Travel Industry

Richard Fain, chairman and CEO, Royal Caribbean Cruises Ltd. officially takes ownership of Oasis of the Seas .

The hype has been enormous — seminars touting the retractable roofs, interior balconies, ziplining, aqua theater, an elevator bar and a promenade that features real grass the employees have to mow. Heck, they’ve even signed Rihanna to provide entertainment in December. But despite the webinars, CLIA classes, brochures and emails telling the travel industry between the lines that Royal Caribbean’s Oasis of the Seas will invigorate profits, it’s now looking like … well, hype.

Even the world’s largest ship can’t overcome the plummet in discretionary income to persuade folks to book sooner than a few weeks out in this fourth quarter. Travel agents are telling Cruise Week that at the end of October, there’s still plenty of vacancy on Oasis for Christmas and New Years sailings, even though the $1.5 billion vessel is the most talked about new cruise ship to come along in years, the publication points out. This includes everything from the inside Category Q spaces to balcony categories, although the suites at the top of the pricing chain are sold out.

It’s the same story for the first quarter of 2010, too: suites sell, while agents paddle to get vacationers to commit to the rest of the ship. That 40 percent additional space to entertain as many as 6,360 passengers per sailing may turn into 40 percent more booking headaches as the recession continues.

And since Oasis also carries another accolade — world’s most expensive cruise ship — slow bookings can’t be too welcome within the accounting department at Royal Caribbean, particularly with sister ship Allure of the Seas hot on its heels in the shipyards.  Oasis is scheduled from December 2009 to April 2010 to offer 7-night trips from Ft. Lauderdale to St. Thomas, St. Maarten and the Bahamas. Beginning in May, the itinerary changes to Haiti, Jamaica and Mexico out of Port Everglades, one of the few large enough at the moment to allow Oasis to dock.

“It’s in the DNA of our company, about every 10 years, to take more or less a fresh sheet of paper and create the greatest cruise ship in the world,” CEO Adam Goldstein has said. He’d better hope he also reinvents American travel habits in the next 12 days as well.

Photography: Royal Caribbean Cruises Ltd.

On Oct 21, 2009, the Clean Cruise Ship Act of 2009 (S. 1820) – which would ban the release of raw, untreated sewage in U.S. waters, including the Great Lakes – was introduced in the US Senate by Senator Dick Durbin (D-IL). Nearly identical legislation was introduced in the House by Representative Sam Farr (D-CA).

Cruise Ship

Currently, cruise ships are allowed to discharge waste three nautical miles from shore. The Clean Cruise Ship Act would establish a no-dumping zone in waters within 12 nautical miles of U.S. shores and strengthen standards for treatment of waste outside of this zone.  The bill would also establish an onboard monitoring program to ensure that ships comply with the law.

Three good reasons for the cruise industry to wake up and smell the waste -

A) Sen. Durbin is the Assistant Senate Majority Leader – effectively the no. 2 in the Senate, and he represents Illinois and has excellent relations with President Obama.

B) Rep. Sam Farr is co-chair of the Congressional Travel and Tourism Caucus – which basically means the guy who’s supposed to be protecting your interests is pulling the rug out from under you.

C) The issue is too big to be left alone - the U.S. is close to hitting ten million annual cruise passengers. The average cruise ship produces over 1.2 million gallons of wastewater every week, and there are more than 230 cruise ships operating around the world, generating millions of gallons of wastewater daily.

A single ship can produce over 200,000 gallons of human sewage; one million gallons of graywater from kitchens, laundry and showers; more than 10,000 gallons of sewage sludge; more than 130 gallons of hazardous waste and over 25,000 gallons of oily bilge water that collects in ship bottoms.

Sen. Durbin had put up the same bill in 2008, but the Senate apparently had better things to do at that time. While introducing the bill, he explained why he feels strongly about this - ” Under the current system, these ships can directly dump their waste into our oceans and the Great Lakes with minimal oversight.  Vacation cruises can be a wonderful way to see the world, but we cannot afford to leave the destruction of the oceans in the wake of these ships.”

Sen. Durbin’s legislation is supported by environmental groups including Friends of the Earth; Earthjustice; Oceana; Surfrider; Campaign to Safeguard America’s Waters; and Northwest Environmental Advocates.

Neesha Kulkarni, Legislative Associate at Friends of the Earth, added that “Advanced technology is available to treat this waste, but the cruise industry has failed to install this equipment on a majority of its ships.”

And Rep. Farr chimed in with his own recriminations – “Big cruise ships make for big pollution; it’s an unavoidable truth. Unfortunately, responsible disposal of that waste hasn’t always been a given. The cruise ship industry is way overdue to take responsibility for its actions.”

The US House has also approved legislation requiring cruise lines to improve their passenger safety record, with new and stringent requirements related to crime prevention and reporting. This bill (HR 3619) is also now heading for the Senate for approval.

