2010 was a tough year for many businesses, but not for Regent Seven Seas Cruises
The Fort Lauderdale
-based luxury cruise line is posting its best year ever in revenues and profits. What's more, the three-ship company expects 2011 to stay strong, as customers seek value in its all-inclusive packages that include suites with balconies, gourmet food, bar drinks and even shore excursions, a perk not included in the ticket price of most other cruise lines.
Regent's President Mark Conroy spoke with the SunSentinel about the company, trends in cruising and other topics aboard the 700-passenger Seven Seas Voyager at Port Everglades
. What follows is an edited version of the interview.
Q. How can you compete with companies much larger than yours, when they have much more bargaining power with suppliers?
A. We gained some economies, when we joined with [three-ship] Oceania Cruises
in 2008 and merged some back-of-the-house operations, such as accounting. But we don't need millions of customers to compete. I need about 70,000 customers a year and Oceania needs a similar number now [to stay full.] That allows us is be a little more nimble in finding those customers.
Regent also relies on repeat customers. On a typical cruise, past customers consume 62 percent of our capacity, because they travel more often and take longer cruises. The travel agents are our secret weapon too, because they tend to recommend us to their friends and their clients in our market.
I see the large lines introducing cruising to probably millions of passengers a year, and they are creating a pool of experienced cruisers, and all I have to do is fish in that pool. I just have to convince them that there's a different way to go cruising — on a smaller, luxury ship, with no line at the port.
We really try to listen to our customers. For our Alaska cruises, we include a one-night pre-cruise hotel package in the price, and if you don't use it, you get a credit for non-use. I'll tell you 70 percent of our cruisers that are booking are taking the package.
Q. What consumer trends do you see in 2011 in food, technology, pricing or other areas?
A. People are looking for healthy food
. We added Canyon Ranch spa and their menu selections in 2009. And guests want choice. We have open-seating [for meals,] so you typically dine when you want where you want. Guests also want value. I think the inclusiveness of our product is what really distinguishes us.
Q. What's included in your price, and why did you switch to an all-inclusive format?
When the recession began, we were looking for what to do to get people traveling again and to get them to book early. We didn't want to discount our product, because you end up getting a different mix of customers. Plus, you train customers not to pay $600 a day but to pay $300 a day, and we as a company can't live on $300 a day. So, we looked at what people spend money on and where we could offer value.
We realized that the largest spend anyone had on board was shore excursions. So, we decided to give them away. Any tour we used to sell for $200 or less, we give away, and those that retail for more than $200, with limited capacity, we sell but without a big margin. About 80 percent of the tours that are taken now are the free ones.
This allows us to maintain the rates we have: about
$600 per day per person. Our ticket price is probably more expensive than others, but the vacation in the end doesn't cost much more … because so much is included.
Q. How did Regent finish up 2010, and what is the outlook for 2011?
A. The best year in our history had been 2008. The first time we felt the recession was late September 2008 after the stock market made that big adjustment downward. Our customers tend to be high net worth people, so they basically stopped spending because nobody knew where the bottom was. But as the stock market bottomed out, and we did some pretty aggressive promotions, business climbed back.
2010 will be the best year in our history, and 2011 is tracking well. We look at forward bookings. Our average bookings are 240 days before departure, so we can see when things slow down and react to it. What we're seeing now, compared to last year, is that our occupancy is about the same and our rate is up substantially. … We're very profitable.
Q. When this tough economy ends, will you go back to a more traditional model, not all-inclusive?
A. The inclusiveness is going to stay, because it really is a differentiator.
Customers are all about value. And price is not the leading-edge. People want to make sure they have a great experience, don't waste their time and don't get nickel and dimed.
Doreen Hemlock can be reached at firstname.lastname@example.org