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Working Paper
Michael P. Vogel
Bremerhaven, 11th September, 2004
Abstract
This empirical study aims to understand how the cruise industry perceives its past and
future exposure to uncertainty; which sources of uncertainty it considers to be gaining
importance over time; and by which means it intends to cope with the uncertainty.
It is based on the hypothesis that cruise companies face uncertainty from four main
sources: demand, competition, distribution, as well as the economic and political
environment. For each of these sources, the study proposes five to six indicators, or
factors, of uncertainty, which can be observed and evaluated relatively easily.
In a written survey, cruise industry representatives were asked to rate the changes in the
importance of these factors of uncertainty that have taken place since the year 2000, and
the changes they expected to occur until the year 2010. The respondents further rated
the importance of different business functions for coping with the uncertainty.
Overall, the findings suggest that three years after the 9/11 attacks, uncertainty in the
cruise industry remains on a high level. In various respects, future developments are
expected to bring about even more uncertainty. But more importantly, the study
highlights a fundamental qualitative shift in the respondents’ perception of uncertainty:
for the period 2000 - 2004, uncertainty was associated with a mix of risks and
opportunities, whereas for the period 2004 - 2010, uncertainty is seen as a provider of
more opportunities than risks for the cruise industry.
According to the respondents, the most important business functions to cope with the
uncertainty, and therefore to seize the opportunities provided by the uncertain future
changes in demand, competition, distribution, and the industry environment, are
technology and marketing. This should be reflected by cruise companies’ budgetary and
investment priorities, management development activities, and strategies anticipating
continuously high uncertainty levels.
Acknowledgement
I am grateful for the support of the empirical survey by the Hochschule Bremerhaven.
M. P. Vogel: International Cruise Industry - Coping with the Uncertainty page 3
1. Introduction
Exactly three years ago, the attacks on the World Trade Center in New York and on the
Pentagon in Washington marked the beginning of a qualitatively new phase for the
travel, tourism and hospitality industries worldwide. What started with an immediate
plunge in bookings, occupancies, and turnovers, leading to a radical short-term cutback
of investments and sending shockwaves through the entire sector, has triggered or
accelerated many profound longer-term changes on both the demand and the supply
side, which still strongly influence the way tourism is developing today.
Also the cruise industry was severely hit. But the mobility of their ships allowed cruise
companies to react faster and more flexibly than hotel chains. Capacities were
redeployed to destinations that were perceived safe, and flight-inclusive cruise
programmes were replaced by homeland cruises. Airlines went bankrupt, and so did
some cruise lines. But while the airline industry parked hundreds of aircraft in the desert
in order to limit the cost of idle capacities, the cruise industry reduced prices and held its
breath. Somewhat luckily, the strategy succeeded. Soon, demand recovered, and many
companies returned to profitability.
Yet significant uncertainty remains. In some parts of the world, the geopolitical situation
is becoming more complicated every day, and security concerns still abound. Demand
remains highly price sensitive; technological progress is affecting the role and position of
distribution intermediaries; the forced market exit of players like Festival, Renaissance
and Royal Olympic has changed market structures; and the industry’s high innovation
rates may turn winners of the past into the losers of the future.
The purpose of this study is to understand how the cruise industry itself perceives its
past and future exposure to uncertainty; which sources of uncertainty it considers to be
gaining importance over time; and by which means it intends to cope with the
uncertainty.
Three terms which are central to this study need some clarification: uncertainty, risk, and
opportunity. Uncertainty refers to future developments the outcomes of which are not
certain. Risk denotes uncertainty bearing chances of loss or damage for cruise
companies. Opportunity, finally, is to be understood as a possibility for cruise companies
due to a favourable combination of circumstances. Hence, risk and uncertainty in the
context of this study are not identical with the homonymous concepts known from
decision theory.1
1
In decision theory, risk specifies situations with different possible outcomes which can be assigned
specific probabilities of their occurrence. Uncertainty also refers to situations with different possible
outcomes, but here the outcomes cannot be assigned probabilities.
M. P. Vogel: International Cruise Industry - Coping with the Uncertainty page 4
2. Methodology
This study is based on an empirical survey conducted between February and April 2004.
During this period, about 100 envelopes were sent to ocean cruise companies, ocean
cruise tour operators, and international passenger ferry companies in North America,
Europe and Asia.