In short, it’s time for the cruise industry to clean up it’s act, or Congress is quite willing – and likely, to do it for them.

Photo by ccgd

Wi-fi around the world

It should serve as the death knell for Internet connection charges in upscale hotels.

The pressure started with budget hotels tossing in free wi-fi connections along with their breakfast buffets. Then restaurants followed until the sign “free wi-fi here” became a staple of McDonald’s, Panera Bread and even little mom-and-pops like Aviano’s pizza.

Now it seems airlines might be the next hospitality arena to offer Internet without a $10.95 24-hour charge.

JiWire and Row 44 are reportedly in talks with Southwest and Alaska Airlines to deliver wi-fi network paid all or in large part  by advertising instead of log-on fees. The specifics are sketchy — some speculate users will have to stroll through a virtual mall to reach the Wild, Wild Net, a modern twist on the SkyMall catalogue.

The idea would certainly appeal to a business audience that has pulled its dollars from the travel industry in this recession. In fact, surveys by the Wi-Fi Alliance show that 76 percent of business travelers would pick an airline based on wireless access, and more than 70 percent would choose wi-fi over a meal service.

And it should go a long way toward converting the Internet from a service to a standard throughout the entire industry, similar to a televsion set. Hotels need to watch this experiment quickly … and it wouldn’t hurt the cruise lines to eavesdrop, too.

Photography courtesy mujitra (Flickr)

Last month, I sat through a training session with Walt Disney where the rep assured travel agents that the Mouse’s empire is NOT a discounter, doesn’t want to gain a reputation as a discounter, and therefore and the special price cuts we’ve seen this year would not continue in the future.

Disney magic

Approximately a week later, I received notice of slashed hotel prices at Walt Disney World this October. 

They followed this with news the cruise line would offer an Alaska itinerary in 2010, which is in line with the upscale image.

Now today, Disney has announced it will scale back the Adventures by Disney guided tour program next year, saying good-bye to Spain, Austria and the Czech Republic altogether. Apparently, selling $6,500 per person safaris eluded even the magical world of Disney these days. Here in 2009, the division offered 429trips to 17 countries. Next year, that will be reduced to 272 trips, or a 40 percent drop.

The scary part? According to the Orlando Sentinel, Disney says ventures such as Adventures By Disney is a great feeder business for the all-mighty parks dollars because it introduces the brands to consumers in new markets. Adventures’ tours require little capital investment — Disney contracts out for services during its tours, rather than building its own infrastructure — so it generates relatively high returns.

If that the case, then just what is the financial sense behind buying 2 4,000-passenger ships and hotel resorts in Washington D.C. and Hawaii? Not to mention investments in upgrading Castaway Cay and its Port Canaveral terminal.

Adventures says it will add more trips if the demand materializes. If the theme parks are any barometer, they might need to rethink that  price cut philosophy across the board to fill the capacity they have.

Photographer: Julie Sturgeon

Mariner of the Seas

Will the Tupperware model work for the travel industry?

Royal Caribbean tried this marketing strategy in late summer to see if it would float. Using House Party, a consumer activation and experiential marketing company, and teaming up with Cruise Planners/American Express, the line introduced more than 14,000 consumers to a cruising experience in 1,000 homes across the country.

Most women are very familiar with the format: You invite friends into your home to attend a fun, authentic theme party — all about Royal Caribbean cruising in this case, as opposed to food prep tools, make-up, sex toys, baskets or candles. Cruise planners were on hand to answer questions, and the hosts are tracking results at microsites. These online communities also allow hosts and attendees to upload photos and talk about their experiences, thus extending the good times (and brand strength) via social media.

I’m betting the exclusive gifts and discounts on sailings Royal Caribbean offered attendees didn’t hurt, either. Nor does the fact participants earn drawing entries for every photo they post.

“We wanted and found consumers who were willing to share their enthusiasm and love of cruising with their friends and family,” said Michelle Fee, CEO and co-founder of Cruise Planners/American Express. “The hosts and guests shared their passion for travel and learned more about all the fun and activities that Cruise Planners and Royal Caribbean International have to offer.”

Can cruises imitate Tupperware?

On the other hand, apparently no one is tracking whether this ploy could double back to bite RCCL. Home parties may work on the bottom line, but the grumbling folks do behind the hostess’ back at having to attend yet another  party and shell out money on stuff they don’t need out of pressure to help a friend is real. The pressure is getting greater: In 2006, NPD Group polled 40,000 women and  found 7% had attended a home product party within the past eight months. That compares to 3% in a survey done eight months prior.

Nor is Royal Caribbean the first with this idea by a long shot. Among the companies that have dabbled in home sales: Jockey, Aerosoles, and even AT&T. House Parties in the past has turned  your neighbors’ backyard Fourth of July barbecues, Halloween parties and New Year’s Eve celebrations into sales pitches for everything from CDs, DVDs, TV shows and video releases.

