From Likes to Leads :

From Likes to Leads : Cruise agents, social media & the impact of emerging technologies A joint Amadeus North America Cruise Lines International Association survey on opportunities for the cruise industry Independent research commissioned with Schwartz Consulting Partners

2 Table of contents An introduction to cruise agents, social media & the impact of emerging technologies... 1-2 Overview of the cruise specialist according to Amadeus research... 2 Social media and the cruise market... 3 Travel agancies and social media... 3-4 Cruise companies and social media... 4 Emerging technology and the next generation of cruise customers... 5 Adopting mobile applications and technology... 6-7 Emerging technology and agent adoption... 7-9 Company information... 10-11

1 v An introduction to cruise agents, social media & the impact of emerging technologies Like many other industries, the cruise industry is constantly challenged to predict how social media and mobile technology will be used and what tactics and initiatives will take the best advantage of them. To assist in this endeavor, the Cruise Lines International Association (CLIA) and Amadeus North America commissioned a study to examine how the cruise lines, cruise travel agencies and cruise customers are adopting emerging technologies. Schwartz Consulting Partners, a Tampa-based marketing research company with expertise in travel and emerging media research, provided analysis of the survey results. CLIA and Amadeus polled more than 1,000 travel agencies in the survey. Of the respondents, 13% were representatives of large travel agencies that sell a minimum of 300 cabins a year, 43% were representatives of medium-sized travel agencies that sell between 50 299 cabins a year and 44% were representatives of small travel agencies that sell between 1 49 cabins a year. Owners and managers accounted for 57% of the respondents, with cruise specialists representing 24% and independent contractors representing 19%. All respondents were asked for their input regarding cruise industry trends related to the following: Technology needs New generation of cruisers Vacation preferences Social media adoption As a part of the study, Amadeus also spoke with marketing executives from a number of major cruise line companies regarding their current and anticipated use of emerging technology. An earlier study commissioned by Amadeus and conducted by JD Powers reveals that over 60% of travelers worldwide use social media travel-related sites. The results of this study indicate that the cruise industry is responding to emerging technology in a similar fashion. All major cruise lines have Facebook pages. Carnival and Disney Cruises have amassed half a million Facebook followers each. Furthermore, 54% of cruise specialists already use social networking for their business and reported that on average 13% of all stateroom bookings now come from leads generated via social media tactics and initiatives.

2 Overall, the survey shows that despite uncertainty regarding the details of exactly how emerging technology will impact the industry, expectations are high as cruise specialists, cruise lines and cruise customers gear up to understand and take advantage of this new medium. v Overview of the cruise specialist according to Amadeus research The cruise specialist market consists primarily of agencies with at least 70% of their business devoted to selling cruises, tour packages and insurance to leisure customers. A smaller portion of their business involves booking air, car and hotel reservations. To take advantage of favorable pricing opportunities, most agencies are members of a travel alliance, franchise or consortium. Travel agents with this set of characteristics are often referred to as cruise specialists. Cruise specialist general demographics (2010 statistics) 53 years old (average) 75% female 15 years of industry experience (average) 88% are agency decision makers 72% currently have ARC 58% are home based Cruise specialist GDS and revenue information 56% have annual revenues less than $100K and gross sales less than $500K 32% book air via the GDS 54% book non-air segments direct with a supplier 54% use a GDS Top reasons cruise specialists utilize a GDS Ability to compare and book cruises and excursions easily, efficiently and accurately Ability to book anywhere and at anytime Significant CRM capabilities Ability to create custom packages within the system Marketing and sales ideas to attract more business Ability to customize travel documents (itineraries and invoices) Ability to find the lowest fares Access to cruise related data from the GDS (port information, cruise line information) Integrated front-to-back solution Protection from bad checks, credit card fraud and default of cruise deposits Destination training for agents

