The European cruise sector grew 29.2 per cent from 2010 to 6.39 million passengers by the end of 2014. The fastest growth is in Germany which, with a market share of 27.7 per cent, is now the largest cruise source market in Europe, followed by the UK (25.7 per cent) and Italy (13.2 per cent).
However, while the sector grew almost 10 per cent each year until 2011 that rate has slowed to only 0.5 per cent from 2013 to 2015. Capacities will increase by 93,308 berths between 2015 and 2018.
A fierce price war is anticipated by industry experts, according to a German Travel Industry Club panel made up of Cunard’s Director of Sales and Marketing – Germany, Anja Tabarelli and two of the largest German cruise online travel agencies.
As a result of the price war commissions will plummet. Cruise companies will not be able to pay 20 per cent sales commission or more to travel agents for much longer with the direct distribution model. Direct distribution is no longer viable as passengers increasingly compare various products made up of vessel, service standard, features, and region (e.g. the Caribbean, the Baltics etc.).
With the growing trend of mature users booking their cruises on their tablet computers, more and more are comparing products and prices online. Their sources include Online Travel Agents which facilitate comparisons; it means cruise providers need fully automated booking processes utilising API techniques to support such comparisons.
Only if mass market, low price cruise bookings become a “touchless” reservation for online travel agencies, will they remain a lucrative product to sell.
Cruise companies will continue to depend on agents to sell but at lower commissions. And agent success will depend on selling cruises provided they can be booked “hands-free”, just like air, car or hotel bookings are today.
Those cruise companies that provide an API to the trade and those agencies that implement those APIs first will become the winners of the “cruise war“.