At what point will the average American balk at turning friendships into commercial opportunities for sale? Luckily for Royal Caribbean, which has not released hard numbers from its August 8 experiment, the answer is not now.

Photography: Svensonsan (Flickr) prayitno (Flickr)

Alaskan cruise scenery

Carnival Cruise Lines’ CEO Micky Arison says earlier word that the company planned to file litigation relatively soon against Alaska’s $50 per passenger head tax was a misunderstanding.

That turns out to be especially unfortunate for our 49th state, because Arison amended his press conference comments on Tuesday to say that the cruise industry will challenge the tax. In other words, Alaskans have an even bigger fight on their hands to keep this particular revenue stream.

Sure, cruise lines have griped about this tax, approved by citizen referendum in 2006, all along. Arison is on record calling it “unconstitutional and, in fact, effectively illegal” in March. It goes hand in hand with his appearances at Alaskan legislative sessions pleading his case.

So far, the cruise industry has been limited to using capitalism to fight back: Carnival Corp., Royal Caribbean Cruises Ltd. and NCL Corp. have said they can’t absorb the dwindling profit margins from floating in this part of the world, and announced they’re pulling capacity here for 2010. All of them blamed this head tax.

But when the U.S. Supreme Court put the lid on Valdez, Alaska’s tax on large cargo ships back on June 15, citing the Constitution’s “tonnage clause,” the 7-2 ruling opened the door for legal fights on the tourist tax as well. Lobbyist John Binkley with the Alaska Cruise Association wouldn’t be surprised if the challenge ends up being passengers in a class action suit, either. Joe Geldhof, the lawyer who cowrote this tax legislation, told local newspapers he thinks the issue is apples and oranges: the Supreme Court struck down the idea of taxing physical ships, not people.

In 2008, the state coffers collected $46.8 million from the passenger head tax. There’s no estimate on the hit the tourism industry could see from a decrease in ships calling at their ports.

Meanwhile, other prevailing voices inside the travel industry say the entire issue is a smoke and mirrors deflection. The real problem, they contend, is that we simply put too many cabins in that market to start with, creating a supply glut that drives prices — and thus profits — down.

Whatever the answer, average Joes who thought they could never afford to see Alaska are getting that chance this summer, with prices discounted by as much as 80 percent. Certainly I’m the last person on earth to deny companies their need to make a buck, but let’s hope the outcome in this situation allows more Americans the economic means to view this state.

Photography: Noel Zia Lee

That’s not a rhetorical question. ‘Why Not?’ is the name of Royal Caribbean President & CEO Adam Goldstein’s new blog (www.nationofwhynot.com/blog/). He’s still getting his feet wet as a blogger, but Goldstein seems to be cruising in the right direction, so to speak.

Adam Goldstein, President & CEO, Royal Caribbean International

In his opening post, he notes that he’s not certain the world needs another blog, but adds that he gets that there is enormous interest in Royal Caribbean International, and if his blog can give useful insight into  Royal Caribbean’s world, then it should be of value over time.

He says he plans to use the blog as a forum to provide answers to questions on topics ranging from the Nation of Why Not campaign, latest news and updates on their ships Oasis of the Seas and Allure of the Seas, itinerary planning, Crown & Anchor loyalty program, and also provide updates on relevant current issues like swine flu (H1N1).

He also participated in an ‘Ask Adam’ afternoon, in which he was bombarded with over 300 questions, which dealt with everything from the economy to the size of Royal Caribbean’s ships (the Oasis class is 220,000 tons) and the impact of these large ships on the environment.

Goldstein also manages not to turn the blog into a corporate press release outlet, by adding a bit of a personal touch. He mentions that he was part of Royal Caribbean’s team which participated in the Mercedes-Benz Miami Corporate Run 5K, and he says that he wrote his first blog post as a diversion, while waiting for the Run to start. Goldstein won the race, as part of his company’s Coed team.

In more ways than one, Adam Goldstein is off to a running start with his blog. So why not check out his blog?

About Adam Goldstein (bio, Forbes profile): Adam Goldstein has been President of Royal Caribbean International since Feb 2005, and took on the role of CEO since Sept 2007. He oversees fleet operations, sales and marketing, brand development, supply chain management, government & community relations and Royal Celebrity Tours. Prior to his appointment, Goldstein served as Royal Caribbean’s Executive Vice President, Brand Operations, with similar responsibilities, from 2002 – 2005. Goldstein has been with the company since 1988.

Goldstein also serves on the Board of Directors of the U.S. Travel Association (USTA, formerly TIA – Travel Industry Association), and was TIA’s National Chair in 2001. Goldstein and his wife, Cheryl, have two children, David and Julie, and live in Miami-Dade County, Fla.