Luxury Cruise Sales

What are the key changes you've seen in the luxury cruise market?
Conroy: When I started in the industry, we were catering to a large extent to the Great Generation. They were pretty tight with their money, and it was pretty hard to convince them to spend freely.

But they left a generation of boomers who are well-educated and well-employed and who have made money, plus inherited money from their parents. So the standard of wealth today is broader and much higher than it was, and they tend to spend more freely.

Also, cruising has gone from being a niche vacation to a mainstream vacation.

And as much as I used to hate it when Bob Dickinson (former president of Carnival Cruise Lines) used to talk about customers trickling up to luxury from premium and contemporary, he was actually right. About 85% of the people who cruise with us have been on a cruise before. Today we don't get a lot of first-time cruisers.

How has the product changed?
Conroy: When I started in the business a big cruise ship had 700 passengers and a small ship 500 passengers. Today a big ship is 5,000 to 6,000.

An interesting phenomenon in the premium and contemporary brands is they really haven't raised their rates much, but they've continued to be successful by building these larger ships with greater economies of scale.

What they figured out very successfully is onboard revenue; charging for stuff that quite frankly they used to give away.

So how does the luxury cruise market differ?
Conroy: The good news about luxury is there have been some economies of scale and we have been able to raise our rates. But in order to do that we've had to show the customer we're giving them great value.

Do you think in general the cruise experience has improved over the years?
Conroy: I was shocked when I first got to Royal Viking Line (earlier in my career) and heard that on the 108-day cruise you sat at the same table with the same people for all 108 nights. I would kill myself.

One of the definitions of luxury is choice. We try today to give customers a lot of choices.

If you talk to any luxury cruise line they will tell you the same thing: We developed our cruise products based on feedback from customers. We put in the walk-in closet because customers were unhappy with the small closets, for instance. They have nice homes and nice things, and they don't want to compromise their lifestyle when they go on a cruise.

How important to the luxury market is all the kitschy stuff that's been added on the big ships?
Conroy: My customers aren't particularly interested in rock-climbing walls. What they like is the little stuff, like when they get back from a full-day excursion in Beijing and the staff is on the pier waiting for them with towels and glasses of wine and water.

Food and service continues to get better and better on the larger ships, with the specialty restaurants, and it has forced the whole industry to raise the bar.

Our customers also like new and modern – for instance, that we have wireless throughout the ship. Only 30% of our guests are retired. The others are working wealthy, and while they may not have to be in the office every day, they do want to stay in touch.

How has the luxury demographic changed in recent years?
Conroy: At Regent, our average [customer] age 10 years ago was probably north of 65. Today it's 58.

The other phenomenon we have is we're getting a ton of extended families. Prior to 9/11 the only kids we would get were grandma and grandpa taking one of their high school- or college-graduating grandchildren on their first big trip to Europe. I was on a ship in June, we had over 100 children under age 17, and most were part of family groups with anywhere from 10 to 20 people in them.

What has really knocked your socks off in the industry that you didn't see coming 20 years ago?
Conroy: It starts with the all-inclusive, and the large size of the suites. I used to joke when I started at NCL that you had to leave your cabin to change your mind.

Also, the variety and number of dining venues