Improved revenue has floated Royal Caribbean’s boat this year. Can a new ship launch—and brand partnerships—take the cruise line’s fortunes even higher?
The line’s newest ship, Allure of the Seas, sets sail on its maiden voyage Dec. 1 with marketers DreamWorks and Starbucks aboard.
Money’s still tight for potential cruisers, so adding “brand experiences” is one more way for big fish like Royal Caribbean to cozy up to customers.
When passengers sail with Allure, they will see Megamind in 3D—in the first movie theater of its kind on a ship—and How to Train Your Dragon on ice, among other DreamWorks productions. DreamWorks CEO Jeffrey Katzenberg said the brands plan to expand the “DreamWorks experience” to other Royal Caribbean ships. “To take characters off screen and to bring them life was a new run for us,” added Kerry Phelan, who heads worldwide licensing and consumer products at DreamWorks.
Meanwhile, Starbucks is also touting its partnership with Royal Caribbean. After posing questions on MyStarbucksIdea.com, the coffee chain decided to give consumers what they wanted. “Our customers have been asking for a Starbucks at sea, so we delivered,” said Kerry Busheikin, vp of licensed store operations, East.
From Royal Caribbean’s perspective, it was time to expand on its existing relationship with Starbucks, said Betsy O’Rourke, Royal Caribbean’s svp of marketing in an interview with Brandweek during a media preview sailing on Allure last weekend. The cruise line already offers Starbucks-owned Seattle’s Best coffee on its ships. “We continue to serve Seattle’s Best, but as we further expand globally, we wanted a brand like Starbucks, which has greater global recognition,” O’Rourke said.
Royal Caribbean has an aggressive marketing plan in place for the Allure launch. The company kicked off a campaign for Allure in June, with TV spots boasting the DreamWorks partnership. “The nation of why not?” is the tagline. Two more spots debuted since then, along with several Webisodes on Royal Caribbean’s site. One Webisode, for instance, documents the first pour at Allure’s Starbucks on Nov. 19.
Social media, word of mouth and celebrity endorsements—on the Today show and Oprah— are also part for the mix. Additionally, Royal Caribbean has tapped international consumers to serve as its “reporters at sea” and create segments in different languages to promote Allure’s many features. O’Rourke wouldn’t disclose the campaign’s cost.
In addition to DreamWorks and Starbucks (for which Royal Caribbean is paying a licensing fee), the company has brought other brands onboard, including the Guess Accessory store and the Britto Art Gallery.
Allure without doubt is Royal Caribbean’s most impressive ship yet. But can the cruise line get consumers to spend money now that the economy is improving? Stewart Chiron, a cruise industry analyst—also known as The Cruise Guy—said consumers are embracing cruising now more than ever. “Cruising offers the highest satisfaction rate of all available vacations and for good reasons. Cruise ships are sailing full and prices are rising,” he said.
The brands alone, however, won’t be enough to get passengers to sail on the ship. “It may [even] dilute revenue as Allure was selling just fine without DreamWorks,” said Chiron, noting that Norwegian Cruise Line hasn’t seen a bump as a result of its relationship with Nickelodeon.
So far, things are looking good for Royal Caribbean. According to chairman and CEO Richard Fain, half of all its ships’ capacity has been filled for next year. SEC filings show that Royal Caribbean’s revenue was up 16 percent to $5.1 billion from January to September 2010. In Q3 2010, the company posted a higher-than-expected quarterly profit, lifting shares 15 percent to the highest level in nearly three years, per Reuters. In its earnings forecast, Royal Caribbean said consumers were willing to pay more for its cruises next year.
While Royal Caribbean enjoys a revenue spike and publicity surrounding Allure, its biggest rival, Carnival, is recovering from a Nov. 8 incident that left 3,299 passengers and 1,167 crewmembers stranded off the Baja California coast after an engine-room fire on the Splendor. One analyst, Wells Fargo’s Tim Conder, told USA Today that the event wouldn’t have a long-term impact on Carnival’s bookings.
According to Chiron, what sets Royal Caribbean apart is the fact that there are no other ships that can provide a similar experience. “Oasis and Allure of the Seas are in a unique class by themselves,” he said.
Will consumers choose a specific ship because of Starbucks or the DreamWorks experience?
“Probably not,” concedes Chiron. “But these brands will be able to entice passengers to spend more money while onboard, which is the goal.”