In 2006, passengers on the big three cruise lines — Carnival Cruise Lines, Royal Caribbean International and Norwegian Cruise Line — spent $4.4 billion for onboard extras like premium wines, gourmet dining, enrichment classes and spa treatments. That's approximately $43 per passenger a day. Clearly, onboard spending has become a big profit center for cruise lines, and it got a lot of attention from the industry insiders who met to discuss the future of cruising at the annual Seatrade Cruise Shipping Convention in Miami in March.
Here are some highlights from the discussions.
"Less-inclusive" cruising
People still think of cruising as an "all-inclusive" vacation. Certainly, that is no longer true. Sure, meals, accommodations and entertainment are included in the cruise fare, but you'll have to pay extra for things like soft drinks, bottled water and alcoholic beverages — not to mention "special-venue dining," spa and salon treatments, shore excursions and tips.
Lisa Lutoff-Perlo, vice president of onboard revenue and entertainment for Celebrity Cruises, recognizes the misconception and tried to set people straight. "We are not all-inclusive unless we specifically say we are," she told the audience. "We do include a lot and cruising is a tremendous value. But when people go on vacation, they want to spend money."
Well, I don't know about that last statement, but Lutoff-Perlo is right when she says that shipboard offerings must continue to evolve to stay competitive with options available at shoreside hotels and resorts. In her view, this means that cruise ships will soon be offering more "lifestyle-oriented" activities like educational food-and-wine seminars — which, not coincidentally, would encourage wine sales at dinner. She also sees shipboard offerings becoming more differentiated by cruise-line brand, as we are already seeing with cruise lines hiring celebrity chefs on exclusive contract to come up with unique gastronomic events.
Mining passenger data
With the advent of larger and larger ships carrying more and more passengers, cruise lines are looking for ways to maximize shipboard sales efficiently. Tony Heuer, president of Fidelio Cruise Software, reported that his company now offers a data-mining program that can scan a ship's inventory databases by key revenue sectors (e.g., shore excursions, spa services and retail shops) to detect unsold items, and then send promotions to passengers via the ship's stateroom televisions. For example, the software could detect a passenger who often orders cognac in the ship's bars but hasn't bought a bottle of cognac in the duty-free shop; that passenger could then be targeted with a promotion.
Smart cards and Botox
Discussing the future of onboard gambling, independent cruise industry consultant David Stanley foresaw more cashless slots using smart cards for both play and winnings. He also predicted that new technologies would benefit older revenue centers like photography by enabling after-cruise Web sales. As for spa services — a big moneymaker for cruise lines in the last few years, when many cruise lines added tooth bleaching and acupuncture to their list of spa services — Stanley had some other predictions. Think "dermabrasion," he said. And "Botox."
Botox? That raised some eyebrows (or maybe not). Is Botox-at-sea a good idea?
I spoke with Pittsburgh plastic surgeon and anti-aging expert Dr. James J. Barber, the author of "The Forever Factor." Barber, who has worked with Botox since it was first approved by the Food and Drug Administration, acknowledged that there has been a lot of abuse of the product by unscrupulous doctors who dilute the drug with more saline than is recommended. Nevertheless, Barber feels that Botox can be safely offered on cruise ships so long as it is administered by an experienced, board-certified plastic surgeon or dermatologist, in a sterile environment and at recommended doses.
In fact, Barber thinks cruise lines could be very successful with "Botox cruises" if they were organized specifically for individuals looking for products, services and advice on living a healthy lifestyle. Such cruises could attract top-notch doctors with whom the passengers would feel comfortable, and they could create an effective learning environment. "Teaching and evaluating individuals before getting Botox on how to make healthy lifestyle changes that really matter — that's what's most important," Barber said.
It's clear the face of cruising is about to change. Keep your eyes open.
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