Cruise vacationing has emerged as one of the fastest growing components of the leisure industry globally. It is fast emerging as a new marketable commodity even among the middle class in the country who are ready to spend money on leisure. Growing at the rate of 12 per cent per annum globally, this sector has witnessed a consistent growth in India. This is the reason major cruiseliners are looking at tapping the potential of the Indian outbound market.
According to Cruise Lines International Association (CLIA), the global demand for cruising reached 22.04 million passengers in 2014, up 68 per cent from 13.1 million passengers in 2004. Since 2013, demand for cruising grew 3.4 per cent, from 21.3 million passengers. Total contributions of the cruise industry to the global economy reached US$119.9 billion in 2014, up from US$117 billion the previous year. This includes supporting 939,232 full-time equivalent employees earning US$39.3 billion in income. Direct expenditures generated by cruise lines, passengers and crews totaled US$55.8 billion. The study further states that North America accounted for 55 per cent or 12.2 million cruise passengers. Europe accounted for 29 per cent or 6.4 million passengers. Other regions of the world, including Australia, China, Singapore, Japan and South America, accounted for the remaining 16 per cent or 3.5 million passengers. CLIA’s research shows that China is a main driver of passenger growth in Asia, adding 480,000 more cruise travellers since 2012 – a nearly 80 per cent compound annual growth rate. And, among the nearly 1.4 million cruise passengers from Asia, China accounted for nearly half of the regional passenger volume in 2014.
However, this number is quite low for India. Going by industry estimates, the number of Indian outbound cruise passengers stood at around 150,000 in 2015. However, the growth in Indian outbound tourism segment is much higher than the global average growth as the base too low.
Current and emerging scenario:
All players T3 talked to were gung ho about the business in 2015 and expecting to continue the momentum in 2016 as well. “We have had an exceptional 2015 with a revenue increase of about 45 per cent and guest count increase of about 35 per cent. We are adding newer guests to our experiences while our past guests are upgrading as they appreciate the value on offer. 2016 will be challenging with respect to maintaining this momentum, however, we are in line with our projections for next year. To embrace newer markets and allow ourselves to cater to the aspirations of many more Indians, we hope 2016 will be even better for us. There are challenges as we tread the path of doing business based on a new model, enduring the challenges of the marketplace today,” says Ratna Chadha, the Chief Executive of Tirun Travel Marketing, the exclusive India representative for Royal Caribbean Cruises.
Richa Goyal Sikri, Director, STIC Travel Group, which represents Holland America Line Cruises in India, echoes similar view. “The cruise industry has been on a steady growth track. 2015 was a good year and the Bollywood movie “Dil Dhadakne do” helped in further popularising the concept of cruising. In 2015, we enjoyed an 80 per cent growth in our business as compared to 2014. The traveller profile was a mixed bag of high net worth individuals, corporate, and on the group side a lot of family groups from West India,” Sikri informs.
Star Cruises has also come a long way and has grown exponentially over the years. “Cruising sector is moving at a steady pace and attracting more and more Indians to cruise from shorter two nights itinerary to longer seven nights itinerary as well. India, being a huge market for Star Cruises, we have recorded encouraging growth in recent years. There has been a consistent increase with the share of Indian passengers. Guests from middle and upper middleclass segment are frequent travellers experiencing cruising as a new alternative to their travel options,” Naresh Rawal, Vice President – Sales, Star Cruises, said. Costa Cruises India also fared well in 2015. “2015 did fairly well in India. We expect more people to cruise in 2016 on our various sailings from ports located in various parts of the world. The traveller profile is also from different age groups and segments,” says Nalini Gupta, Managing Director, Lotus Destinations, the GSA for Costa Cruises India. Kunal Sampat, General Manager, MSC Cruises India, opines that 2015 was an optimistic year for all cruiseliners from India. “We even experienced multiple cruise liners passing Indian ports and passengers are now looking forward to more cruise holidays. We are hoping that similar trend continues in 2016 as well. We have mostly seen the movement in leisure travellers, MICE, wedding and religious groups,” Sampat adds.
