Stakeholders in both new and established destinations are increasingly adopting this kind of proactive approach more often. Ports in Europe have approached cruise lines to appeal for business, and in some cases the providers of shoreside entertainments and excursions have gone directly to cruise operators such as Celebrity.

The results of these relationships, driven by the ports and shoreside operators, are tangible. In Europe, for example, Celebrity was approached by the stakeholders at a number of UK destinations, and consequently the line now calls at ports new to its itineraries such as Holyhead in Wales as well as Edinburgh and Inverness in Scotland.

These destinations have the right ingredients in terms of culture, entertainment opportunities and port facilities. Furthermore, they give an edge to Celebrity’s offering in Europe over competing lines.

“We have a lot of repeat guests, so we need new options all the time to keep them coming back to us,” says Block. “However, we also need to offer the traditional, established destinations for our new guests. There are some key ports that we can’t abandon, but we must add ports that our guests may not know a lot about.”

For Block, her Baltic itineraries are further examples of the strategy in action. There are many established destinations, such as St Petersburg, which are essential for routes in the region. Alongside these, however, are visits to places such as Tallinn or Riga, which are much less well known, but which often provide something new for passengers.

Finding new destinations may seem easy, given the many ports are directly approaching the cruise lines to attract new business. However, the apparent wealth of new opportunities places a burden on the processes and procedures used to evaluate and investigate each port.

“Most new ports that have the infrastructure for cruiseships come to us to present their facilities and what the destination has to offer,” says Block. “We talk to local agents and port authorities, and we look at the logistics point of view, as well as the potential for experiences and excursions our guests might enjoy.”

The competition between ports vying for position on itineraries not only provides cruise lines with a broader choice, but also puts pressure on ports to raise the standards of their facilities and services. There are many examples of this to be found in Europe, where the volume of cruise business and the number of ports receiving visits are growing all the time.

For many, the main issue to address has been the quality of port facilities for cruiseships, but significant, long-term investments have been made at many established destinations, including Stockholm, Barcelona and St Petersburg, while emerging destinations have also been willing to invest in new terminals.

“Ports are making a big push to be part of the cruise industry, especially in Europe,” says Block. “Some are willing to invest up front in facilities. The number of ports that are adding new terminals or infrastructure is amazing.”

TIPPING THE BALANCE

Building a terminal, however, is not enough to tilt the scales in favour of a port as it strives to become a cruise destination. Cruise lines must consider many sources of information before making selecting their destinations.

One of the most important sources of data underpinning this choice is the direct feedback from passengers. While relatively few guests fill in free text comments on their cruise-evaluation forms, those who do so provide useful information on the quality of a destination and its port. Analysing this feedback is a key task for Block and her colleagues.

“We review all the comment cards from guests,” she says. “Every piece of text is stored and coded, whether it is positive or negative. We talk to sales departments and travel agents to find out what the trade thinks we should be offering. We are now doing high-level consumer research, which looks at the ranking of ports and the wishes of guests in terms of where they would like to go. This validates our products.”

In deciding which ports to choose, itinerary planners must balance the appeal of the destination against the quality of port facilities and the willingness of port stakeholders to engage in a positive relationship with their cruise customers. Many developing ports rely on the willingness of local businesses to invest in shoreside entertainment facilities and excursions, but often it seems such developments are supported by local communities. This suggests that over time there has been more communication and cooperation between ports and cruise lines.

At one time cruise lines were eager to listen to the needs of ports to satisfy their criteria. Now, it seems, ports are keen to hear what cruise lines want from them to ensure that valuable cruise business comes their way. This shift means that ports also have to become better at managing long-term relationships with cruise operators.

Though Block has to manage more of these relationships, she feels that in many cases they have become closer and more involved, and the level of engagement, communication and trust between ports and cruise lines is increasingly a deciding factor. “We really appreciate when ports are easy to do business with,” says Block. “If they can partner with us, then that makes a difference.”

WIN-WIN RELATIONSHIPS

Such is the importance of reliable, long-term relationships with ports that Celebrity Cruises has in the past withdrawn business from ports that have not placed sufficient emphasis on communication and collaboration. Though such instances are rare, they stand out more in an environment where competition between ports is more intense and there is greater willingness to work closely with cruise lines.

“We like to partner with a port,” says Block. “We often share programmes with small ports that look at the investment that is needed to make a town attractive to cruise guests, which might include walking tours or improved signage. We have many such joint ventures.”

A vital element of a good relationship is clear and consistent scheduling. One port from which Celebrity Cruises withdrew business fell foul of just this issue. After all, a cruise line can’t sell what it can’t deliver. “Some ports do scheduling very well, so why can’t they all?” asks Block. “Some just don’t want to turn business away, so they say ‘yes’, regardless of whether they can fit us in. That is why we need to partner with ports to get better commitment. It is incumbent on us to help them improve.”

For cruise lines planning itineraries two years ahead, being told that a reservation cannot be fulfilled is a catastrophe, given that it will have made sales based on those reservations and, therefore, risks damage to its brand by failing to keep its promise to its passengers. So, for ports, reliability is key, and with so many ports fighting for the same cruise business, it will become a defining factor in whether a port makes it onto an itinerary.

CONGESTION ISSUES

Looking further ahead, the problem of overcrowding at some ports may become more of a problem. Already there are parts of the Caribbean that suffer from congestion, which has led Celebrity to start using the port of Bonaire in the southern Caribbean. As traffic increases, this could become an issue more ports have to address. If it does, there would be even more emphasis placed on careful and considerate scheduling.

If cruise lines and ports continue down the road towards closer collaboration and even partnership, such issues will be central to their discussions. Ultimately, cruise operators will still have to balance the many different elements of value that impact on passenger experience, profitability and business relationships.

The task faced by Block and her fellow itinerary planners is unlikely to get less complex, but the rewards for performing this task well are likely to be ever greater for cruise lines like Celebrity.