Cruise bookings: Has the digital pivot favored OTAs?

A recent Phocuswire article explained Expedia’s focus on the cruise segment, continuing to invest to capture cruise demand by simplifying the shopping and booking experience, including a big focus on their call center extending the digital experience. The complexities of a cruise conversion make online bookings a challenge—and the cruise brands’ own call centers are at the center of their direct booking activity—so brands cannot stand by and allow another call center to manage their customer relationships.

Expedia’s strategic focus on the cruise segment is reminiscent of the online travel agency (OTA) approach 15-20 years ago in the hotel sector. Leveraging the technology and consumer experience lessons honed while carving out 25-30% of hotel bookings, OTAs threaten both cruise brands’ and competitive travel agencies’ efforts to engage consumers and drive bookings. Before Online Travel Agents invest millions to hype this new focus on cruise, the time is now for cruise lines to combat this push and cultivate direct relationships by focusing on the consumer booking experience.

In 2020, we experienced a digital pivot across all U.S. consumer demographics driven by the COVID quarantine and a dramatic shift to remote work. SAP reports the largest shift to online commerce came from Boomers—whose online share of their overall spend grew from 25% to 37%. This tendency for consumers to now transact online more comfortably should theoretically translate to more direct-to-brand cruise bookings. Consumers developed confidence in brands that “know” them and offer connected experiences, and confidence grew in their own ability to find information, comparison shop and manage the transaction.

But this will not happen automatically. Cruise (and all travel) brands need to build on the relationships fostered during the pandemic and deliver on the promise of a connected digital experience.

Another consideration is potential share capture by OTAs across demographics most desired by cruise brands. OTAs have been successful attracting Millennial, GenY and GenX consumers that cruise lines crave and the multi-gen trip conversions they can deliver. As reported in PhocusWire, “For the sector to appeal to younger, digital-savvy generations, cruise will certainly have to evolve to some extent. Online giants such as Expedia are well placed, armed with the data, to provide all the necessary tools needed for a full online experience.”

Learning from hotels in the early 2000s

Travel industry veterans may feel like they have seen this movie before. The rise of OTAs in the period between 2000-2010 saw Priceline, Expedia and others invest tens of millions of dollars in advertising to target hotel and air bookings. A few of our Epsilon colleagues were hotel brand executives during the resulting OTA war, an expensive uphill battle to recapture the consumer booking share shift this created.

Megan Graham, senior director at Epsilon Technology and former Hilton marketing technology executive, shared, “What began as an opportunistic partnership to sell available last-minute inventory at a discount evolved into a loss of booking share and a significant customer service challenge.”

Addressing Hilton’s efforts to combat this share shift, Graham continued, “By the time Hilton invested considerable effort (both technology and marketing) and funding to implement a brand-level direct booking strategy to react, the OTAs had already captured booking share they would not give up.”

The technology investments that enabled OTA success were followed by massive broadcast media investments. Hotel and Air “partnership” contract negotiations with major OTAs made headlines while hotel brands publicly appealed for direct bookings in their own media. This elevated awareness of brand-direct relationships and consumer expectations for direct transactions, creating a consumer mindset of “If a brand claims to know me, then I expect to be treated that way, regardless of the channel in which I choose to engage that brand.”

One easy example of the consumer-friendly expectation created by hotels focusing on direct bookings is the connected shopping and booking experience. Just a few years ago, a search on for a hotel in South Florida may still have been followed by an email 30 minutes later for a Courtyard in San Francisco. Today the shopping experience is integrated, so the linked search customer experience (CX) across the website and app is supported by email and authenticated site CTAs that “know” my Bonvoy intent that day. If Marriott doesn’t provide that seamless, connected experience, their OTA partners certainly will.

What can cruise brands do?

Will cruise brands embrace the digital experience necessary to capture their share of online bookings? For example, email clearly rose in importance through the pandemic as stalled brands’ lifeline to consumers. Will next week’s email reflect this week’s site activity, and push the consumer to the real brand experts in your own call center for more vacation booking info? OTAs will take share from traditional agencies, no doubt, but cruise brands themselves have the most to lose if the brand experience is managed inconsistently.  

Consumers have come to expect a connected experience across all channels (website, email, app, direct mail, media, call center), which relies on a unified consumer identity solution powering all channels. If you look to technology vendors like Epsilon for one thing in the recovery, consider how identity can link the interactions of your customers across touchpoints. What challenges stand in the way of your call center providing a seamless consumer experience after a consumer visits your site or engages with an email? What unique knowledge does a cruise brand have about that consumer that they can use to foster confidence, leverage past engagement data and create a conversion experience superior to what an OTA can offer?

Cruise brands have a rare opportunity in front of them with escalating travel demand, consumer buying trends and a positive PR appeal that is currently peaking after a pandemic sentiment rollercoaster. How each brand harnesses demand and cross-channel engagement will determine who wins the booking, particularly important this year as wave booking season will coincide with full cruise industry redeployment.

To summarize why this matters:

  1. Given the digital pivot, the opportunity for cruise lines to engage the cruise consumer in brand direct relationships is now, not after Expedia & Bookings spend tens of millions of dollars advertising their all-in-one app and call center.
  2. The CX that drives direct relationships depends on more than your web site—use the site to start the conversation and then drive consumers to your call center, just like Expedia is planning.
  3. The hotel segment has proven the OTA model appeals to the demographic most sought by cruise brands, and it is incredibly sticky (market share of about 25-30% OTA share for over 10 years). Those consumers with 30 years of lifetime value need to be engaged directly by cruise brands.

Cruise brands, OTAs seem to be targeting the segment at an opportune time. Epsilon has seen—and helped address—the OTA share shift trends that settled into a lasting, uneasy reliance on intermediary partners for bookings and customer relationship management. But this outcome is not pre-ordained. By leveraging your powerful data asset and the right technology and analytics, you can create the uniquely personalized experience that will motivate savvy consumers to book direct!

While Epsilon was acquired by Publicis Groupe in 2019 for our Data, Technology & Digital Media businesses, Identity and our digital CORE ID are receiving the most attention as the U.S. emerges from pandemic lockdowns. An identity solution based on the combination of our legacy offline and digital data assets maximizes the number of the same people with whom you can talk across channels. For example, a recognized site visit drives personalization in your email and digital media to cultivate your conversion funnel, with all engagement data fed to your call center to complete the booking.

The exceptional, immersive brand experiences that cruise provides onboard can be extended to your communications more easily than ever. Let’s learn from the OTA lessons taught in other travel segments and harness the COVID digital pivot to drive brand-direct relationships and bookings.

This blog post was co-authored by Bob Brown.