While most of the travel industry struggled to stay profitable this year, cruises have never been more popular. Shrewd pricing and quick redeployment moves seem to have increased the appeal: According to the Cruise Lines International Association (CLIA), more than 3.6 million North Americans went on a cruise during the first half of 2002, actually a slight increase over the same period in 2001. And the cruise product continues to evolve to meet the needs of the meeting and incentive market.
For the latest on what to expect in 2003, tips on charters and tax write-offs, and an update on small-ship adventures, read on.
CRUISING CLOSE TO HOME
Ships enjoy one undisputed advantage over hotels: They can move. So if world conditions cause one destination to suddenly fall out of favor, a cruise line can simply move a vessel from that area to a more popular site.
Immediately following the events of September 11, 2001, several cruise operators took advantage of that capability. They found that many Americans wanted to travel closer to home, avoiding airports if possible and shunning certain parts of the world altogether.
The biggest shift — a surprise to no one — was a move from distant waters and back to North America. Alaska, always an appealing cruise destination, looked even better post-9/11. Many ships started sailing out of new or seldom-used domestic ports, often to the Caribbean.
Here's what's in the works for 2003:
Next year, more than 14 ships will make more than 185 departures out of New York, once a busy harbor for passenger ships but in recent decades relatively idle. New York to Bermuda itineraries seem to be picking up in popularity.
More cruise lines are sailing for Alaska from Seattle, a big boon for meeting planners tired of dealing with customs issues in Vancouver, B.C., the usual home port.
Baltimore, Portland, Boston, Charleston, New Orleans, Galveston, Philadelphia, and Tampa are seeing more cruise line traffic.
“[Cruise lines] received such positive response to the use of these ports, which place cruises within driving distance of more residents, that they are increasing the number of departures from those locations,” says Bob Sharak, executive director and vice-president of marketing and business development for CLIA.
BACK TO EUROPE IN 2003
In response to political unrest, about 20 percent of the Mediterranean itineraries for 2002 were shifted elsewhere. Apparently, CNN reports routinely showing maps of the Mediterranean didn't inspire meeting planners to bring incentive cruises to the region.
Sharie Jenson knows that feeling firsthand. Last fall, feeling uneasy about a Mediterranean incentive cruise she had chartered with Silversea, she started asking about alternative ports. Originally, the vice-president of marketing sales promotions for Lincoln Benefit Life in Lincoln, Neb., had planned a weeklong voyage from Athens to Istanbul for the May 2002 meeting, with 350 attendees. After September 11, she had some reservations about the Istanbul portion of the itinerary. Jenson consulted with Silversea and the captain of the chartered vessel, Silver Shadow, and decided to substitute Venice, which meant changing some of the ports along the way. Aside from a few qualifiers disappointed at not visiting Ephesus, overall reaction to the shift was positive.
Interest in European itineraries seems to be surging again. Many of the ships moved from the Mediterranean in 2002 ended up in other European locations, such as the United Kingdom or the Baltic Sea. Some of the ships redeployed away from the Continent for 2002 are returning to Europe. Together, Celebrity and Royal Caribbean will operate five ships in the Mediterranean in 2003. But Celebrity is also hedging its bets by keeping its Century vessel in the Caribbean year-round instead of returning it to the Mediterranean as it did in the past.
Turkey is also showing up on 2003 itineraries, with 16 cruise lines calling at various Turkish ports, including new Crystal and Radisson Seven Seas ships.
CHARTER DO'S AND DON'TS
Chartering a ship is a great way to promote bonding, but it's not right for every group.
First, determine whether your incentive plans mesh well with the demands of a charter. For example, charters entail a set number of cabins, andare ironclad. “If you're planning to have a group of top producers and you know exactly how many people you will be sending, that's the time to think about charter,” says Joyce Landry of Landry and Kling. “If your meeting is based on criteria with a lot of flexibility, and your numbers might sway a lot, it's probably not a good idea.” Charters also don't make sense for a meetings with a large number of singles, since ships are sold by the number of cabins, not people.
The length of a program can influence the decision to charter as well. Cruise lines are reluctant to sign afor anything less than a week, and many corporate planners are looking for only a five-day itinerary. But shorter trips aren't out of the question, Landry says, especially if the cruise operator has a long lead time — sometimes very long. Many cruise ships that operate in the Caribbean, for example, are committed to itineraries two years in advance.
For the best value from a charter, Landry advises finding exactly the right ship for your needs. “There's a vast difference between a mass market ship that's 15 years old and a brand-new, state-of-the-art luxury vessel with all the latest technology,” she points out.
Many corporate planners want to customize an itinerary. If you work with the cruise company, meetings can be timed to coincide with a ship's at-sea schedule, and food, beverage, and entertainment can be customized. “One recent client wanted a lot of dancing, so the organization brought its own band on board,” Landry recalls.
Perhaps the most important requirement for a charter is the ability to commit. Charters require a contract and a letter of credit — anywhere from $30,000 a day to $500,000 a day, depending on the size of the group.
Landry says that many of her firm's clients get hooked the first time they do a charter, and they never want to share a ship again because of the prestige, exclusivity, and camaraderie a customized cruise can provide. “Every person walking around the ship is part of the same group and because of that, everyone seems more approachable,” she says.
It's possible to charter all manner of vessels, from large liners to small-but-luxurious river barges.
However, meeting planners with smaller groups or smaller budgets might consider a partial charter. Depending on the ship, all the group members can be assigned the same type of cabin, and a dining room can be closed to the public throughout the journey.