The envelopes were mostly addressed to human resource directors and contained a
cover letter as well as three copies of a questionnaire (see appendix A). In the letter the
recipient was asked to complete and return one questionnaire, and to forward the other
two questionnaires to a marketing or sales manager, and to a strategy or finance
manager of her or his company. This way, 300 questionnaires have been distributed.
The objective of this procedure was to get different points of view on the same questions
from representatives of the same companies. These points of view could be expected to
vary because of the different information available to each of the three respondents.
The questionnaire was divided into five sections.2 Section 1 contained questions about
the company and the respondent. Sections 2 to 5 comprised questions covering four
possible sources of uncertainty and asking how particular aspects of uncertainty had
developed since the year 2000; how these aspects were expected to change until 2010;
whether the past and uncertain future changes were seen as opportunities or rather as
risks; and finally, how the companies would cope with the expected future changes.
With very few exceptions, all questions were closed-ended, offering a fixed range of five
possible answers.
In the course of the analysis of the returned questionnaires, all answers were trans-
formed into integer scores (variable name x) ranging from 1 to 5, so that for each
question, the mean score x and the empirical standard deviation s could be computed.3
The mean scores x can be assumed to reflect, or to be proportional to, rates of change.
Depending on the type of question, the mean scores x were then interpreted in the
following way:
1.0 ≤ x ≤ 1.5: strong increase / very important / mainly opportunities
1.5 < x ≤ 2.5: moderate increase / important / more opportunities than risks
2.5 < x ≤ 3.5: no change / less important / opportunities and risks
3.5 < x ≤ 4.5: moderate decrease / not important / more risks than opportunities
4.5 < x ≤ 5.0: strong decrease / irrelevant / mainly risks
2
Actually, the questionnaire contained a sixth section, asking the respondents to validate a particular
management competency model. However, the findings of that section were not intended for, and taken
into account by, the present study.
1 1
3
Sample statistics: x =∑n
x and s =
n −1 ∑ ( x − x )2 where n is the sample size.
M. P. Vogel: International Cruise Industry - Coping with the Uncertainty page 5
The standard deviation s is a measure of the dispersion of answer scores x around their
respective mean score x . Therefore, s can be regarded as an indicator for the level of
consensus among the respondents regarding a specific answer to a question. The
possible values of s were interpreted as follows:
0.0 ≤ s ≤ 0.5: strong agreement
0.5 < s ≤ 0.8: some agreement
0.8 < s ≤ 1.2: some disagreement
1.2 < s: strong disagreement
In chapter 5 of this study, two additional parameters will be introduced, an average mean
score x̂ and the standard deviation ŝ calculated on the basis of individual mean scores.
While the interpretation of the values of x̂ will be the same as of x , the interpretation of
ŝ will be given in the context of the chapter itself.
3. Sample
The response rate of the survey was low. Only 11% of the 300 questionnaires distributed
were returned. Telephone calls to a small number of companies that had not replied
suggested two main reasons for this response rate:
(a) Stock-listed companies or subsidiaries of stock-listed parent companies may not
have been allowed to disclose certain information or answer some of the questions
without communicating the same information also publicly.
(b) Since uncertainty and risk are sensitive issues, companies did not want to be
associated with a study on this subject matter, the outcome of which was not
foreseeable for them.
The 33 completed questionnaires were returned from twelve European companies based
in Great Britain, Finland, France, Germany, Italy, and Norway, as well as from four
companies in the United States. Most of the responding companies were small or
medium in size. Only two of them were subsidiaries of the “Big Three” (Carnival
Corporation, Royal Caribbean International and Star Group). This seems to confirm the
particular situation of stock-listed companies mentioned above.
The respondents occupied the following functions in their respective companies: human
resources (9x), sales (7x), finance or controlling (6x), marketing (6x), strategy (2x),
managing director (2x), and information management (1x).
For reasons of confidentiality, the names or further details of the participating companies
and individuals cannot be provided.
M. P. Vogel: International Cruise Industry - Coping with the Uncertainty page 6
4. Sources of Uncertainty
The questionnaire design was based on the hypothesis that cruise companies face
uncertainty from four main sources: demand, competition, distribution, as well as the
economic and political environment. Uncertainty about future technological progress
itself is not a problem for a cruise line, but it becomes one if this technological change
may erode the company’s competitive advantage (competition-related uncertainty) or
weaken its position in retailing (distribution-related uncertainty).
