Fred. Olsen Cruise Lines is one of the UK’s most prestigious and well known brands. Founded well over a century ago, the line has kept up pace with an industry which is moving at breakneck speed – and is now one of the most innovative companies working within the industry today. Cruise News UK sat down with Nathan Philpot, director of sales and marketing for the operator to discuss competition, niche markets and future plans.
Fred. Olsen Cruise Lines operates older, smaller ships. How difficult is it for Fred.Olsen to compete with companies with large modern ships that operate in the same space?
Our fleet is unashamedly British in character and caters to the more traditional market, offering homely surroundings and all the comforts, coupled with excellent onboard product delivery. It is a quintessentially British experience for our more than 90% British guests. The cruise market offers a wide spectrum of cruise passengers and ours choose Fred.Olsen for our onboard experience, homely atmosphere and our absolute and total commitment to service.
Your smaller ships can’t match the facilities and amenities now available on the large ships. What is the draw-card that keeps on bringing thousands of passengers back onto Fred. Olsen’s ships each year?
Fred.Olsen is renowned for its outstanding service onboard and great cuisine but most importantly our clients choose us for the exciting destinations we offer. With our small ships we can offer itineraries to some of the more remote destinations and generally dock as close as is possible. Our ships are able to go all the way up-the Amazon River to Manaus, or into Ho Chi Minh or directly into the heart of St. Petersburg. Overwhelmingly clients choose the destinations they wish to visit before choosing their ship. As we offer a vast array of cruises around the globe our clients have plenty of options to choose from. We also enjoy a very strong repeat trade.
What are some of the best sales attributes of the Fred. Olsen Cruise Lines product?
Our strength is an intimate product where a client is an individual; they are referred to by their name, and staff will even remember their favourite tipple. For clients convenience we also offer departures from a number of regional ports such as Rosyth, Greenock, Newcastle, Harwich, Belfast and Portsmouth. In 2013 we will offer departures from Liverpool’s new Pier Head terminal, which we are particularly excited about. This is on top of departures from our traditional ports of Southampton and Dover, so in 2013 more than 90 percent of the UK’s population will be no more than 90 minutes away from a Fred.Olsen departure port. We also offer excellent fly cruise options to our destinations further afield on our longer ‘Around the World’ itineraries.
What is the typical customer profile for Fred. Olsen?
Our clients are typically in their mid- sixties, ‘Middle—England’ conservative, financially savvy and secure and generally looking for a safe, good value cruise experience to some of the world’s more unique destinations.
You have recently announced going all-inclusive on some cruises in 2013. What has been the driver for this decision and how did the market respond?
The decision to go all-inclusive was reached after extensive research of our past guests. The results clearly pointed out that what guests feared the most are large onboard bills at the end of their holiday which played an important part in our decision process. The growing trend in the UK towards fully inclusive holidays was another factor as well as a desire differentiate Fred.Olsen from other cruise lines that could not afford to go down the fully-inclusive route. Our cruise holidays are now even better value which also helps us attract a younger age group.
You have recently walked away from doing business with Thomas Cook due to lack of financial protection. How has that decision impacted on Fred. Olsen and has it been replaced through other sources?
Thomas Cook was a very strong distribution point, but our financial protection had to come first. It is very hard to quantify the full sales impact, but as a company Fred.Olsen Cruise Lines is performing very well, which to us means that a lot of smaller, independent high street agents saw Thomas Cook dropping out as an opportunity for them to pick up more Fred .Olsen business and we are seeing that. To what extent the growth of business through other channels is the fall -out of the Thomas Cook business we will never know, but we are extremely happy with our performance to date.
Some of your competitors have reduced commissions from 2012. Are you looking to follow the lead of your competitors?
have changed our commission structure early this year to encourage agents to stop discounting our product. Source commission had been reduced by 5% and now the full 5% taken away from the source payment is paid only annually on total sales. Agency agreements have been modified to stipulate that Fred.Olsen Cruise Lines’ products can only be sold at the pricing levels set by the company, with no further discounting permitted. In essence, agents not being able to discount has made selling our product more profitable, as they still earn a healthy 10 percent commission at source and then receive the balance of their commission in one lump sum annually. In the past large chunks of the 15% commission paid ended up as a consumer discount and therefore agents are far better off financially now selling the Fred.Olsen product.
What percentage of total guests for Fred.Olsen Cruise Lines originate from the UK? And what are some of the other major nationalities Fred. Olsen handles on its ships?
UK passengers account for over 90 percent of our total cruise guests with the balance made up by Australians, South Africans, Dutch and guests from Belgium.