New products/itineraries making a beeline
Encouraged by a good business in 2015, players in the Indian industry are launching many new itineraries and products to cater to the burgeoning Indian outbound cruise travellers. “May being the month of holidays, Tirun Chart sailings for Voyager of the Seas sailing for three and four nights from Singapore in the first week for May 2016. For the first time, Celebrity Cruises did short sailings with four and five night itineraries in February 2016, the same will be followed later in the year in October 2016. Royal Caribbean Internationals, newest Quantum Class ship, Ovation of the Seas will do a couple of sailings from Singapore in the month of June 2016,” Chadha reveals.
MSC Cruises has experienced a lot of demand from the India market for their North Europe sailings covering Scandinavian countries along with the Mediterranean sailings. “We have our new ship, “MSC Meraviglia” joining the fleet in 2017 which will definitely be an attraction for the Indian market,” Sampat says.
In 2016, Holland America Line is introducing a brand new ship, the Koningsdam. “The inaugural sailing will be on April 8, which is a roundtrip Rome for a night night cruise, covering destinations like Naples, Dubrovnik, Corfu. The ship will focus on Europe this season featuring other unique sailings like the April 15 Greek and Turkish Treasures for 12 nights, April 27, Mediterranean Mosaic featuring Barcelona, Cartagena, Seville, Palermo for 12 nights,” Sikri says.
Star Cruises also offers a series of FlyCruise holidays from India, allowing travellers to experience the unique opportunity of visiting exotic destinations by both air and sea, all within a single trip. “Travellers get the best of both worlds, flying-in to their favourite homeport cities, as well as travelling further via a relaxing cruise on the high seas or to new destinations on board our cruise ships, such as SuperStar Virgo ex Guangzhou Nansha ( China) will now be sailing through Hong Kong and passing through beautiful islands of Japan Miyakojima and Naha. While Genting Hong Kong has Star Cruises in its existing cruise portfolio, with extending the core business we have recently launched newly brand Dream Cruises that will cater to the growing premium Asian cruise market and recently acquired Crystal Cruises is the world’s leading luxury cruise provider,” Rawal says.
Although Costa Cruises’ year round Mediterranean sailings are very popular, it is constantly including newer sailing options for their clients. “We continue doing our sailings from Dubai and Singapore but we have started focusing our attention on our Hong Kong sailings as well. We will be shortly announcing our short sailing itineraries from Bangkok in January 2017 for which we are expecting robust demand from the travel trade for their FIT and MICE clients. We are also working on a fly-cruise initiative with Indigo airlines as well,” Gupta informed.
Agents yet to adopt cruises?
Players of the industry are divided in their opinion when asked that despite higher agency commission on offer, majority of travel agents in India are unwilling to sell cruises. “This is true. We find that even when we offer a higher productivity linked bonus to certain agents, everyone is not able to produce the numbers. Reasons could be varied depending on the agency and the particular circumstances. However, in our experience the main reasons are lack of focus, lack understanding and complacency,” Sikri opines. Explaining it further, Sikri says that agents who are successful in selling cruises have either a smaller team focused only on cruises or they have ensured that all their sales and operations staff view cruises as another business line and focus on it. Also, while selling cruises is not as difficult as it seems from outside, it is still a different concept when compared with a land tour. Moreover, there is a very dangerous mindset that exists in our industry of “let’s sell what is easy to sell” or “let the customer decide what he/she wants that way if there is a problem they cannot shout at us”.
Chadha is quite straight in her answer. “Higher commission is not an incentive these days as commission is usually passed as a discount to the client. Without gauging what consumer wants, agents just pass on the product. They should rise above that and should be proactive rather than reactive,” Chadha added.