3 v Social media and the cruise market Facebook, the world s largest social network, has more than 641 million members worldwide with a 35% annual growth rate. The age distribution comparisons between Facebook members and cruise customers do not overlap significantly today, however, the social networking generation represents a coming wave of new cruise consumers. Social media use among the 35 44 age group, as well as younger age groups, may be seen as a predictor of significant opportunity. The age groups 44 and below will have an expectation of being serviced in a manner that past cruise passengers have not demanded. The cruise specialist and cruise lines that will succeed in the coming years will be the ones that are able to engage with customers in the social media stratosphere. Facebook members Cruise passengers 30% 28% 28% 26% 26% 25% 21% 20% 17% 18% 15% 15% 10% 7% 8% 5% 5% 0% 1% 1% 0% Under 18 18-24 25-34 35-44 45-54 55-64 65 and older Figure 1 v Travel agencies and social media Approximately 54% of agencies that participated in the survey actively use social networks to generate cruise customer leads. Furthermore, 16% of small agencies get at least 30% of their customers through social media tactics and initiatives. Inline with social media demographics, this trend is also age based. For agencies that cater to cruise passengers under the age of 45, between 18% and 20%, receive 33% or more of their leads from social media sources like Facebook and Twitter.

4 The following outlines the main uses of social media among cruise specialists 68% engage with customers 43% post offers or discounts 39% promote new products and/or services 19% provide travel advice 19% allow customers to share experiences 12% provide customer service Over 70% of cruise specialists have their own Web sites, about half of which allow for online booking. This however, does not predict social media adoption and success. Against expectations, 72% of the specialists without Web sites use social networks as an effective substitute, receiving as many or more bookings from social media tactics or initiatives as agents who have Web sites. This number drops to 41% for agents with marketing based Web sites and 30% with booking based Web sites. v Cruise companies and social media Cruise companies have seen a major shift in recent years for marketing and advertising initiatives due to the emergence and power of social media. All of the major cruise lines have established Facebook pages and many have Twitter profiles and blogs. The primary use of social media among cruise line companies is for marketing and brand building rather than direct sales. However, some companies do foresee an increase in sales directly via Facebook. Cruise line advertising is also experiencing a shift from seasonally targeted ad campaigns using traditional television and print media to more dynamic and conversational consumer-focused interactions with social media as the primary platform. Facebook likes (as of May 3, 2011) Carnival Disney Royal Caribbean Princess Celebrity Holland America Norwegian MSC Cunard Oceania Seabourn Uniworld Crystal Silver Sea Windstar Avalon Azamara Regent Seven Seas Paul Gauguin Hurtigruten USA AMA Waterways 107,299 105,079 89,635 35,259 24,206 11,813 10,214 9,890 6,863 5,840 4,323 4,123 3,367 2,935 2,275 1,488 859 297,713 260,324 535,081 724,427 0 250,000 500,000 750,000 Figure 2

5 v Emerging technology and the next generation of cruise customers As the cruise consumer market gets younger, agents see the use and influence of social networks increasing. Agent expectations Agency use of social media 76% 23% 1% Social media influence on cruise sales 76% 20% 4% General use of social media 76% 21% 3% Customer online research 72% 26% 2% Online booking 55% 38% 7% Increase Stay the same Decrease Figure 3 When cruise specialists were asked which potential enhancements in social media marketing would most help the cruise industry, they were largely in agreement about the significant benefits available for promotion and increased word of mouth from customer sharing. In particular, the chart below elaborates on the potential benefits. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Social media areas that would most help business 29% 29% 27% 26% 24% 22% 23% 22% 22% 24% 18% 15% 12% 23% 20% 14% 17% 20% 9% 9% 9% 9% 9% 9% 8% 6% 8% 8% 8% 9% Under 35 35-44 45-54 55-64 65 and older Figure 4 Promotions Customer sharing Social media booking Will not help my business Mobile apps Ratings and reviews DK/others