Since the four terms specifying the sources of uncertainty are relatively abstract and
require lots of explanations before respondents are able to understand and answer
questions about them, sets of more operational indicators were needed that would make
the questionnaire as little abstract as possible.
Therefore, for each source of uncertainty, five to six factors of uncertainty were defined,
which had to fulfil two criteria: to represent facets of the respective source of uncertainty,
and to be very clear and concrete. The resulting hierarchic model of total uncertainty,
sources of uncertainty, and factors of uncertainty is depicted in appendix B.
4.1 Demand
4.1.1 Demand as a source of uncertainty in 2000 - 2004
To investigate the importance of the demand side as a source of uncertainty for cruise
companies, respondents were asked how much, according to them, the following six
factors, or indicators, of uncertainty had changed since the year 2000:
• Demand for cruises
• Sensitivity of demand with respect to price
• Share of late bookers (< 30 days prior to departure)
• Predictability of demand
• Customers’ cruise-specific know-how
• Customers’ uncertainty about the geopolitical situation
With a mean score of x =1.88, the sensitivity of demand with respect to price was seen
by the respondents as the demand-side factor of uncertainty having displayed the
strongest increase over the past four years. The associated standard deviation s=0.83
equals the mean standard deviation calculated for all answers of the sections 2 to 5 of
the questionnaire. In other words, there was an average disagreement among the
respondents concerning the increase of the sensitivity of demand with respect to price.
Due to their fixed-cost structure, cruise lines have a strong incentive to offer price
discounts to late bookers in order to fill empty capacity. A growing price sensitivity of
demand makes this incentive even stronger, and should normally lead to a rising share
of late bookings. The respondents, however, confirmed this hypothesis just partly.
According to them, the share of late bookers ( x =2.38 with s=0.92) has risen less
M. P. Vogel: International Cruise Industry - Coping with the Uncertainty page 7
significantly than the price sensitivity of demand since 2000. This is good news for the
cruise industry because it largely seems to have escaped the downward spiral tantalising
the airline and hotel business.
The predictability of demand was considered stable by the respondents. Its mean score
of x =3.02 was the highest for any demand-side factor of uncertainty. It means that
demand for cruises today was regarded as equally predictable as in the year 2000. The
standard deviation of s=1.31, however, speaks a different language. It shows that the
respondents disagreed significantly over this factor, and indeed, answers given by the
cruise company representatives varied from 1.00 (“strong increase”) to 4.00 (“moderate
decrease”).
The reason for this heterogeneity could be the result of great behavioural differences of
customers in the different geographical markets and market segments in which the
respondents’ companies operate.
The remaining demand-side factors covered by the questionnaire - demand for cruises,
customers’ cruise-specific know-how, and customers’ uncertainty due to the geo-
political situation - achieved mean scores in the range 2.07 ≤ x ≤ 2.34 (with standard
deviations of 0.74 ≤ s ≤ 0.93), indicating moderate increases in all of them.
customers’ need for expert advice in the information, decision-making and booking
process prior to a cruise may decline, providing opportunities for new, less advice-
oriented distribution channels and reducing the role of traditional travel agencies.
The following figure 1 summarises these findings diagrammatically by depicting the
mean scores of all six questions with respect to the periods 2000-2004 and 2004-2010.
This representation allows comparing the respondents’ views on past developments of
demand-side factors of uncertainty against their expectations about the future.
Sensitivity of demand
2.36 1.88
with respect to price
Customers' uncertainty
2.47 2.13
due to geopolitical situation
Customers' cruise-specific
2.34 1.82
know-how
4.2 Competition
4.2.1 Competition as a source of uncertainty in 2000 - 2004
The second potential source of uncertainty for cruise companies covered by the
questionnaire was competition. The respondents were asked how much, according to
them, the following six factors had changed during the period 2000-2004:
• Overcapacities
• Market entries of new competitors
• Degree of concentration among cruise companies
• Insolvencies and market exits
• New product concepts; product differentiation
• Price level of cruises
Among those six factors, the emergence of new product concepts and product
differentiation was perceived to have increased the most ( x =1.97 with s =0.51).
Although for more traditional and less innovative companies, this tendency may
represent a risk which could even prove fatal, the industry as a whole clearly benefits
from it. Innovation and differentiation allow targeting new customer segments and
maintaining prices at higher levels.
