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existDuring the short few months of the summer vacation, the domestic cruise market experienced a lively opening, then a cooling of the market, agents cutting prices to stop losses, price collapse, cruise companies "forced to rescue the market", and finally returned to a relatively stable state.Behind the seemingly gradual calmness, it seems more like a lose-lose situation after a big gamble.

The further impact of this crisis is still ongoing, and cruise companies and agents are still blaming each other. Did agents make money after the rescue? Who should be blamed for this summer industry disaster? What will be the future path for cruise companies and agents?

01

Agents lose moneyWhose fault is it?

"The summer peak season was not busy. The vast majority of resource providers and travel agencies had too high expectations for this summer and set prices high. In fact, the market's purchasing power was insufficient, resulting in the company's first ever summer with a large number of unsold products or sales below cost. The overall summer operating performance was very poor and ultimately resulted in a loss," a cruise agent told Wenlv.

He recalled that after entering the summer vacation, he found that the market problems were very serious. Fortunately, the shipping companies later introduced some policies to stabilize the market, so the losses were not very severe. However, the expected profits were lost, and the labor costs and various expenses of the past few months were lost, so the company's operating losses were not small.

Liu Jianbin, member of the China Cruise Development Expert Committee and CEO of Shangchuanba, also said with emotion: "The ships for August are basically sold out. Those that can be sold will be sold, and those that cannot be sold will have to be refunded to the cruise brands. At present, some voyages still lose some money, but no matter what, the risks of the summer vacation have finally passed."

This summer will be a memorable one for cruise agents and brands alike. As a highly anticipated year, domestic and foreign cruise brands have made significant investments. As of May 22, a total of 21 international cruise ships have been operating in ports in my country.

But at the beginning of the summer vacation, the market was out of control like a wild horse. After Wenlv first broke the news that the summer cruise prices plunged, more inside information about the cold cruise market surfaced, and the contradictions between cruise companies and agents became increasingly prominent. Whether under the pressure of public opinion or out of business considerations, the major cruise companies finally came up with some "rescue" measures, so that this storm finally came to a seemingly decent end.

At present, the measures taken by cruise companies are mainly to recall cabins at specific times to reduce the losses of agents. Agents no longer have stranded cabins, and the phenomenon of crazy low-price sales has been curbed. In this way, it seems that the cruise companies have sacrificed the occupancy rate to stabilize the market price, and at the same time, the losses of recalled cabins will ultimately be "paid" by the cruise companies.

Either way, it's a lose-lose situation.From the agent's perspective, the reason is more about high expectations for the summer vacation leading to high pricing, which is then met with a downgrade in consumption.

But the cruise companies have different views. Dr. Liu Zinnan, senior vice president and chairman of Asia for Royal Caribbean Group, also mentioned the bottleneck problem of sales through travel agency channels. At present, after obtaining a large number of cruise resources, travel agency sales agents still rely on traditional models to promote and attract customers, lacking more effective wholesale and distribution methods. This year, the overly optimistic expectations for the summer market, coupled with the increase in cruise market supply and the increase in agency cabin allocation, have led to a sales bottleneck.

Dr. Liu Zinnan further analyzed that after obtaining cabin resources, travel agencies need to wholesale them to lower-level agents - retailers, who then sell them to consumers. This multi-level agency model makes it difficult for cruise companies to grasp sales in real time, and unable to communicate and solve the problem of poor sales in a timely manner. On the contrary, cruise companies are more aware of consumer demand and market fluctuations, and will make timely adjustments based on market demand and supply. In contrast, the cruise company's marketing channels, dynamic cabin management, and control of the demand and supply sides reflect its cabin management level.

The implication is that cruise companies’ direct sales may be more scientific and flexible than some agents. However, some agents also said that cruise companies’ direct sales are inevitable. Some cruise companies’ direct sales systems are indeed very good, while some cruise companies have problems with their internal KPIs and system settings, which leads to customer service direct sales prices being lower than agents’. When the market is not good, they take the lead in smashing prices, which is also one of the reasons why agents break prices during the summer vacation.

The agents' anxious waiting, the cruise brands' weighing and entanglement, and the twists and turns of the entire process are things that outsiders cannot understand, but fortunately, the summer vacation is over.

02

Is the “cold winter” really over?

The short "cold winter" is over, but the off-season has really arrived.

Many industry players said,After the summer vacation, prices returned to normal and supply and demand gradually balanced.There are many reasons behind this change. On the one hand, after September, my country's cruise market entered the off-season and the supply of cruise ships will decrease rapidly. On the other hand, the cruise ships that are still in operation have also begun to lower their prices and received many orders from MICE guests in advance.

From the supply side, after September, the MSC Glory will leave Shanghai for Japan, which means that China's cruise capacity will lose a highly competitive large ship. According to the MSC official website, the MSC Glory will depart from Shanghai to Tokyo on September 6, and a Japanese visa is required for one-way travel.

From the demand side, the gradually returning MICE demand is a pleasant surprise. Liu Jianbin said that all cruise lines are accepting MICE groups, and even some small cruise lines may be chartered. However, MCIE groups are more about volume, so price comparisons will be more severe and profits will be greatly compressed.

Although the most severe summer vacation has passed, the profound impact on the future Chinese cruise market continues. The most direct manifestation is that in 2025, Tianjin home port will lose two international cruise brands, Royal Caribbean's Ovation of the Seas and MSC Mediterranean.

Previously, Wenlv also pointed out in "Tianjin home port loses MSC again, the cruise market in 2025 is full of variables",The cautious layout of many foreign cruise brands will, on the one hand, affect the incremental scale of cruise supply in 2025, and on the other hand, directly affect the overall vitality of my country's cruise market.

On the other hand, since the beginning of this year, negative public opinions such as poor service experience have continued to affect the reputation of the cruise experience.For example, there are long queues for getting on and off the ship, chaotic management, people have to fight for food in the restaurant, and the attitude of some service staff. The most mentioned issue is the dining experience, which brings a very bad experience to passengers, so that tourists who have experienced it will not repurchase, and there are many cases where interested tourists are persuaded to give up.

For travelers, good food and accommodation are the prerequisites for everything, while entertainment facilities are more of a bonus, but they will not affect the final decision. Judging from the many cruise brands that have been complained about, these most basic guarantee services have not met the standards, let alone other things.

Another problem that needs to be improved urgently is that the unique sales model system of my country's cruise ships has exacerbated the conflicts between cruise companies and agents this summer. IPG China Chief Economist Bai Wenxi also publicly stated that in response to the conflicts between direct sales channels and agents, cruise companies need to establish a more reasonable distribution system and coordination mechanism, strengthen market management, and reasonably control capacity and prices to maintain market order and ensure long-term development.

Despite many problems, my country's cruise market is indeed moving forward. For example, the official operation of the "Aida·Modu", the first large cruise ship made in China, has made China one of the few countries outside Europe that has this capability; the emergence of China International Cruise, a truly "all-Chinese" national team in domestic cruise operations, represents the future direction of change in China's cruise industry; in addition, my country has a population of more than 1.4 billion, and the market prospects are still worth looking forward to.