6 v Adopting mobile applications and technology Some of the cruise lines are also already making preparations for the incorporation of mobile technology into the cruise experience. In the near future, smart phone cruisers may expect to engage with the cruise line during three phases: Pre-booking Pre-cruise On-board During the pre-booking phase, more cruise line Web sites will be adapted for smart phone viewing providing prospective cruisers the opportunity to research their vacations using mobile devices. During the pre-cruise phase, cruise lines will use text messaging and e-mail along with cruise line smart phone apps to provide cruisers with notifications about events and updates leading up to their departure date. On-board, these same smart phone apps will be used to allow cruisers to make dinner and excursion reservations as well as to receive notifications about cruise events and even to communicate with shipmates using their own cell phones. For the latter, ships are likely to employ Wi-Fi technology that will allow cruisers to connect independently of their regular mobile phone provider or platform and without having to incur roaming charges. Agents differ, primarily by their customer demographic, in their view of the impact of smart phone applications on their customers. Overall, interest in mobile applications increases directly with the age of the average customer. The estimates for the younger cruise segments are comparable to the findings from the earlier Amadeus/JD Power study, which revealed that about 40% of airline passengers would use mobile applications that deliver real-time information on flight and baggage status as well as airport directions. Agents indicating mobile apps would help business 65 and older 28% 55-64 30% 45-54 32% 35-44 35% Under 35 38% 0% 10% 20% 30% 40% Figure 5

7 When agents are asked about the likelihood of customer use of in-cruise mobile applications, differences again appear according to the agents primary customer age segment. In general, approximately half of all agents believe that cruise customers would likely use mobile applications that notify them about cruise events. Most cruise agents however, regardless of the age of their customers, do not believe that their customers would be interested in mobile applications that enable them to transact business with the ship cashier. This will change with the prominence of the younger generation of cruisers who expect to be engaged via mobile technologies, as noted in the figure of Facebook members versus cruise passengers. We would use the figure number here. v Emerging technology and agent adoption The survey also examined the primary means of booking reservations used by cruise specialists as well as managers and owners of travel agencies. Overwhelmingly, agents who use automation systems (travel Web sites, third party booking engines or GDS) reported significantly greater stateroom bookings than agents who rely mainly on more traditional methods. This was reported across all types and sizes of agencies. Average annual cruises sold GDS* Agency booking engine* Consortia booking engine Supplier Web site Call supplier* Third party booking engine Consolidator / wholesaler Cruise line Facebook Travel Web site Online affiliate programs 153.7 157.8 188.1 259.7 241.9 174.5 140.8 196.9 140.7 198.6 117.1 193.8 112.5 195.9 80.9 196.7 48.4 317.6 367 563 0 100 200 300 400 500 600 Do not prefer Prefer Figure 6

8 While cruise specialists are widely accepting of emerging technology, they express a fair amount of uncertainty about how they might best take advantage of these tools. When cruise specialists were asked why they do not use automated services and emergency technology the most frequent answer, given by 34% of non-users, was I want to talk to a real person. On the other hand, those agents who do use automation were asked about the main benefits. The most frequent response, cited by 65% of users, was ease of use. Agents that initially felt uneasy with the emerging technology and their presumptive belief of depersonalization, were very pleased with the ease of adoption of the same technologies into their businesses. Furthermore, the survey revealed that the increasing use of social media is more often seen as an improvement than a detriment to the ability to connect with customers. One cruise line executive in the survey expressed the use of social media as a way of putting a more human face on the brand. Another spoke of recent trends in online marketing as a dynamic and customer-led set of conversations with social media as the platform. The most encouraging finding of this study and the reason the cruise industry should feel confident that they will overcome this uncertainty is that ocean or sea voyages are the overwhelming favorite of cruisers regardless of age or technical expertise. Agents report that younger cruisers are more likely to select all-inclusive resorts, land-based packages and resort vacation packages. Older cruisers are more likely to prefer European and US river cruises and land-based escorted tours. But, most significantly regardless of age group, the lead preference is the cruise vacation or ocean/sea voyage. Destination preferences by age group Cruise vacation or an ocean/sea voyage All-inclusive resorts* Land-based package* European river cruise vacation* Visit to friends/relatives Resort vacation package* Land-based escorted tour* Non-package land-based trip Vacation house rental Vacation/business trip Time shares Non-package resort vacation US river cruise vacation* Camping trip 23% 21% 20% 23% 18% 18% 15% 18% 14% 14% 14% 9% 15% 6% 5% 39% 43% 45% 40% 34% 31%% 58% 62% 67% 76% 84% 94% 94% 0% 20% 40% 60% 80% 100% Under 45 45 and over Figure 7

