Demand for cruise travel is soaring. But that doesn’t mean people are willing to board at any price. Value for money is still extremely important. Amidst rising costs, how can we deliver the value customers seek while safeguarding the industry? By expanding reward programs and the definition of value.
Cruise travel is back in a big way. In April, both Carnival Cruise Line and Royal Caribbean reported record-breaking booking volumes between March 26 and April 3 — around the same time the U.S. Centers for Disease Control and Prevention (CDC) eliminated the pandemic-related travel warnings that have been in place since March 2020.
Though this recent jump can partly be attributed to expiring future cruise credits, passengers are more than ready to sail. Per one commenter on the Royal Caribbean blog:
“We sailed the 04/03 Oasis 4 night. Only because our FCC expired 04/30 [sic]. But the excitement was there, and many people booked another cruise while onboard. We are planning 2 more this year ourselves.”
Arrivia’s recent research confirms this sentiment. In a consumer travel survey conducted between the end of 2021 and the beginning of this year, 80% of respondents said they were planning a cruise or considering booking one in the next two years. These findings dovetail with the Cruise Lines International Association projections, which anticipate a full recovery by 2023.
As eager as they are to travel, consumers aren’t willing to cruise at any cost. According to our survey, Ready to Board, value is the primary driver of a consumer’s decision to book a cruise or not: 25% of respondents said they did not book a cruise in the 12 months before the survey period because of price, despite COVID protocols. But at a time of unprecedented inflation, keeping cruise prices down will be near impossible. Cruise lines have already started raising rates. In April 2022, both Carnival and Norwegian announced hikes for onboard services, including Wi-Fi, specialty dining and beverage packages. They also upped the recommended gratuity by 50 cents per guest.
Across-the-board hikes will be a tough sell, says David Katz, an investment banking firm Jefferies Group analyst. “…the cruise customer is inherently a value purchaser, and as a result, it is incrementally more difficult for the likes of Carnival to push price up in this environment,” he recently told the Financial Times. So, how can we, as travel rewards providers, continue to deliver value to our customers in this context while safeguarding the bottom line and supporting the cruise industry? By expanding reward programs and the definition of value.
More options equal better value.
According to our cruise travel survey, 18% of respondents plan to use points to pay for their cruise wholly or partially. It’s clear that the demand for this type of redemption exists, and yet, many rewards programs fail to include it in their redemption process, choosing instead to focus on the big three: air, hotel and car rental.
By expanding their current rewards or travel options to include cruise, consumer-facing companies, membership-based groups and loyalty programs can all capitalize on the soaring demand in this segment. Consumers will appreciate using their points to offset the cost of their cruise and benefit from members-only pricing and members-only experiences, which are hallmarks of successful rewards programs.
But consumers don’t only assign value based on price. Many of the arrivia consumer cruise survey respondents said they were interested in luxury cruises. While there are savings in that category, it’s not traditionally defined by rock-bottom rates. But consumers do want value for their money, or in other words, experiences commensurate with their spending. That can take many forms, from exceptional customer service and upgrades to time-saving workflows.
Imagine a rewards member that wants to book a cruise. They log on to their rewards platform only to discover that this option isn’t available. They feel frustrated and head to an online travel agency (OTA), where they can book their entire trip in two or three clicks. To provide actual value, travel rewards programs must become one-stop shops. That will allow them to deliver unparalleled pricing, convenience, and a better customer experience.
Even as prices rise, member-based programs have a distinct advantage over public platforms like OTAs: they can negotiate exclusive pricing, meaning that while cruise travel (and travel in general) might become more expensive, customers will still get more bang for their buck if they opt to book through their loyalty provider, whether they choose to pay in cash or points. That’s a powerful selling point and a recognizable value proposition for loyalty marketers looking to attract new members and incentivize customer engagement.
Adding more travel options like cruise to your rewards program also provides a strategic advantage. For instance, say a customer starts looking at flights through your platform. You might assume the customer has a family, so you send offers to a theme park even though the customer is more interested in a romantic cruise. You’re delivering a poor customer experience with little value by sending irrelevant offers. On the flip side, the more options your customers can access through your platform, the better picture they will have of their future wants and needs, allowing you to create targeted offers that are far more likely to result in a conversion.
Value and the importance of memory-making
There are so many reasons why we might book a vacation. We might do it to disconnect from our everyday lives, to discover something new somewhere new. We might see it as a way to spend quality time with loved ones or to spend quality time alone. Ultimately, a vacation is about the time, place, and memories you create. That, in and of itself, has a lot of value.
For many, the pandemic shone a light on the importance of travel to our overall well-being. Despite the simmering threat of a new COVID wave and the geopolitical and supply chain issues that are driving up costs, we’re seeing soaring demand for cruise and other leisure travel. But that demand isn’t immune to these factors. To ensure that this wave doesn’t fizzle out prematurely, we need to double down on what’s truly important to customers and give them the value they genuinely want, even if that entails re-defining what the word means in a world that’s not done changing.
Jeff Zotara is the Chief Marketing Officer of arrivia, a travel technology company that provides travel loyalty, booking and marketing solutions to consumer-facing companies that want to deliver exceptional value to their customers, uncover new revenue streams, and drive growth through exciting travel rewards and member benefits. With over two decades as a strategic and operational marketing leader, Jeff is focused on driving growth and marketing technology across brands and providing the best member experience at the intersection of travel and tech.
