Mass market goes luxury on the high seas


By Rebecca Tobin

When Carnival Cruise Lines launched its first product in 1973, an inexpensive party cruise, it was the bottom feeder of the industry: “Lower than a snake’s hips,” as CEO Bob Dickinson likes to say.

Yet today, if passengers turn over the plates in one of Carnival’s reservations-only, $30-per-person Supper Clubs, a mainstay on all its newest ships, they will discover that the brand of china is Versace.

Bottom-feeder no longer. The world’s most popular cruise line today appeals to “everybody” Dickinson insists -- including people who know how to pronounce Versace.

It’s not that Carnival has transformed itself into a luxury line, but even on “mass-market” cruise ships, consumers are discovering -- and coming to expect -- more luxury touches.

“Over time, lines like Carnival have given people options to be every bit as sophisticated as the luxury lines,” Dickinson recently said.

Traditional luxury cruise lines, whose domain has long been no-holds-barred opulence, with prices to match, have been challenged in recent years like never before.

Peter Ratcliffe, CEO of the Princess and Cunard brands, went so far as to assert that “all cruise ships are luxury” today.

“I call it the democratization of luxury,” Ratcliffe said. “All products are increasing their level of luxury, and they’re doing it for good pricing.”

Increasingly, this trend has left the traditional luxury lines attempting to differentiate their products with such intangibles as service, atmosphere and simple elitism -- hobnobbing with other wealthy and socially privileged passengers.

The slow road to luxury

There was no single defining moment when mass-market cruise lines suddenly became luxurious, but certain milestones stand out:

In short, cruise lines have been successfully raising the bar on their product for years.

Carnival doesn’t call itself a luxury cruise line, but there’s no disputing that places like Las Vegas -- where the cruise industry looks for inspiration -- have gone upscale.

The biggest name in the resort trade there (don’t call it a “casino”) is Wynn Las Vegas, a hotel with room rates at $260 -- and a Broadway-type show, a Chanel boutique and a Ferrari dealership.

When a travel company is competing against the two biggest benchmarks in the U.S. travel industry -- Vegas and Orlando -- it has to keep up, which often means reinventing itself. In addition to upscale china, Carnival is now rolling out new mattresses, duvets and pillowcases, which it describes as “an ultra-fine, ring-spun, satin-striped cotton blend” that will create “a luxurious and comfortable sleep environment.”

The 2005 Leisure Travel Monitor -- published by Yesawich Pepperdine Brown and Russell/Yankelovich Partners -- taking note of the phenomenon, called it “the mainstreaming of affluence.” What has happened is that “ordinary people have affordable access to things that used to be the preserve of the wealthy,” including “touches of luxury.”

“I think there’s always an increasing quest for value and getting better quality,” said Ron Kurtz, the director of the Miami-based American Affluence Research Center and a former cruise line executive. “It’s sort of an ongoing evolution of the consumer having higher expectations.”

During the cruise industry’s early years, a cruise was considered a vacation for the wealthy, a perception that stemmed from the industry’s roots. The liners of the steamship era offered three classes of service, but when the lines started offering “pleasure cruises,” they naturally tended to emphasize the best they had to offer. Cruises were billed as “all first class.”

By developing cruises for the masses back in the 1970s, Carnival considerably broadened demand, but lately, the trend has been a return to opulence. About 15 years ago, most passengers would have been happy with an oceanview stateroom. Today, the private balcony has almost achieved that same status.

“Balconies aren’t a deluxe amenity anymore,” Kurtz said.

Sushi bars and wine lists

In the contemporary category, Norwegian Cruise Line offers crystal stemware (and Versace plates) in some of its specialty restaurants. So does premium-level Holland America Line, which spent a quarter-of-a-billion dollars transforming its product into an upscale offering for the demanding baby boomer market. It features Bulgari china in its specialty restaurants.

Any cruise line worth its extra tonnage has a specialty restaurant, where the food and service are comparable to fine dining in any landside establishment, with the added attraction of ocean views. Sushi bars, once considered exotic, are now commonplace, as are lengthy wine lists.

