While the inbound cruise business still seems to be a distant dream, it is the outbound cruise business that remains one of the most interesting and fast paced leisure travel businesses in the wide spectrum of offerings. Players in the industry believe that there is much room for growth considering its huge potential that is virtually untapped. Statistics suggest that, while the global cruise industry is set to see a 4 per cent growth this year with around 23 million travellers taking a cruise holiday, the industry in India is optimistic about notching a double–digit growth in 2015. They opine that the cruise business can emerge as one of the fastest growing segments if the industry starts cruising along.
However, players in the industry still don’t know the real growth trends and the changing profiles of travellers as the industry lacks the wherewithal to capture and calculate these numbers. T3 spoke to select noted cruise operators to gauge the potential of cruise tourism.
Authenticity and Trends
According to various guestimates, India records 120,000 cruise travellers annually. However, players are not sure about the authenticity of this figure and differed in their opinion. “The number of outbound cruise travellers from India is a little above 100,000,” said Nalini Gupta, Managing Director, Lotus Destinations, the GSA for Costa Cruises India.
Ian Banerjee, Director, Global Anchor Cruises, Representative – Oceania Cruises, also feels that the number could be more than 120,000 as many high profile clients who are cruise travellers are dual citizens between India and other countries such as the US & UK. He explained that many big ticket sales get closed in these markets and resident citizens in India have been regularly booking overseas via specialised, experienced cruise agents.
Richa Goyal Sikri, Director, STIC Travel Group, which represents Holland America Line Cruises in India, said that the number is in the 120,000 – 150,000 range.
Naresh Rawal, VP, Sales, Star Cruises; Nishith Saxena, Director, Cruise Professionals and Kunal Sampat, General Manager, MSC Cruises in India, however, think otherwise. Rawal opines that there is no concrete or audited data available regarding the numbers on the total cruise market. Sampat said that in absence of an automated tool to measure the exact Indian market size, it is estimated that the current total potential of cruise market from India is close to 1.2 lakh passengers per year.
“Since there is no formal organisation or forum of cruise line representatives in India, the authenticity of passenger sales numbers could always be challenged as different cruise lines peg their productivity on different parameters,” Saxena said and added revenue is more important for them than numbers. Comparing a cruise liner that could accommodate 20,000 pax on a two-night sailing to one with 4,000 pax doing average of 12 night sailings is unfair, he said.
Role of industry associations
The moot question is why the numbers are so low despite the presence of several travel agents’ associations. Here also, players differ in their opinions. Sikri candidly admitted that the industry is now looking at the cruise business more seriously, although this is still at the individual organisation stage and the associations have not yet done anything in a big way. But she is optimistic that travel agents and tour operators can play an extremely important role in future development of this business segment.
“We could count a handful of initiatives by various travel agents associations in the last decades which could be attributed to serious built-up of cruise business or demonstration of the intent of promoting cruises,” Saxena added.
Gupta opined that the growth we currently see in the cruising numbers largely comes from the satisfied customers by word of mouth recommendation. “We are in the middle of the road and we need to continue our efforts to make cruising a strong holiday option in the minds of both the consumers and sellers. When travel agents see a strong demand in the market, they too will take the required steps to get equipped to sell cruises to their clients,” she said.
Sampat, however, feels differently. “Cruise industry growth in India has been due to strong backing from travel agents/ tour operators and active support of our trade associations such as TAAI, TAFI, OTOAI, etc..,” he said.
For Star Cruises, the travel trade is the only source of booking and is an extended sales arm for the company. “We work very closely with all these associations and are more than happy to support them in all their ventures and initiatives. We thank each and every member of the travel trade for their continued and unconditional support towards us,” Rawal said.
Banerjee believes that these industry associations are very essential for the growth of the cruise industry as a whole and supporting the industry indirectly. “In the past couple of years, almost all the trade fairs that the associations support have had cruise lines in their exhibition and they do provide conference / seminar options during that time,” he opined.
However, they are of the opinion that the associations need to be more proactive. In the lack of active support, individual players run various other promotional programmes to educate themselves about the product.
B2B v/s B2C
Replying to a question over agent’s reluctance towards selling cruises despite high commissions, players expressed varied views. While B2B is still a strong channel for some, others consider the significance of B2B waning due to the growth and emergence of B2C. The B2B segment is still the strength of the cruise industry in India and a switch over to B2C channels still seem to be a long way ahead, Sampat said. According to Gupta, Costa Cruises India gets queries from travel agents and direct consumers. “Very often direct clients connect with us as they have several questions and need detailed explanations,” she said.
Costa Cruises India is also seeing MICE queries for large Incentive movements on their sailings, especially from ports such as Singapore and Dubai due to close proximity to India and short itineraries. “These queries come from travel agents and also directly from corporate,” she said, adding that once travel agents start focusing on the cruising segment, it will automatically attract more queries from the B2B channel and B2C channels. “For us, presently, both the channels are a very strong distribution mode for our business,” she added.
Sikri, however, feels that it is challenging to make travel agencies who currently don’t sell cruises to start. “They are not sure “how to sell” this new holiday concept. This is where companies like ours are focussing our energies on training travel agents to empower them to sell cruises more effectively,” she said.