According to the respondents, on average the price levels of cruises has remained
stable since the year 2000 ( x =3.19). In the presence of moderately increasing
overcapacities ( x =2.26 with s=0.69), the successful avoidance of industry-wide price
battles can be seen as the consequence of the tendency towards greater differentiation
just described.
Interestingly, the respondents disagreed strongly over the issue of price stability
(s=1.25). Closer inspection of their answers revealed that most of them thought prices
had decreased moderately, but a few “outliers” felt that price levels had actually
increased moderately or even strongly. In two of these cases, the specific niche products
or markets may indeed have allowed the respondents’ companies to raise prices against
general market trends. In the other cases it can only be conjectured that the respective
respondents actually wanted to express the opposite, but got the dimensions of the
questionnaire wrong.
The other competition-related factors contributing to uncertainty in the cruise industry -
market entries of new competitors, market concentration, insolvencies and market
exits - were given mean scores of 2.39 ≤ x ≤ 2.71, indicating very moderate increases or
no changes at all, with rather high degrees of consensus (0.46 ≤ s ≤ 0.71) among the
respondents.
M. P. Vogel: International Cruise Industry - Coping with the Uncertainty page 10
4.3 Distribution
4.3.1 Distribution as a source of uncertainty in 2000 - 2004
As a third possible source of uncertainty for cruise companies, the distribution side of
their business was covered by the survey. In the questionnaire, the respondents were
asked to rate the importance of changes in the following five distribution-related factors
for the period 2000-2004:
• Degree of concentration in travel retailing
• Commission rates for cruise distribution
• Expert cruise know-how expected from travel agents
• Share of direct sales in total cruise sales
• Sales of cruises via the Internet
According to the respondents, the importance of cruise sales via the Internet has
increased significantly since the year 2000 ( x =1.89 with s=0.83). Although the turnover
generated online with cruise products is still small, this is an interesting finding. It
challenges the conventional wisdom that cruise customers require detailed advice and
personal contact with an agent they have confidence in. It can be conjectured that
Internet buyers of cruises are mainly people who either look for the best available deals,
not caring much about the specific product offered, or who are repeat buyers, already
knowing the product and therefore not needing any further advice.
The degree of concentration in travel retailing was felt to have increased moderately
( x =2.13 with s=0.83) since 2000. A higher concentration can have an ambiguous effect
on the cruise industry. On the one hand, it could gradually shift the balance of
negotiation power in favour of the retailers and lead to the risk of rising commission rates
or other distribution costs. But the respondents did not perceive such a development
over the past four years: they largely agreed that commission rates for cruise
distribution have largely remained stable ( x =2.79 with s=0.49).
On the other hand, a higher concentration of the distribution side may be associated
with the emergence of more professional and more efficient retail networks, investing
more in training and technology. Both would improve the quality of the sales process,
and benefit those types of products in particular, which tend to be consulting-intensive
and more complicated to book - cruises for instance. In this case, concentration would be
seen as an opportunity by the cruise industry.
The importance of training is highlighted by the respondents’ view that the level of
expert cruise know-how required from travel agents has also increased moderately
since 2000 ( x =2.10 with s=0.71). This judgement is in line with the previous
observation that cruise products seem to be getting increasingly differentiated (see
sections 4.2.1 and 4.2.2).
M. P. Vogel: International Cruise Industry - Coping with the Uncertainty page 13
The share of direct sales in the cruise industry, finally, seems to have remained largely
stable over the past four years ( x =2.57), though there was some disagreement among
the participants of the survey on this issue (s=1.07). Less than in other parts of
organised tourism, direct sales in the cruise industry are a domain of the Internet. A
much bigger business for cruise lines is the on-board direct sale of cruises to their own
passengers.
Degree of concentration in
2.13 1.74
travel retailing
General propensity
3.13 2.00
to consume
Fig. 4: Mean scores of factors of uncertainty related to the economic and political
environment of the cruise industry
M. P. Vogel: International Cruise Industry - Coping with the Uncertainty page 17
Fig. 5: Mean scores of the summary questions about the meaning of different types of
past and expected future changes for cruise companies
5.2 Findings
The complete synthetic profile is depicted by the dotted line in figure 6. It is graphically
embedded in the four original uncertainty-specific profiles, showing the resemblance
between them. The values given in the figure are the average mean scores x̂ .
