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Cruise lines get 'back to basics' in focus on marketing/sales, Conroy says

Mark Conroy - product quality and differentiation are being used as sales tools
It's 'an exciting time in the cruise business' with management teams 'getting back to basics' and focusing on the product and brand differentiation, veteran senior executive Mark Conroy said.

Many big lines in recent years have been managed on costs to the point where marketing budgets and sales teams were cut and that's one reason the number of first-time cruisers has declined, in Conroy's view.

The companies have 'all awakened to that,' he told Seatrade Insider.

Trimming marketing and sales made for immediate bottom-line savings and momentum may have carried the business to a point, but relying too much on past customers isn't healthy.

Even as ticket pricing stayed flat operators have managed to eke out stronger profits thanks to economies of scale and increased on-board spending. Gourmet specialty restaurants, more interesting shore excursions, nicer gift shops and better casinos have boosted on-board revenue, but 'ticket revenue hasn't really lifted,' Conroy said.

He singled out the luxury sector as an exception, with pricing up at brands like Seabourn, Regent Seven Seas Cruises and Oceania Cruises.

Now there's a broader shift away from discounting and toward marketing to fill ships.

Conroy credits his former boss, Frank Del Rio, with a strategy built around giving the best fares to the customers who book earliest. This builds a good base of occupancy early on and creates scarcity. With less inventory to fill, prices rise closer to sailing, and deep discounting is avoided.

Other lines have done it in years past. Now more are trying to make it work, Conroy said.

'What I'm seeing right now is product quality and differentiation being used as as a sales tool,' he added. He thinks cruise brands are more differentiated now than in the last 20 years.

Ships like Oasis of the Seas and Quantum of the Seas, for example, get higher average rates because Royal Caribbean emphasizes the distinctive experiences they offer. Plus, the line is one that has maintained a robust sales force.

'Everyone is working hard to differentiate themselves and really setting themselves apart so the customer really has a choice,' said Conroy, who leads his own South Florida-based consultancy.

He previously served as executive adviser to Prestige Cruises and before that, as the long-time president of Regent Seven Seas Cruises. Since last year, Conroy been a consultant and strategic adviser to Cruise Lines International Association on travel agent matters.

'Agents have always been important and will continue to be,' he said, adding that no cruise lines give travelers who book directly a lower price.

CLIA's revamped agency member program that provides benefits to individual agents as well as agencies has been a 'big success,' and now Conroy is pushing for ways the association can mobilize agents to engage with their lawmakers on issues related to cruises.

'I'm as excited about CLIA as I ever was,' he said.

Conroy expects 2015 will be a good year as cruise lines reinvigorate their sales and marketing efforts. Plus, he said, it helps that the US economy is back on track.