Rawal says that his distribution channel is the travel agents and they have supported Star Cruises extensively to make the brand presence stronger in every part of the country. “Cruise companies are one of the highest commission payers. We urge all the members of the travel trade who until now have not been promoting cruising heavily to give it a serious thought and explore such a lucrative business opportunity to further expand and grow their revenues. We would not be able to comment on the other cruise operators looking for the B2C route but for Star Cruises, we will continue to work with the travel trade which has always been very supportive of us,” he said.
Saxena, however, compares the B2B V/s B2C scenario to the chicken-and-egg-story. “While we may continue to believe that it is the travel agent which is selling cruises, we tend to forget that it is the passenger who asks for a cruise. Once passengers start asking for cruises in greater numbers, it would have a cascading affect on travel agents, who would then sell in greater number. To achieve this, the cruise companies and their representatives are gradually shifting to marketing their offerings on B2C channels including internet and social media,” he said, and added that the relevance of the B2B segment is limited to fulfillment.
However, Banerjee feels that the B2B segment is the life line of the cruise industry. “All cruise operators/cruise representatives see this as their main business model. Even though cruises offer higher commissions many agents are not selling great volumes,” he said.
Lucrative Offers V/s Perfect Holidays
Many cruise liners consistently advertise third and fourth pax free for two full fare paying adults sharing the cabin. Does this proposition make a holiday perfect when three to four persons are staying in one cabin whereas at their homes, most likely, they stay in independent rooms? Responding to this, Sampat said, “It is an advantage for families travelling together, as kids only pay taxes when travelling with adult passengers.” MSC Cruises offers triple and quad occupancy cabins with “kids sail free” policy for children below 18 years of age sharing the cabin with 2 full fare paying adults. “On MSC, an average of 15 – 20 per cent of our bookings have third and fourth passenger in same cabin,” said Sampat.
Sikri said that this definitely is a very lucrative proposition especially for those who are looking for a good value. “The triple and quad cabins are big enough to accommodate third or fourth pax comfortably. However, adults travelling together generally prefer separate cabins. Approximately 40 per cent of our bookings have third and fourth pax in one cabin,” she added.
Star Cruises has a maximum capacity per cabin and depends on the cabin category chosen by the guest. There are cabins available on the ship with triple and quad occupancies. “We have a separate fare for the third and fourth pax occupying the same cabin with the two full paying pax,” added Rawal.
Banerjee, however, recommended taking two adjacent rooms if the third and fourth traveller are adults as it assists privacy and comfort. “Since our products are best suited for mature travelers we see very less triple or quad bookings,” he said.
Saxena opined that such marketing gimmicks are often adopted to get passengers’ attention, but no sane and serious cruise passenger would ruin their vacation experience by sharing their cabin space with third and fourth guest in the same cabin, unless these are smaller children staying with parents. “This could help a cruise line in the short term but would lose it’s sheen in the long term as cruise passengers are affluent and they do not like their vacation experience to be worse than their day-to-day normal life,” he said. Cruise Professionals handles about 3-4 per cent of their bookings where the third and fourth passengers are sharing the cabin with two main passengers.
The Interest of Travellers
Replying to a question over safeguarding the passengers’ interest in the case of cancellation as cruise bookings generally attract very high cancellation penalties, Gupta explained that the charges applied for cancellation of cabins is very justified as unlike an airline, the possibility of filling the seat even 24 hours before flight departure is possible. “The cruise cabins are very difficult to fill at the last minute, as there are several prior arrangements which need to be made such as, buying the International ticket, getting the required visa/s, transfers etc. Hence, even the clients understand the cancellation charge applied by Costa cruises, which in any case, is very customer friendly,” she said.
Sikri claimed that the Holland America Line offers the best trip Cancellation Protection Plan (CPP) in the industry to protect vacation investments from loss, against a very nominal fee. Rawal opines that cancellation policy is governed by the terms and conditions of the insurance service provider.
MSC Cruises does not offer any insurances to protect passengers in case of cancellation. “We are hopeful Indian Insurance Companies start to offer Cruise Insurance, which will protect passengers’ interest in case of cancellation,” said Sampat.
India as a Cruise destination
Sikri feels that a lot of work needs to be done before we can come close to capitalising on our coastline. “The first is the infrastructure at the ports, then the support given by the local officials when a ship docks. If India is serious about developing the coastline for cruise tourism, then there is considerable investment that needs to happen not just in physical infrastructure but training and manpower to provide a “welcoming feeling” to passenger cruise lines that dock,” she said.
According to Rawal, the existing infrastructures and policies do not encourage us to have a ship home-ported in India. Banerjee stated that, launching an international vessel in India requires a strong focus and intent from the Government via the domestic tourism boards. Saxena echoed his opinion.
“We do not have the very basics which are essential to boost cruise industry in India – lack of safe and dependable public transport & taxis, lack of clean & hygienic public utilities, absence of clear cruise tourism policy, high cabotage & unfavorable taxation etc. – these are some of the areas which need serious considerations before we even think about promoting cruise tourism in India,” Saxena opined.
