CONTINUED SALES GROWTH AHEAD

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1 TRVEL GET CRUE DUTRY OUTLOOK U E L R E C T O E T R C T O L O TRVEL GET MEMBER PERPECTVE PRL 2016

2 TRODUCTO The outlook for the cruise industry in 2016 continues to be strong according to travel agents who were surveyed in late February. These agents, who have their finger on the pulse of consumer attitudes, expect to see cruise growth this year, both in the number of people who take cruises and in the amount passengers are spending on cruises. This anticipated growth in cruising appears to be particularly strong in destinations in or near the United tates. gents expect to see considerable growth in laska as well as the Caribbean, Hawaii and ew England. mong categories of cruising, river cruising is poised to show the greatest growth. Cruise customers are focused on value, with nine out of ten agents saying that cost and the overall cruise experience are crucial factors driving purchasing decisions, with itineraries and promotions also important. mong the amenities that are most important to cruisers, the two most significant are stateroom comfort and dining options, followed by stateroom categories and entertainment options. gents say their most important source of new clients by far is through referrals. The next most important sources for new clients are social media, brand recognition and the nternet, showing that agents who are able to navigate the online world have an advantage over their competitors. This survey proves the vital importance of travel agents to the cruise industry, said Cindy D oust, president and CEO, CL. Travel agents are able to direct clients to destinations and categories of cruising that best suit their individual vacation dreams. The return on experience of a vacation means something different to each customer, which is why the one-on-one interactions between agents and their clients are so important in identifying the right cruise for each traveler. 1

3 COTUED LE GROWTH HED Travel agents continue to be highly confident in the cruise industry s outlook for Three-quarters (76 percent) of travel agents expect to see their cruise business grow this year, with a third anticipating growth of ten percent or more. nother quarter expect growth of six to ten percent. Only seven percent of all travel agents expect a decline. 40% Describe your agency s outlook regarding its cruise sales volume in the current year compared to that of the previous year. 32% 24% 19% 17% 3% 2% 1% 0% More than 10% Better 6 10% Better 1 5% Better Remain Flat o Change 1 5% Worse 6 10% Worse More than 10% Worse ome agents think the economy is playing a factor in this positive outlook. Lisa Gardner, of Farmingdale, ew York, speculated, believe the tremendous decrease in gas prices has afforded clients the ability to have more fun money, and therefore are booking more trips. 2

4 How would you estimate the cruise spending behavior of your clients in the current year? 30% 0% 21% More than 10% Better 19% 6 10% Better 26% 1 5% Better 22% Remain Flat o Change 8% 1 5% Worse 1% 6 10% Worse 2% More than 10% Worse Travel agents also expect consumers to increase their spending on cruising this year. More than two-thirds (67 percent) said they anticipate higher sales than in 2015, with more than a fifth expecting growth of ten percent or higher. These expectations are slightly lower than reported in the February outlook report, which reflected travel agent forecasts at the end of

5 CCORDG TO MORE TH 60 PERCET OF TRVEL GET, RVER CRUE COTUE TO BE THE BUE EGMET WTH THE MOT POTETL FOR GROWTH TH YER. THE RE OF RVER CRUG ccording to more than 60 percent of travel agents, River Cruises continue to be the business segment with the most potential for growth this year. bout a quarter of all agents expect to see significant growth in River Cruises. Very large, or Big hips, are also expected to experience growth this year, according to nearly 60 percent of agents. gents are also optimistic about growth in Ocean Liner Cruises, with more than 40 percent of respondents anticipating increases in that category. helly Ramirez, an agent from Michelle s Destinations, Unlimited, LLC, in orman, Oklahoma, commented that they are receiving more requests for river cruises. This trend was echoed by Mitch Krayton, of Krayton Travel in Denver, Colorado, who said, River cruising is picking up, especially for longer cruises. 0% n your view, what is the current booking growth level of the following cruise ship categories? Ocean Liners Expedition Vessels Mega hips River Cruise hips 3.36% Boutique/ Yachts 2.01% Mid ize ignificant Growth Growth Decrease ignificant Decrease 1.34% Large 4

6 EEKG RETUR O EXPERECE n terms of the factors that influence clients to select a cruise, agents are finding that a return on experience is a key determinant. n overwhelming number of travel agents (more than 95 percent) say that the overall experience of cruising, the cost of a cruise, and the cruise itinerary itself are important to their customers. ince value is defined very personally according to each customer s background and expectations, this finding illuminates the importance of offering different market segments. For example, agents who said they expect to see growth in the Luxury segment emphasized the importance of the overall experience and had less sensitivity to cost. However, agents who are experiencing growth in the Mass Market segment placed significantly more emphasis on the overall return on experience. t is not surprising that most travel agents (nearly 60 percent) report growth in booking levels for the Mass Market cruise segment. lmost as many agents cite Premium as a growth category and more than 40 percent of agents are also experiencing growth in the Luxury segment. What are the key decision-making factors driving the behavior of your cruise clients? Overall Experience Cost Cruise tinerary Promotions afety Onboard menities Port of Embarkation Cruise Brand/Loyalty hip 0% 20% 40% 60% 80% ot important at all omewhat important ot too mportant Very important 5