Technology 1.36
Separate profiles for the
four sources of uncertainty
Marketing 1.38
Synthetic profile combining
all types of uncertainty
Strategy
1.61
Organisation 1.78
Human Resources
1.92
Finance 2.57
Fig. 6: Synthetic profile of mean scores for the importance of different business functions
to cope with uncertainty
With only one exception, all business functions proposed in the questionnaire and listed
in section 5.1, scored remarkably low average means of 1.36 ≤ x̂ ≤ 2.12, which means
that the respective functions were considered important or even very important.
Compared to other parts of this study, such low scores really stick out. The pre-selection
of suitable business functions by the author cannot alone explain these ratings, since
also the sources and factors of uncertainty (see appendix B) had been pre-selected in the
same way.
Possibly, the respondents wanted to emphasise the necessity to combine several
business functions in order to succeed. But equally well, the respondents’ judgements
might have been systematically biased against everything that had to do with risk and
passiveness, and biased in favour of everything that implied action and success.
Therefore, these results need to be interpreted with some caution.
M. P. Vogel: International Cruise Industry - Coping with the Uncertainty page 20
As can be seen from figure 6, technology was almost consistently rated the most
important function of all for coping with uncertainty. With its average mean score of
x̂ =1.36 and a standard deviation of ŝ =0.27, technology was broadly considered “very
important”. Of the four individual mean scores x ={1.25; 1.31; 1.13; 1.75}, only one did
not fall into the “very important” category. The respondents felt that technology is not so
well suited for dealing with uncertainty originating from the political and economic
environment of the cruise industry ( x =1.75).
In the context of sales-side uncertainty, technology was assigned the greatest
importance ( x =1.13). This is not surprising, given the power of today’s reservation
systems, yield management instruments, knowledge management tools, and the rate of
technological progress in these areas.
Technology was very closely followed by marketing as a business function employed to
cope with uncertainty. The low standard deviation of ŝ =0.10 shows that the average
mean score of x̂ =1.38 is a very good representative of the individual mean scores
x ={1.46; 1.34; 1.25; 1.47}. This means that marketing activities play an almost equally
important (and always “very important”) role, be it in the context of demand-side
uncertainty, competitive uncertainty, sales-side uncertainty, or political and economic
uncertainty facing cruise companies.
According to the respondents, strategy as a business function follows on third position
with an average mean score of x̂ =1.61 (“important”) and a fairly low standard deviation
of ŝ =0.21. From the individual mean scores x ={1.52; 1.38; 1.88; 1.66}, it follows that
strategy is regarded as particularly effective in the face of competition-related uncertainty
( x =1.38). In comparison with the functions of technology and marketing, however,
strategy still only occupies the third place with respect to this source of uncertainty.
This provokes the question whether, ultimately, it is not company’s strategy that
determines the use of technology and marketing tools (‘structure follows strategy’). If this
is so, i.e. if the concrete forms of technology and marketing applied by a cruise company
are actually consequences of strategic decisions, why did the respondents not put
strategy on top of the list of business functions?
The reason could lie in the narrow definition of strategy proposed in the questionnaire
(see section 5.1 above). Another reason could be that technology and marketing may
have been regarded as the most effective business functions to fix unforeseen
‘emergency’ situations, whereas strategic reactions take time and are thus more limited.
A third possible explanation is that the majority of respondents perform rather
operational functions in their respective companies (see chapter 3), and therefore may
have assumed more operational points of view when completing the questionnaire.
Organisation achieved an average mean score of x̂ =1.78. It was thus considered an
important business function for cruise companies to cope with uncertainty. A look at the
individual mean scores x ={1.61; 1.49; 1.63; 2.38} explains the high standard deviation
of ŝ =0.40. In coping with uncertainty originating from within the cruise industry itself -
M. P. Vogel: International Cruise Industry - Coping with the Uncertainty page 21
4
A two-sided test using the normal distribution did not reveal a significant difference between the two
sample means at a 5% level of significance.
M. P. Vogel: International Cruise Industry - Coping with the Uncertainty page 22
Appendix A: Questionnaire
In autumn 2003, Bremerhaven University of Applied Sciences, located on the shore of the German North Sea, has launched the
first degree course in Cruise Industry Management worldwide. It is a 3-year Bachelor programme which has been developed in
cooperation with major cruise companies in Germany.
