I just read an article this morning from Travel Trade Magazine that states that the major cruise lines are forecasting a huge year in 2012 – “a 5.6% increase from this year’s headcount…” to quote the article. That’s great for them and I’m happy to see that people are getting out and traveling. What’s not great, is that this $15.5 billion is only going to the major cruise lines while small local independent boat operators continue to struggle. I hope I’m wrong in my observations, but at a meeting last week, one of my colleagues hinted that she knew of three local independently owned boats were contemplating getting out of the business because there just were not enough people signing up for their cruises. So why are small independents (operators that carry fewer than 20 passengers,) or boutique cruise lines as I’ve heard us described, having such a hard time, while the giants continue to have great years?
I credit the difficulty that a lot of independents have to three main problems:
1- Public is Unaware of Independent Options
2- Cost of Advertising
3- Perceived Cost of Cruises
1 – Public is Unaware of Independent Options
The biggest reason I see that people don’t sign up for small independently owned cruises is that most potential passengers, even people who seek out unique travel opportunities, don’t know that the independents exist. Most tour operators that I know, including ourselves have a limited marketing department. For my company, besides being the marketing, sales and PR departments, I’m also the boat’s chef, naturalist, deckhand, and co-engineer. Since a small operation is limited in time and money to spend on marketing, potential passengers either accidentally find us, or have to be in “the know” that our kind of cruise is available.
Cost of Advertising
The cost of advertising and the ability to get wide-spread PR is very expensive. Even Google’s AdWords has become much more expensive from the five cent clicks we enjoyed in 2005. Some of the larger independents have deeper pockets and have the ability to connect better than others. That’s natural, but the small independents still must rely on word-of-mouth, inexpensive social networks, and local media. Unlike Princess, Carnival or Holland America, independent cruise operators cannot simply spray-and-pray the public with huge ads in every magazine, newspaper and website. The independent has to seek out passengers in unique places.
I feel lucky that we are running our business in an age where we have access to Facebook, Twitter, LinkedIn and other social networks to spread the word about our cruises in Alaska, the Inside Passage and San Juan Islands. Because of these social networking outlets, we’ve been able to deepen our friendships with our past, present, and future passengers. Compared to the millions of dollars that the large companies can use to persuade us from every imaginable angle, the independent operator’s reach is shrinking with the the sustained economic downturn. The fewer passengers who choose independently owned tour operators, the fewer advertising dollars they have, which leads to fewer choices for the public when it comes to having a unique travel experience.
Perceived Cost is Too High
“Your cruises are so expensive,” is something that I hear regularly. I think the problem with the perception that independents have with pricing is one of value. From the prospective of the passenger it’s hard to image the cash value of solitude, small groups, and being cared for in the wilderness. The initial sticker shock comes from the fact that the cost of providing private and semi-private cruises is not split up between thousands of people, but instead, small groups. The independent operators I’m talking about in this blog have boats with fewer than 20 passengers at a time. Many of the boats in this class are unique and are often historic. A prospective passenger that has been inundated with major cruise line specials and deals has been trained to believe that a cruise should be a cheap vacation. Many of these same people see the beauty in traveling on a historic boat, but that realization does not often translate into an understanding of the independent cruise operators pricing schedule.
It’s the job of independent cruise operators to educate their prospective clients as to why anyone would want to come on their boats. My common response to the notion that we are too expensive, is to acknowledge that we are expensive. (a 7-day cruise in Alaska on the M/V David B is $4200 per person), but there are reasons for the expense and I carefully guide my passengers through all the benefits that they receive. Once they understand that our pricing is honest and based on the actual cost of providing their adventure, they are more inclined to come with us. They can see that our price isn’t set to gouge them and we aren’t “making a killing” off them. Our passengers realize that the cruise they are going on is something that is unique and special and well worth the cost.
Looking to 2012
I’m not in the business to be able to forecast what 2012 will look like for small independents, but my feeling is that it will be a little better than 2011. My hope is that some of the hundreds of thousands of people who are forecast to cruise with the major cruise lines will stumble upon the small ships and decide that small ship is just what they are looking for.
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