ADVENTURES AT SEA
If your group is looking for an upscale soft-adventure experience — and 82 percent of the agents surveyed last year by ICP magazine said they were — you might want to consider an adventure at sea. There are many small ships that are nothing like the huge floating resorts aimed at being complete entertainment centers. Rather, these smaller vessels offer experiences outside the ordinary.
Lindblad Expeditions dubs this “expedition travel.” Their most popular destinations for corporate incentive groups have been Alaska, the Arctic, the Galapagos, and Baja, Calif., says executive vice-president Andrew Young. Lindblad has five ships that accommodate from 64 to 110 guests, and all include several “field staff” experts. There's a staff-to-passenger ratio of about one crew/staffperson to two guests. “Expedition travel is about exploring the natural environment: snorkeling, kayaking, swimming, or just getting up-close and personal with nature,” says Young. “Our trips are active and guests are off the boats an average of twice a day.”
Cabins are comfortable, with Egyptian cotton bed linens and nice bathrooms, says Young. But they're also compact, compared to standard luxury liners. In this type of ship, cabins are only for sleeping.
The best match for expedition cruising is the seasoned traveler looking for something different, Young adds. “We've found that incentive groups who have cruised before — but never on a trip like ours — relax very quickly and have a great time. It's a very immersive experience and promotes great opportunities for bonding.”
— Regina Baraban
Even in this time of relative austerity, luxury cruising remains a popular incentive reward. “Companies are still using luxury ships for incentive programs,” says Tanya Barnette, director of charter and incentive sales for Seabourn Cruises. Seabourn's ships are like being in 104-cabin yachts. Every cabin is an outside suite, with amenities such as a fully stocked liquor cabinet. Wine is served with lunch and dinner everyday. And if qualifiers tire of sipping on the fruit of the vine, a fresh fruit basket in every cabin is replenished daily. When guests leave the cabin, the pressures of a day at sea can be relieved with complimentary neck and shoulder massages on deck.
The downtime for Seabourn's business following September 11 wasn't as severe as it could have been, says Barnette. Bookings picked up to their brisk pre-9/11 levels by spring 2002 and remain strong through 2004, she says. “Our charter rate is a better value than a group rate,” Barnette adds, “and the Caribbean is our best price.”
Silversea Cruises is booking more incentive travel business than ever before, thanks to schedule adjustments and shorter sailings, says Jan Loeff, director of incentive sales and charters. He adds that the majority of incentives are charters, and that 60 percent of Silversea's incentive business comes from insurance groups.
The bulk of Silversea's incentive cruises are seven-night Mediterranean, Western European, and Baltic trips. Luxury on board starts with oversized suites that have separate living rooms and marble bathrooms. New ships have separate tubs and showers as well as two wash basins. Eighty percent of the suites have private verandas.
Silversea is the only ocean-going member of Relais & Chateaux-Relais Gourmands. All food is cooked to order. On the line's larger ships, 388 passengers are matched by 300 crew. Smaller ships match up 294 passengers to 200 crew members.
— Bob Andelman
The International Council of Cruise Lines (ICCL) cited tight security — tightened in the past year — as a key reason for cruise lines' quick rebound in 2002.
Since September 2001, the major cruise lines have operated under the highest security measures, Level III. That includes screening of all passenger baggage, carry-ons, ship stores, and cargo; restricted access to sensitive areas; intensified screening of passenger lists and identification; close coordination with the U.S. Immigration and Naturalization Service and other federal agencies to prevent suspicious passengers and crew from departing; and establishing a 100-yard security zone around all ships.
“I think we can allay anyone's concerns about security,” says Andrew Poulton, a spokesman for Fort Lauderdale-based Radisson Seven Seas Cruises. “Things have never been safer.”
More meeting planners are looking at ships as a secure venue. Even before 9/11, the number of information-sensitive corporate meetings aboard cruise ships was on the rise, says Joyce Landry, president and CEO of Landry and Kling, a Miami-based corporate cruise planning company. Landry and Kling has seen the meeting portion of its bookings grow in the past three years from 6 percent to about 16 percent. “Companies feel very secure out at sea that they won't be infiltrated and the information will stay there,” says Landry.
DECIPHERING THE TAX TANGLE
Cruise incentives are taxed differently from cruise meetings.
As with any pure incentive, the recipient of a cruise incentive trip is required to pay taxes on the fair market value of the trip.
“The pure cruise incentive is 100 percent deductible to the awarding company,” says Jonathan Howe, partner in the Chicago-based law firm of Howe & Hutton. “Cruise meetings, which in my experience are still going strong and are a big business, are subject to a variety of limitations before they can be deductible.” Three main stipulations: The trip must be aboard a ship of American registry; it must visit only American ports of call; and the limit is $2,000 per participant.
— Bill Gillette
Surf for Ships on the Web
Setting Sail in 2003
|Costa Mediterranean||2,154||Three-deck, 1,180-seat theater|
|Crystal Serenity||1,080||Butler service on some decks|
|Royal Caribbean Navigator||3,114||Rock climbing, in-line skating|
|Radisson Seven Seas Voyager||700||All balcony, all suite|
|Coral Princess||1,950||Indoor/outdoor spa|
|Island Princess||1,950||Two-story interactive show lounge|
|Norwegian Dawn||2,224||11 different menus every night|
|Carnival Conquest||2,974||Caviar and cigar bars|
|Carnival Glory||2,974||Three-deck, 1,500-seat theater|