What are the biggest challenges facing World Travel Holdings in the Covid-19 environment?
Obviously turning on a dime from growing sales to canceling almost every reservation was a traumatic event. Our company mantra is to “deliver a remarkable experience.” When Covid caused the cruise industry to literally stop sailing overnight in March 2020, we had to adapt on the fly—getting cancellation and refund information from the cruise lines, fielding calls from consumers, and working with employees whose personal lives were upended. I am so incredibly proud of the way we handled that crisis—not only as a company but as an industry.
As a company, we had people literally working around the clock, handling customers and programming new systems to deal with an environment none of us ever imagined: mass cancellation of our entire business. As an industry, the cruise lines were enlightened in their response. Consumers were offered the option of a full cash refund or 125 percent of their purchase price toward a future cruise credit.
Not shockingly, about half of all consumers opted for the future cruise credits. As to our employees, I live by a quote from legendary coach Vince Lombardi: “Perfection is not attainable, but if we chase perfection we can catch excellence.” During the Covid crisis we may not have been perfect but we have been excellent. Our employees’ performance has awed and inspired me.
What should consumers expect once cruising restarts?
Cruising will be better than before. I know that sounds like a sales line, but it is true. Older ships have been retired and are being replaced by newer, bigger ships. The ships will have improved dining options (forget the buffet line), more entertainment and an improved customer experience. There will be a lot more use of digital technology to speed up check-in and improve the onboard experience. You will be able to make reservations for restaurants, the spa and shore excursions from the comfort of your lounge chair. There will be more powerful broadband for faster Wi-Fi service. In addition, ships will have been retrofitted with hospital-grade air-filtration systems and improved medical facilities in the event a need arises. The ships are more environmentally friendly with state-of-the-art scrubbers and coating on the hulls to allow them to sail more easily through the water and reduce fuel burn. On private islands, cruise lines are adding water-park facilities and overwater bungalows. And ships will be implementing a raft of safety protocols, including increased testing and, in many instances, some form of vaccination requirement.
What is the future of cruising and of travel in general?
About 25 years ago travel morphed from a luxury to an entitlement. People are going to travel. We saw a relatively quick return to growth post-9/11 and after the Great Recession. Covid will be no different. Our booking activity indicates a lot of pent-up demand. Since March 2020, when Covid hit, American households overall have saved over $2.25 trillion partly due to decreased spending. People have, by and large, not gone on vacation for more than a year, so they have accrued a lot of unused vacation time. Obviously, we see an explosion of travel coming across all sectors of the industry. As to cruises, not a single new ship order has been canceled and industry capacity should increase roughly four percent per year from 2021 to 2023. Almost 500,000 people have safely sailed on ships presently sailing from ports outside the U.S. with almost no cases of Covid on board. So there is proof that ships are Covid-safe.
Do you see more opportunities for river cruises or smaller boutique cruise lines?
River cruises and small boutique cruises will continue to grow. When the Iron Curtain fell and people could travel the great rivers of Europe for multiday stretches, river cruises took off. They have by and large replaced bus tours. They allow people to see many different cities and towns, including some smaller places that are breathtakingly beautiful, all without having to pack and unpack. The more genteel pace appeals generally to an older demographic, and in a post-Covid environment, where people, especially people over 55, will be looking for less crowded options, river cruises will do well. So will the more upscale cruise ships. Throughout Covid our sales on luxury vessels have been much less affected than sales on massmarket ships. Luxury ships tend to be less crowded than mass-market ships. Even though they are smaller and more intimate, all of them offer an array of dining options, with most featuring at least one restaurant by a celebrity chef. They are also a great way to see some of the more exotic places on earth, to meet interesting fellow passengers, and to hear lectures from interesting speakers. My wife and I have cruised the Galápagos Islands (with our children) and Southeast Asia on luxury ships, and met three of our closest friends on these cruises.
What got you into the travel business?
My brother Brad and I have been partners in travel for practically our entire adult lives. When we were young our dad went into the travel business and within two years he was embezzled for everything he was worth. So, after school we were in the office putting away brochures and sweeping floors, and on weekends, with our two other brothers, we were a production line, folding, stuffing, sealing and stamping envelopes for group mailings. It was all fascinating and we both got the bug. I am proud that together we have built not one but two large travel companies.
What do you like most about cruising?
I love the convenience of having dining and entertainment within steps of my stateroom. And I love the ability to explore a variety of places.
How have you seen the cruise industry’s target market change?
Cruising used to be for the newlywed and nearly dead. Now there is a ship for everyone. Mass market to deluxe. Intimate to immense. Baby boomers and older are still the biggest market, but millennials are the fastest growing and second largest segment on mass-market ships. Millennials love value and cruising is a fantastic consumer value. And speaking of value, American Airlines AAdvantage members get all the benefits of the best deals in the industry, plus they earn miles for every dollar they spend when they book through American Airlines Cruises. Those with an American co-branded credit card multiply their mileage earnings because they get miles for using the credit card in addition to the miles they earn by booking through American Airlines Cruises. It is truly an incredible value. We have had some AAdvantage members earn hundreds of thousands of miles on one around-the-world booking!
When should consumers start booking their next cruise vacation?
I would book now for Q4 and next year. “Sold out” are two words that consumers are very likely going to hear, and we don’t want that. Due to limited capacity, and the future cruise credits many people have used to already book, there is less availability and prices will continue to increase.