Nishith Saxena, Founder and Director, Cruise Professionals, opines that it would be incorrect to say that the travel agents are not selling cruises. “Yes, the number of proactive agents selling cruises is far lesser than number of agents with react to clients cruise queries but that cannot be translated as agencies unwillingness to sell cruises. Most agencies are aware that commission is a derivative of sale and higher sales would eventually yield higher and consistent commissions which add to their bottom line,” Saxena adds. Sampat exactly echoes the same opinion when he says that it would be incorrect to say that travel agents in India are not selling cruise products. “Number of agents selling cruise products have been on a consistent rise and with more and more awareness this number will increase in the future,” Sampat believes.
Gupta is also seeing a growing interest in cruising among agents. “In fact, agents have even started including a cruise in their GIT series programmes. While the commission is an important factor for the agents, most clients find the seamless, efficient operation of the cruise experience the most appealing. From our side, we use multiple platforms such as trainings, ship visits, joint training and promotions through airlines etc. to keep spreading the awareness of cruising as an experience in itself,” she opines.
Importance of B2B V/s B2C
“The B2B segment is very important for us. The ratio of B2B Vs B2C is different depending on the region. In North India, it would be 60 per cent B2B, in West it is 90 per cent, and in South and East again similar to North India. We don’t see ourselves moving from B2B to B2C in the near or distant future,” Sikri reveals.
For Tirun Travel Marketing, B2B is a very important segment. “India is still an immature market when it comes to cruising. Intermediaries like agents are still needed for communication especially in Tier II & III cities. Yes, we would like to reach B2C definitely but India is a diversified market so it is difficult,” Chadha says.
Costa Cruises India, however, feels that both the segments play an equally important role. “With technology playing such an important medium through which travellers can now plan their vacations/holidays on their own, we get several calls from direct customers who need further clarifications. At the same time, there are lot many travellers who still prefer the agents to plan the whole itinerary for them to enjoy a hassle free holiday experience,” Gupta says.
Sampat opines that India is a B2B market for cruise liners, considering we do not have any scheduled ships starting from India and there are external factors like air ticket, visa, insurance, land packages, etc. involved for Indian passengers taking a cruise holiday. “Growth of MSC Cruises in India has only been due to continuous support provided to us by the trade partners,” says Sampat.
Cruise Professionals gets 100 per cent business through B2B segment. “In lot of cases, we need to push the consumer to route their bookings through a travel agent. We need to recognise that a passenger today has access to a lot of information and options and he needs to be in control of his vacation plans. If he does not get the comfort through the travel agent, he would try and make direct bookings, even without any discounts. It seems that the marketing efforts of various cruise lines are directed towards consumers since they are calling the shots when it comes to their cruise or land vacations. This is also another way of increasing the market size,” Saxena says.
Competition always welcome
According to Sampat, India is an emerging market for the cruise industry and there is enough potential for everyone. “Our strategy has always been to focus on our service standards and empower trade partners to promote cruise holidays in India,” says Sampat.
Rawal opines that Star Cruises understands the mind set of Asian cruise passengers. “The competition will always be there and we are happy that the segment is growing. For this year’s strategy, we are concentrating on our sales across India and today we can proudly state that with the help and unconditional support of our travel partners, we have managed to penetrate the smallest of the cities,” Rawal claims.
Gupta claims that Costa Cruises is quiet competitive in terms of rate with other cruise liners. “All the cruise liners currently present in India are doing their bit to grow the cruising segment in India. Everyone is aware of the huge market in front of us which offers all of us sufficient space to grow well year on year,” she says.
Sikri believes that while competition has increased, the market size has also grown. “It is challenging as we have to spend more energy in educating the target segment about the unique selling points about Holland America Line, Seabourn and Windstar Cruises but I feel each brand has over the years developed their own niche that they are focused on,” Sikri says.
For Royal Caribbean, it is not a competition, in fact more players is better for the market. “Moreover each brand gives its own experience. We complement each other. Our strategy is to be brand specific. To sell appropriate experience to the right TG, if you do it the other way brand image will be tarnished,” Chadha opines.
