As easyGroup will shortly be entering the cruise market I would like to make an addition to your analysis of its current state (MW November 13). To my mind, the way to build this market is by unbundling the package and using demand-based pricing.
Traditionally, the cruise market offers an all-in price: customers get on at point A, cruise for a week, then get off at point A again. The result is that the market caters only for those rich in money and time, specifically an older age group.
Any innovation examined in your article is limited: I do not think that adding “activity holiday” products will materially stimulate this market. On the contrary, the product needs to be unbundled, not added to. Your article touches upon the idea charging customers for food and beverages, but should have examined this idea further – as we have done for easyCruise.
There are many cheap flights to the Mediterranean these days, and consumers have the confidence and ability to get themselves to a port. Once at the port, there is no need to insist on customers staying on board for a predetermined length of time. easyCruise will offer berths from £29 a night, the price rising with demand, and consumers can stay aboard as long as they like, subject to availability. Meals will be available at the restaurant on a pay-as-you-go basis, or travellers on a tighter budget can buy basic sustenance from the shop.
Suddenly, the product becomes of interest to the back-packer who discovers that an overnight easyCruise is cheaper and more pleasant than the bus as a means of getting from one part of the Mediterranean to another. The average family of two adults and two children, previously put off by the prospect of keeping the children occupied for a full seven days at sea, can stay for a couple of nights. And dedicated cruisers will still be able
to purchase the services to which they have become accustomed.
I’m happy to read that the cruise market is already estimated to grow by some 6 million passengers in the next eight years. The easyGroup has showed that price elasticity works in other markets, so easyCruise should make this an even larger number.