With the present survey we want to explore the impact of uncertainty on the cruise industry. The information gathered will be
used to prepare a research report. It can further help us to adjust our study programme to the specific needs of the cruise
industry with regards to the handling of uncertainty.
We kindly ask you to contribute to our study by completing this questionnaire and returning it before the end of April 2004 to:
Hochschule Bremerhaven
Prof. Dr. Michael Vogel
An der Karlstadt 8
27568 Bremerhaven
Germany
Alternatively, you can fax it to +49 471 4823 285, attn. Michael Vogel.
If you are not able to answer a question, or if you are not allowed to disclose certain information, please leave the line blank. All
answers will be treated confidentially. No information that can be associated with you or with your company will be given to third
parties in any form.
In return for your completed questionnaire you will receive a copy of the final report via email.
1.5 How many employees does your company have? 0 - 20 20 - 100 100 - 500 500 - 2000 > 2000
❍ ❍ ❍ ❍ ❍
1.6 Which term describes your company best? Shipping company Tour operator Travel Agency Other
❍ ❍ ❍ ❍
1.7 What type of cruises does your company offer? Ocean Coastal River Ferry Others
❍ ❍ ❍ ❍ ❍
Part 2: Demand
According to you, how much have the following factors strong no strong
changed in your market since 2000? increase change decrease
1 2 3 4 5
2.1 Demand for cruises ❍ ❍ ❍ ❍ ❍
2.2 Sensitivity of demand with respect to price ❍ ❍ ❍ ❍ ❍
2.3 Share of late bookers (< 30 days prior to departure) ❍ ❍ ❍ ❍ ❍
2.4 Predictability of demand ❍ ❍ ❍ ❍ ❍
2.5 Customers’ cruise-specific know-how ❍ ❍ ❍ ❍ ❍
2.6 Customers’ uncertainty due to geopolitical situation ❍ ❍ ❍ ❍ ❍
According to you, how much will the following factors strong no strong
change in your market until 2010? increase change decrease
1 2 3 4 5
2.7 Demand for cruises ❍ ❍ ❍ ❍ ❍
2.8 Sensitivity of demand with respect to price ❍ ❍ ❍ ❍ ❍
2.9 Share of late bookers (< 30 days prior to departure) ❍ ❍ ❍ ❍ ❍
2.10 Predictability of demand ❍ ❍ ❍ ❍ ❍
2.11 Customers’ cruise-specific know-how ❍ ❍ ❍ ❍ ❍
2.12 Customers’ uncertainty due to geopolitical situation ❍ ❍ ❍ ❍ ❍
How important will the following functions be for your very not
company to cope with these demand-side changes? important important
1 2 3 4 5
2.15 Technology (e.g. IT infrastructure, data networks,
❍ ❍ ❍ ❍ ❍
knowledge-based systems, reservation systems)
2.16 Organisation (e.g. responsibilities, (de-)centralisation,
❍ ❍ ❍ ❍ ❍
distribution of tasks, processes, outsourcing)
2.17 Human resources (e.g. recruitment policy, training,
❍ ❍ ❍ ❍ ❍
management development, headcount reductions)
2.18 Strategy (e.g. company objectives, business model,
❍ ❍ ❍ ❍ ❍
acquisitions, alliances, new markets)
2.19 Capacity management (e.g. own ships, charter
❍ ❍ ❍ ❍ ❍
contracts, occupancy guarantees, distribution capacity)
2.20 Marketing (e.g. target group definition, CRM, cruise ship
❍ ❍ ❍ ❍ ❍
concepts, product development, pricing, communication)
2.21 Finance (e.g. capital lockup, debt ratio, raising equity,
❍ ❍ ❍ ❍ ❍
sell and lease back)
2.22 Other (please specify)
❍ ❍ ❍ ❍ ❍
M. P. Vogel: International Cruise Industry - Coping with the Uncertainty page 26
Part 3: Competition
According to you, how much have the following factors strong no strong
changed in your market since 2000? increase change decrease
1 2 3 4 5
3.1 Overcapacities ❍ ❍ ❍ ❍ ❍
3.2 Market entries of new competitors ❍ ❍ ❍ ❍ ❍
3.3 Degree of concentration among cruise companies ❍ ❍ ❍ ❍ ❍
3.4 Insolvencies and market exits ❍ ❍ ❍ ❍ ❍
3.5 New product concepts; product differentiation ❍ ❍ ❍ ❍ ❍
