T R A V E L A G E N T M E M B E R P E R S P E C T I V EF E B R U A R Y 2 0 1 6

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T R A V E L A G E N TC R U I S E I N D U S T R Y

Perhaps no one is better attuned to trends in the travel and leisure industry than travel agents. Travel agents are working with consumers and travel providers every day, which gives them a uniquely valuable perspective on the near-term travel outlook.

As a result, it’s significant that travel agents are bullish about the cruise business in 2016. In a CLIA survey conducted at the end of 2015, American travel agents said they expect to see notable growth in the number of cruises people take in 2016 as well as increases in passenger spending.

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While travel agents generally believe that overall trends will be up for 2016, they do not expect growth to be consistent across all geographic segments or price categories. Specifically, the cost and hassle of air travel seems to be discouraging consumers from committing to international ports and destinations in favor of domestic and

“Travel agents have consistently told us that, when consumers take cruises for the first time, they quickly become apostles for cruising in general,” said CLIA acting CEO Cindy D’Aoust. “This survey affirms that the cruise industry is poised for growth among families, who are the future of cruising, and among travelers who are interested in convenience and the return on experience that cruising offers. We thank the travel agents who participated in this survey,which provides important insight on cruise trends.”

U.S.-based cruises, especially in Alaskaand the Caribbean. Travel agents alsosee growth in all core cruise segments.Further demonstrating consumer enthu-siasm for cruises, travel agents say that passengers are booking further ahead than in the past, with the strongest growth seen in pre-booking nine-to-twelve months ahead.

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SALES AND SPENDING OUTLOOKS

Travel agents overwhelmingly agree that the outlook for cruise travel in 2016 is strong. Eighty-three percent said they expect increases in sales volume in the coming year. More than two out of five travel agents expect sales volume to increase by ten percent or better and one-fifth expect volume increases of six to ten percent. Only four percent expect a decrease in cruise bookings in 2016.

“Families, couples and individuals who may not have considered cruising beforeare now taking note that it is not all about shuffleboard and old people,” said travel agent Sabrina Kraft. “They are discovering the full extent of the activities offered both onboard and in the ports. They are discovering the great value of the cruise vacation. Individuals who are now being introduced to cruising are finding that itfulfills so many of their wants and needs without breaking the bank.”

Similarly, travel agents are anticipating that consumers will increase their spending on cruises this year. Seventy-seven percent said they believe cruise consumerswill spend more in 2016, with nearly a third expecting increases in the one to five percent range. About a quarter predicted spending increases of more than ten percent. Overall, only three percent of agents estimated that consumer spending

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on cruises would be down this year.

Travel agents’ expectations of industry growth are consistent with the industry’s own expectations. Between now and 2020, cruise lines are investing more than $25 billion to build 55 more ships. In 2016 alone, the industry will see 27 new builds. If, as travel agents seem to believe, the outlook for cruising is good, that demandshould be met by a new generation of ships that will be introduced in the next four years.

43%

21.5%19%

12.4%

2.5%0.8% 0.8%

50

0More than10%

Better

More than10%

Worse

6 – 10%Better

6 – 10%Worse

1 – 5%Better

1 – 5%Worse

RemainFlat –

NoChange

Describe Your Agency’s Outlook Regarding Its Cruise Sales Volume in the Current Year Compared to that of the Previous Year.

26.5%

19.8%

30.6%

19.8%

2.5%0.8% 0.0%

40

0More than10%

Better

More than10%

Worse

6 – 10%Better

6 – 10%Worse

1 – 5%Better

1 – 5%Worse

RemainFlat –

NoChange

How Would You Estimate the Cruise Spending Behavior of your Clients in the Current Year?

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VACATION TRENDS

Consistent with travel agents’ expectations that sales volume and spending on cruises will increase in 2016 is their perception that, among all vacation segments, cruises are experiencing the greatestincrease in booking and that house rentals and resorts without packages are showing the greatest decreases.

When looking at the full landscape of vacation options, travel agents report that the two segments with the greatest increase in booking are ocean cruises (36%) and river cruises (28%). Only all-inclusive resorts (23%) rival cruises in their increased booking.

If cruises are gaining in popularity, it might be because this is a more attractive option for families. As travel agent Karen Shelton says, “More families are cruising and taking younger children. Families are looking for family-friendly cabin accommodations, activities that please all ages, as well as separate youth programming so the adultscan have some free time.”

Travel agent perceptions about the changing nature of cruise demographics are borne out by research. Today’s average cruiser is only 49 years old, employed full-time, married and has an income of $114,000.

