A Cloudy Outlook As Wave Season Approaches
Cruise Week

While the cruise booking cycle this decade has generally spread more across the whole year than was the case in the 90s, the first two months of the year are still viewed by many as the most critical period.

Last year, after a dreadful October-December, the lines revved up co-op, lowered prices, and saw immediate results with a return to volume in January. That Wave Season model — lower prices to stimulate volume — set the tone for the whole year.

Heading into the 2010 Wave Season, an array of factors are coming into play. The hole dug with deep discounting late last year was a big one, and lower-than-usual pricing is still driving sales. "The fact of the matter is you’re creating a new low," observes Anthony Hamawy of Cruise.com. "At some point in time, $349 for a seven-day Caribbean cruise isn’t going to be as good as a $299 lead-in for a seven-day cruise. They’re trying to hold the pricing where they can, but we’re starting to see some lines lower rates for the first quarter."

There are two major obstacles to getting pricing up: declining discretionary spending and increased capacity in the Caribbean. On the first, research indicates that middle and upper income North Americans continue to keep a close eye on their spending habits.

The second obstacle to pricing recovery is a big capacity increase in the Caribbean for 2010. Even with real growth in internationally-sourced business, there are eight new ships coming next year, most geared to the North American market. This is on the heels of Oasis and Carnival Dream which entered revenue service in the Caribbean this month. That’s enough to challenge pricing even when economic times are good.

Rising airfares are also impacting winter season business. Many consumers are finding that the airfare to get to cruise ports is more expensive than the cruise.

Luxury agents Cruise Week has spoken to are the most positive about sales in the year ahead. They report that retirees who took the year off due to concerns about further erosion in their investment portfolios are coming back.

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