3.6 Price level of cruises ❍ ❍ ❍ ❍ ❍
According to you, how much will the following factors strong no strong
change in your market until 2010? increase change decrease
1 2 3 4 5
3.7 Overcapacities ❍ ❍ ❍ ❍ ❍
3.8 Market entries of new competitors ❍ ❍ ❍ ❍ ❍
3.9 Degree of concentration among cruise companies ❍ ❍ ❍ ❍ ❍
3.10 Insolvencies and market exits ❍ ❍ ❍ ❍ ❍
3.11 New product concepts; product differentiation ❍ ❍ ❍ ❍ ❍
3.12 Price level of cruises ❍ ❍ ❍ ❍ ❍
How important will the following functions be for your very not
company to cope with these competitive changes? important important
1 2 3 4 5
3.15 Technology (e.g. IT infrastructure, data networks,
❍ ❍ ❍ ❍ ❍
knowledge-based systems, reservation systems)
3.16 Organisation (e.g. responsibilities, (de-)centralisation,
❍ ❍ ❍ ❍ ❍
distribution of tasks, processes, outsourcing)
3.17 Human resources (e.g. recruitment policy, training,
❍ ❍ ❍ ❍ ❍
management development, headcount reductions)
3.18 Strategy (e.g. company objectives, business model,
❍ ❍ ❍ ❍ ❍
acquisitions, alliances, new markets)
3.19 Capacity management (e.g. own ships, charter
❍ ❍ ❍ ❍ ❍
contracts, occupancy guarantees, distribution capacity)
3.20 Marketing (e.g. target group definition, CRM, cruise ship
❍ ❍ ❍ ❍ ❍
concepts, product development, pricing, communication)
3.21 Finance (e.g. capital lockup, debt ratio, raising equity,
❍ ❍ ❍ ❍ ❍
sell and lease back)
3.22 Other (please specify)
❍ ❍ ❍ ❍ ❍
M. P. Vogel: International Cruise Industry - Coping with the Uncertainty page 27
Part 4: Distribution
According to you, how much have the following factors strong no strong
changed in your market since 2000? increase change decrease
1 2 3 4 5
4.1 Degree of concentration in travel retailing ❍ ❍ ❍ ❍ ❍
4.2 Commission rates for cruise distribution ❍ ❍ ❍ ❍ ❍
4.3 Expert cruise know-how expected from travel agents ❍ ❍ ❍ ❍ ❍
4.4 Share of direct sales in total cruise sales ❍ ❍ ❍ ❍ ❍
4.5 Sales of cruises via the Internet ❍ ❍ ❍ ❍ ❍
According to you, how much will the following factors strong no strong
change in your market until 2010? increase change decrease
1 2 3 4 5
4.6 Degree of concentration in travel retailing ❍ ❍ ❍ ❍ ❍
4.7 Commission rates for cruise distribution ❍ ❍ ❍ ❍ ❍
4.8 Expert cruise know-how expected from travel agents ❍ ❍ ❍ ❍ ❍
4.9 Share of direct sales in total cruise sales ❍ ❍ ❍ ❍ ❍
4.10 Sales of cruises via the Internet ❍ ❍ ❍ ❍ ❍
How important will the following functions be for your very not
company to cope with distribution-related changes? important important
1 2 3 4 5
4.13 Technology (e.g. IT infrastructure, data networks,
❍ ❍ ❍ ❍ ❍
knowledge-based systems, reservation systems)
4.14 Organisation (e.g. responsibilities, (de-)centralisation,
❍ ❍ ❍ ❍ ❍
distribution of tasks, processes, outsourcing)
4.15 Human resources (e.g. recruitment policy, training,
❍ ❍ ❍ ❍ ❍
management development, headcount reductions)
4.16 Strategy (e.g. company objectives, business model,
❍ ❍ ❍ ❍ ❍
acquisitions, alliances, new markets)
4.17 Capacity management (e.g. own ships, charter
❍ ❍ ❍ ❍ ❍
contracts, occupancy guarantees, distribution capacity)
4.18 Marketing (e.g. target group definition, CRM, cruise ship
❍ ❍ ❍ ❍ ❍
concepts, product development, pricing, communication)
4.19 Finance (e.g. capital lockup, debt ratio, raising equity,
❍ ❍ ❍ ❍ ❍
sell and lease back)
4.20 Other (please specify)
❍ ❍ ❍ ❍ ❍
M. P. Vogel: International Cruise Industry - Coping with the Uncertainty page 28
According to you, how much have the following factors strong no strong
changed in your market since 2000? increase change decrease
1 2 3 4 5
5.1 Disposable household income ❍ ❍ ❍ ❍ ❍
5.2 General propensity to consume ❍ ❍ ❍ ❍ ❍