The Carnival Valor, like other Carnival ships in the same class, has a wine bar. HAL offers cappuccino bars with a premium Starbucks blend. Celebrity’s ships have martini and champagne bars. Everybody has a spa with expensive treatments.

What’s left to differentiate the luxury lines? They once boasted about open-seating dining, but now NCL has been there, done that. Exotic destinations? Carnival is in the Mediterranean, Princess is in Korea, and HAL is in Libya. Fine dining and an upscale onboard experience? See all of the above.

“I think [contemporary and premium] lines are stepping up,” said Bill Smith, senior vice president of sales and marketing for Crystal Cruises. Passengers, he said, “are reading more, seeing more and have more options and choices around the world. They’ve come to expect that in daily life.”

And yet, most industry insiders insist that new luxury and old luxury remain distinct markets.

For Smith, the challenge lies in emphasizing atmospheric differences. “The Reidel, the Christoffle, that’s just part of the experience,” he said. “It’s the service, the food and the people who you’re with throughout the ship.”

David Morris, senior vice president of sales for Silversea Cruises, also asserted that personal service is a differentiator: “If you buy a Chanel suit at Highland Park Village [in Dallas], they offer to have lunch served when you’re in the store. Those kind of people expect that.”

“Regardless,” he added, “the big ship is not going to provide the same service as a small ship.”

Clearly, size matters. And ships in the luxury class are small enough for passengers to feel like part of a club, an elite group of discerning guests.

Take Cunard. People who pay the most and book the top suites are part of the exclusive Princess Grill and the super-exclusive Queens Grill restaurants -- which puts the top passengers in a “mini-environment” within the bigger ship, Cunard’s Ratcliffe said.

“Clearly [you have] the quality of of service,” Ratcliffe said. “But again, you can get that on other lines. So what does the Grill give them? Well, you’re going across the ocean and you’re meeting the top people in the country. The Grills have created this feeling that really interesting people are there ... and it’s distinguishing your brand.”

In a recent study, the American Affluence Research Center asked a group of consumers with an average household income of $369,000 and an average net worth of $2.7 million to name two cruise line brands that offer the best quality, irrespective of price.

Respondents most frequently named Royal Caribbean International, followed by HAL and Princess. “Luxury” brands Crystal and Seabourn showed up in eighth and ninth place.

Kurtz, whose company undertook the study, said there could be two explanations for the “apparent anomaly”: Respondents might have misunderstood the question and based their answers on value rather than solely on quality -- or they might not yet have tried the luxury lines.

“In either case, the luxury cruise lines are clearly missing an opportunity with the target market,” Kurtz wrote.

While some of the market is migrating upscale -- in expectations if not in price -- another piece of the market is moving down the scale, Kurtz said.

“I think contemporary and premium [lines] have created higher levels of quality, both in suites and in the concierge and butler service, that has made it more appealing to the affluent market.”

Crystal’s Smith said the survey could reflect the tremendous recognition the contemporary and premium markets have bought for themselves. “Clearly Royal and Princess and Holland carry more people than we do,” he said.

Crystal is still going to market in the usual ways, and its advertising talks up specific luxury differentiators that mix brand names with lifestyle choices.

If cuisine-savvy passengers associate upscale, Japanese cuisine with the Nobu chain of restaurants, the thinking goes, potential passengers will be lured, or at least impressed, by Crystal’s Nobu sushi bar.

The emphasis on upscale brand association is not lost on cruise lines. Cunard Line doesn’t just have a champagne bar; it has a Veuve Cliquot champagne bar. Silversea Cruises is trying to form an emotional link between its cruises and its partnerships with Loro Piano cashmere and Acqua di Parma toiletries.

But that’s an easy game for contemporary and premium lines to play, too. Consider Royal Caribbean, which touts its Ben & Jerry’s ice cream counters, and HAL’s Explorer’s Cafe, which sports a prominent placement for the New York Times.

Still, Smith insists that the luxury market isn’t losing passengers to the premium lines -- at least Crystal isn’t.

“I think they may go to Celebrity and experience it,” he said of Crystal’s passengers. “But once I walk out of my suite that I’m paying top dollar for, the rest of the ship isn’t living up to that experience. There is nothing luxurious about standing in long lines.”