Today, as never before, your clients’ price for travel purchases largely depends on when you buy them. It used to be that clients could be roughly placed in one of two groups: One that accepts the first offer before other buyers see it; and one that defers purchase decisions as long as possible.
- Those who follow the “buy it now” strategy know that when products are heavily promoted and advertised, the first offer is usually the best, and buyers who trail the pack won’t receive the same benefits or prices.
- Those that avoid making financial decisions feel that better opportunities are always available, if someone is willing to ferret them out.
It used to be that either strategy had its advantages, if clients followed them consistently. Now, keeping to one buying style can cost hundreds—or even thousands—of dollars, if applied to the wrong expenditures. Often, the solution is to try to understand the conditions that underlie each purchasing decision, which is often tied to situations that apply to an entire industry rather than a particular brand.
Airline Tickets
It’s safe to say that airline ticket costs are headed sharply up for at least the next few years.
Pilots and flight attendants are dissatisfied with their salaries and working conditions, and the feds are signaling substantial financial penalties if flights are delayed or canceled, or they redirect fliers’ baggage. Consequently, the number of flights is being cut back. Given the demand for seats is approaching the pre-pandemic levels, barring air or health catastrophes, the only way out of this situation is for airlines to continue to raise ticket prices.
Now is the time for clients to pay for their airline tickets as soon as they can, since only making reservations will not protect them from future price increases. Ideally, this is also the time to use travel insurance or “flight protection plans” offered by cruise lines, airlines, and booking services to reimburse the guests—if their tickets are non-cancellable. In many cases, the best alternative is to upgrade to more expensive tickets that can be canceled or changed before the guests fly; or upgrade to a credit card that includes flight protection.
If air transportation is bundled into a cruise or resort reservation that doesn’t require immediate full payment, don’t assume that air ticket costs are guaranteed by paying the deposit for the cruise or resort. Ideally, the cruise line or tour company offers CFAR (Cancel for Any Reason) that protects clients, even if air reservations need to be canceled due to strikes, computer system crashes, health emergencies, or changes in guests’ plans. Also, it is better if these plans pay in cash rather than in credits against a future vacation or are at least transferable to other family members.
Cruises
Unlike the airlines, the cruise lines were provided little financial protection during the pandemic. Some politicians and bureaucrats may have considered them “non-essential” luxury products. Also, nearly all the ships were foreign-flagged and exempt from many taxes and regulations; this worked against them in competing for pandemic-relief assistance.
The drops in sales tanked the stocks of the “Big Three” (Carnival, Royal Caribbean, Norwegian), that—unlike Disney—had no other income streams from which to benefit. This caused them to take on crippling amounts of debt at “junk bond” interest rates which will take them many years to repay. For them, their best hope is to sell lots of cruise fares to keep on sailing and remain flexible. Also, we suspect some are “grooming themselves” for selling to much richer entities such as the Saudi Sovereign Wealth Fund. As reported three months ago, it was flirting with Carnival to buy Seabourn.
These circumstances may create a “buyer’s market” with each offer better than the last. Sure, the newest and most alluring ships and destinations may fill up quickly, but this will create more economic pressure for the tried-and-true ships and destinations to make more compelling offers. This is likely to create even more attractive offers during the next year.
For example, P&O, a British Carnival subsidiary, is presently offering 7- and 14-day cruises to the Canary Islands with charter air from several British cities, starting at 700 British pounds ($804). If this catches on, and is replicated by other Carnival brands in the Caribbean this winter, it will disrupt the air travel and cruise sectors for the better, especially if foreign crews staff the charter flights.
Another disruptor that may result in lower cruise prices is the growth in US and Canadian cruising.
St. Petersburg and Siberia are likely to remain closed for a while, even after the Ukraine war ends, and cruises to China may become increasingly problematic due to the worsening political situation. Also, droughts and war may reduce riverboat cruises in eastern Europe.
Alaskan cruises are making up for some of the shortfalls in destinations, with cruises on the Great Lakes, the Chesapeake Bay, and the Inland Waterway becoming increasingly common as shallow-draft ships fulfill these needs. This will also reduce airfare costs since these largely domestic flights will be shorter and briefer.
With the increase in temperatures throughout Canada and the US, and the huge increase in “luxury expedition ships,” perhaps traversing the Northwest Passage from Nome to Greenland in comfort will become an increasingly popular choice. All is bright for the cruise industry… provided advisors, guests, and cruise lines maintain the flexibility that has distinguished them for the past 170 years, since the clipper ships rounded Cape Horn to take guests from the East Coast of the US to seek their fortunes in the California, Yukon, and Alaskan gold fields.
Dr. Steve Frankel and his wife have cruised on most of the Seabourn, Silversea, Crystal, Azamara, Oceania, Regent, and Windstar ships. Steve is the founder of Cruises & Cameras Travel Services, LLC. He has been recognized as a “2021 Top Travel Specialist” by Conde Nast Traveler magazine and a “Travel Expert Select “by the Signature Travel Network. His specialties are luxury small-ship cruises and COVID-19 safety measures, and has a doctorate in Educational Research with minors in Marketing and Quantitative Business Analysis. He’s also earned a Certificate in Epidemiology from Johns Hopkins University. Previously, he managed qualitative and quantitative research in the private & public sectors. He’s a member of the Los Angeles Press Club, and has written 13 books and hundreds of articles. His email address is steve@cruisesandcameras.com.