5.3 Uncertainty about the future economic situation ❍ ❍ ❍ ❍ ❍
5.4 Impact of political crises on the cruise industry ❍ ❍ ❍ ❍ ❍
5.5 Safety and security regulations in the cruise industry ❍ ❍ ❍ ❍ ❍
5.6 Uncertainty about the future geopolitical situation ❍ ❍ ❍ ❍ ❍
According to you, how much will the following factors strong no strong
change in your market until 2010? increase change decrease
1 2 3 4 5
5.7 Disposable household income ❍ ❍ ❍ ❍ ❍
5.8 General propensity to consume ❍ ❍ ❍ ❍ ❍
5.9 Uncertainty about the future economic situation ❍ ❍ ❍ ❍ ❍
5.10 Impact of political crises on the cruise industry ❍ ❍ ❍ ❍ ❍
5.11 Safety and security regulations in the cruise industry ❍ ❍ ❍ ❍ ❍
5.12 Uncertainty about the future geopolitical situation ❍ ❍ ❍ ❍ ❍
How important will the following functions be for your very not
company to cope with these changes in its environment? important important
1 2 3 4 5
5.15 Technology (e.g. IT infrastructure, data networks,
❍ ❍ ❍ ❍ ❍
knowledge-based systems, reservation systems)
5.16 Organisation (e.g. responsibilities, (de-)centralisation,
❍ ❍ ❍ ❍ ❍
distribution of tasks, processes, outsourcing)
5.17 Human resources (e.g. recruitment policy, training,
❍ ❍ ❍ ❍ ❍
management development, headcount reductions)
5.18 Strategy (e.g. company objectives, business model,
❍ ❍ ❍ ❍ ❍
acquisitions, alliances, new markets)
5.19 Capacity management (e.g. own ships, charter
❍ ❍ ❍ ❍ ❍
contracts, occupancy guarantees, distribution capacity)
5.20 Marketing (e.g. target group definition, CRM, cruise ship
❍ ❍ ❍ ❍ ❍
concepts, product development, pricing, communication)
5.21 Finance (e.g. capital lockup, debt ratio, raising equity,
❍ ❍ ❍ ❍ ❍
sell and lease back)
5.22 Other (please specify)
❍ ❍ ❍ ❍ ❍
Thank you very much for participating in this survey! Now please do not forget to send back the questionnaire.
Sources of uncertainty Factors of uncertainty
Demand for cruises
Sensitivity of demand with respect to price
Related to the Share of late bookers (< 30 days prior to departure)
demand-side Predictability of demand
Customers’ cruise-specific know-how
Customers’ uncertainty about the geopolitical situation
Overcapacities
Market entries of new competitors
Degree of concentration among cruise companies
Competition-related
Insolvencies and market exits
New product concepts; product differentiation
Price level of cruises
Uncertainty
Degree of concentration in travel retailing
Commission rates for cruise distribution
Appendix B: Hierarchic decomposition of uncertainty
Related to the
Expert cruise know-how expected from travel agents
sell-side
Share of direct sales in total cruise sales
Sales of cruises via the Internet
M. P. Vogel: International Cruise Industry - Coping with the Uncertainty
Fig. B1: Comparison of mean scores for the importance of different business functions to
cope with demand-side uncertainty and with all types of uncertainty combined
Finance 2.57
2.52
3.00 2.50 1.50 1.00
Fig. B2: Comparison of mean scores for the importance of different business functions to
cope with competition-related uncertainty and with all types of uncertainty combined
M. P. Vogel: International Cruise Industry - Coping with the Uncertainty page 31
2.13
Human Resources 1.92
Fig. B3: Comparison of mean scores for the importance of different business functions to
cope with sell-side uncertainty and with all types of uncertainty combined
Environment-related uncertainty
Marketing 1.47 1.38
All types of uncertainty
Fig. B4: Comparison of mean scores for the importance of different business functions to
cope with environment-related uncertainty and with all types of uncertainty combined