9 Amadeus is expecting another growth year in cruising with projections from the 2011 Seatrade Conference announcing that over 16 million passengers are expected in 2011; an increase of over 1 million cruisers from 2010. Furthermore, according to CLIA studies, the cruise industry has had an average annual growth rate of 7.2% every year since 1990, with 2011 in position to continue that trend of passenger growth. The fact that only 20% of North Americans have cruised and only 3% of North Americans cruise on an annual basis presents a significant opportunity for the cruise industry to prosper. Based on industry reports, it is estimated that 26 new ships will be joining CLIA.

10 About Amadeus Amadeus is a leading transaction processor for the global travel and tourism industry. With an impeccable track record of delivering the best travel technology across the globe, Amadeus has more than two decades of experience in IT innovations and solutions. Amadeus enables the travel supply chain with cruise, airline, hotel and travel agency IT, e-commerce, content and distribution solutions. Local knowledge & global reach We re committed to North America more than ever before. You can also count on Amadeus global footprint in 219 markets to help you serve areas outside North America and expand into new territories. Connect with us In the US, call 1.888.AMADEUS, in Canada call 1.888.611.5554 or e-mail us at salesinquiries@amadeus.com. www.amadeus.com About CLIA Cruise Lines International Association is the world s largest cruise association and is dedicated to the promotion and growth of the cruise industry. CLIA is composed of 26 of the major cruise lines serving North America and is an organization that operates pursuant to an agreement filed with the Federal Maritime Commission under the Shipping Act of 1984 and serves as a non-governmental consultative organization to the International Maritime Organization, an agency of the United Nations. CLIA was formed in 1975 in response to a need for an association to promote the special benefits of cruising and in 2006 merged with the International Council of Cruise Lines (ICCL), a sister entity created in 1990 dedicated to participating in the regulatory and policy development process of the cruise industry. CLIA exists to promote all measures that foster a safe, secure and healthy cruise ship environment, educate, train its travel agent members, and promote and explain the value, desirability and affordability of the cruise vacation experience. CLIA is consistently rated the most effective travel association in terms of overall support of the travel agency community, the value for the money, and the quality of its training programs. For example, CLIA s most comprehensive training is the Cruise Counselor Certification Program, which requires agents to successfully complete a number of compulsory training courses and exams, attend cruise conferences and conduct ship inspections, among other things. CLIA also offers Management and Sales Institutes, classroom training and training videos.

11 Schwartz Consulting Partners is a full service market research consultancy based in Tampa, Florida. Schwartz Consulting is an industry leader in contemporary market research methods, with a special focus on travel and emerging technology. As cruise marketing is becoming more increasingly customer focused, tracking of individual customer experience is becoming increasingly essential for success. A single dissatisfied customer on Facebook can be disastrous. Schwartz Consulting Partners recently introduced ASK3, a short, three-question, application that is ideally designed for tracking customer experience with online travel transactions. As a part of the booking process, ASK3 takes only seconds, yet provides the kind of in-depth market intelligence today s online retailers need. More information is available online at www.jettsurvey.com/ask3 and at www.schwartzconsulting.com.