7 n your view, what is the current booking growth level of the following cruise segments? 0% Luxury Premium Mass Market ignificant Growth Growth CRUG CLOER TO HOME mericans are increasing their cruising close to home, travel agents say. lmost three-quarters (73 percent) of agents have seen increased bookings to laska and nearly half are experiencing more bookings for Caribbean/ Bermuda/Mexico cruises. bout a third of agents have seen increases in cruises to Hawaii, the Panama Canal and Canada/ew England. s ngela DeDomenico of Boca Raton, Florida, reported, People are looking for different itineraries close to home Caribbean, laska, etc. 6

8 Travel gents were asked what Cruise Destinations are Experiencing the Most ignificant Booking Growth or Decline. Below represents the Travel gent responses. Growth teady Decline More than half of agents say that lower airfares have had a positive impact on cruise sales, with customers finding it more affordable to travel to and from cruises. imilarly, 30 percent of agents say that favorable currency exchange rates are making cruising more attractive for customers traveling on cruises overseas. How have each of the following factors impacted your cruise sales in the past four months? Lower irfares 53% Currency Exchange Rate 30% 11% afety of Destination or tinerary afety / ecurity of Cruising tock Market Performance 45% 3% 64% 28% 6% 61% 10% 58% 7% 32% 56% Personal Health Concerns 5% 37% 53% Weather-related concerns 5% 41% 58% ncreased Travel Hassles 4% 37% 62% Political Unrest 4% 34% 41% 0% 20% Growth 55% 40% teady 60% 80% Decline 7

9 OCL MED GRET, BUT REFERRL RE EVE BETTER bout a quarter (23 percent) of cruise clients are first-time cruisers, indicating that efforts to attract a new generation of cruisers are bearing fruit. n terms of where these new clients come from, agents overwhelmingly said that referrals are a very important source of new cruisers. gents also report that brand recognition is a critical element in attracting new cruise clients. n an increasingly interconnected world, it is not a surprise that social media and online are also essential sources of new clients. Carol Domme, of uthentic laska Travel, in Ketchikan, laska, explains, More young people are taking cruises, so put more focus on edgy social media and at the same time, increased my more traditional outreach programs as well as Facebook. How important are the following channels to you to source new cruise clients? Referrals ocial Media Brand Recognition Online Traditional dvertising Host gencies Other (Please pecify Below) 0% 20% 40% 60% 80% ot important at all omewhat important ot too mportant Very important 23% OF CRUE CLET RE FRT-TME CRUER 8

10 COMFORT D CUE RE MORE MPORTT lmost half of agents report that when customers are considering whether to book a cruise the most important factors are stateroom comfort and food and dining options. till important, but somewhat less, are stateroom categories and entertainment options. The least important customer consideration when booking a cruise is spa and fitness facilities (judged by more than 50 percent of agents as not important or not too important ), followed closely by enrichment and educational opportunities. What are the most important on-board amenities that your customers are considering when booking a cruise? tateroom menities/comfort Culinary/Dining Options tateroom Categories Entertainment Options Children/Youth Programs Recreation/port ctivities Enrichment/Educational... pa/fitness Facilities 0% 20% 40% 60% 80% ot important at all omewhat important ot too mportant Very important These considerations seem to vary by market segment. gents who anticipate growth in the Luxury segment are more likely to cite stateroom amenities, culinary options and enrichment opportunities as priorities. gents anticipating growth in the Premium segment were more apt to emphasize the importance of culinary options, while agents selling to the Mass Market segment showed a greater interest in entertainment. 9

11 Clients continue to plan ahead for cruises. bout 40 percent of agents said they are seeing increased bookings nine to twelve months ahead of time. gents say that bookings more than 18 months out are, on net, slightly decreasing over last year. ccording to your current experience, how far in advance are your customers booking cruises compared to a year ago? 0% Less than 3 months 3 to 6 months 6 to 9 months 9 months to a year One year to 18 months More than 18 months ncreasing taying the same Decreasing 10

12 UMMRY The health of the cruise industry is robust and 2016 is shaping up to be the best year ever for cruising, travel agents report. bout a third of travel agents predict that sales volume will be ten percent higher or better this year, largely based on bookings in early to mid-winter. Most importantly, positive news over shadows any consumer concerns. Travel agents have played an important role in driving growth in cruising as they have been able to address consumer questions and offer the right cruise to the right customer. FOR QUETO BOUT TH REPORT, PLEE EML RH KEEDY T KEEDY@CRUG.ORG BOUT THE TRVEL GET CRUE DUTRY OUTLOOK The CL Travel gent Cruise ndustry Outlook report is a quarterly study conducted by CL. The data and research are compiled based on online survey responses from the CL Travel gent Research Panel, which consists of 700 travel agents from orth merica. Travel professionals in the cruise industry, can have their voice heard by joining the CL Travel gent Research Panel. imply cliaresearchpanel@cruising.org. 11

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