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If cruises are shaping up to be the winning vacation segments in 2016, then the biggest potential losers are house rentals (with 20% of travel agents expecting declines), resortswithout packages (with 18% expecting declines) and land-based escorted tours (also with18% expecting declines). Only six percent of travel agents believe that oceanor river cruises will decrease in bookings.

36.3%

28.2%

22.6%

4.8%2.4% 2.4%

0.8% 0.8%

40

0OceanCruise

None ofthe

Above

ResortNon-

Package

ResortPackage

RiverCruise

Land-Based

EscortedTour

All-InclusiveResort

HouseRental

Land-Based

Vacation

In Your View, Which Vacation Segment is Experiencing the Greatest INCREASE in Booking?

1.6%

19.83%

18.18% 18.18%

14.88%

7.44%

5.79% 5.79% 5.79%

20

0HouseRental

Land-Based

Vacation

RiverCruise

ResortPackage

ResortNon-

Package

OceanCruise

Land-Based

EscortedTour

All-InclusvieResort

None ofThe

Above

In Your View, Which Vacation Segment is Experiencing the Greatest DECREASE in Booking?

4.13%

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CRUISE TRENDS

Although travel agents perceive that the overall outlook for cruises is strong, they don’t expect to see growth across the board. With t ravelers growing increasingly

price-conscious, the segments that are expected to see growth are mass market cru ises (62% of travel agents anticipate some growth) and premium cruises (54%).

Travel agent Aiko Yao Lim says that the trend that is most affecting his business is the consumers’ desire for “deals and getting the lowest price possible with the best value.….We’ve also been seeing more customers wanting to embark on cruises in their own city and not want to take air to go on their cruise.”

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In Your View, What is the Current Booking Growth Level of theFollowing Cruise Segments?

GrowthSignificant Growth Decrease Significant Decrease

Ocean Liners

Expedition Vessels

Mega Ships

River Cruise Ships

Boutique or Yachts

Mid-Size

Large

100%0

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Similarly, there is uneven growth among the types of cruises that travel agents are booking. They report that river cruises and cruises on large ships are generating the biggest growth (with 71 percent and 66 percent respectively reporting growth in those segments). While few declines are anticipated in any segment, according to travel agents, growth is lowest among expedition vehicles and boutique or yacht cruises.

Travel Agents were asked what Cruise Destinations are Experiencing the Most Significant Booking Growth or Decline. Below represents the Travel Agent responses.

Growth Steady Decline

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Travel agents are reporting that the cost and hassle of international flying is becoming a barrier to many long-distance cruise destinations. Consequently, domestic and local cruises are experiencing the most significant growth so far this year. Even though Alaskan cruises are one of the smallest segments of the industry, accounting for only 4 percent of total deployment, more travel agents (73%) are seeing increases in Alaskan cruises than any otherregion. The largest region for cruising, with a third of all cruises – the Caribbean – seems poised for even more growth in 2016, with 52 percent of travel agents seeing growth there. Another local region with strong growth in 2016 isCanada and New England, with 42 percent of travel agents expecting growth.

100%0

Lessthan

3 Months

3 – 6Months

18+Months

6 – 9Months

12 – 18Months

9 – 12Months

How Far in Advance Are Your Customers Booking Cruises Compared to a Year Ago?

Increasing Staying the Same Decreasing

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Another trend that travel agents are reporting is that customers are booking their cruises further in advance. Forty-seven percent say that customers are increasingly booking nine to twelve months ahead and 42 percent say more cruises are being booked six to nine months in advance. Not surprisingly, last-minute deciders seem to be on the wane. A third of travel agents report a decreasing number of cruises being booked in less than three months.

AGENCY TRENDS

Like any modern industry the travel agency business continues to change. When asked an open-ended question about what trends are having the most impact on their businesses, the most frequently volunteered trend was an increase in groups and families (including multigenerational families) who are cruising together. This is having apositive impact on cruisingas more and younger families discover cruise travel.

New ships, especially larger ships that offer all-inclusive pricing, seem to be having a positive impact on the demand for cruising. Travel agents have also noticed an increased interest in river cruising.

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SUMMARY

As we begin 2016, the cruise industry is headed for growth, and travel agents are reinforcing this trend. Travel agents are anticipating increases in both the number of people who are cruising and the amount of money they spend on cruises. This supports Cruise Lines International Association’s projected 2016 passenger number of 24 million people, up from 23 million in 2015.

Looking long-term, the future of cruising is secure. As more multigenerational families embark on cruises, the cruise habit will become ingrained in younger consumers. This is important because retention rates are extremely high among travelers after they experience their first cruise.

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