Columbus Day 2013

The changing face of the over 55 cruise customer

Nathan PhilpotSales & Marketing Director

In 2012, the cruise industry’s average age may be 56 but two-thirds of all cruisers are aged 55+

• There are 18m over 55s in the UK – one-third of the adult population – and will rise to 21m by 2020.

• The biggest single age group in cruise is 65+

• 40% of the over 55 market is single, separated, divorced or widowed (rising to 60% of over 75s)

• A third of all babies born last year will live to over 100.

Some Age Old Facts

Mori/Mintel Research Feb 2012

14% had been on a cruise

62% will not consider a cruise

But 24% would consider a cruise

Love it or hate it?

So 17.5m adults in the UK or a massive 10x the current size of the UK cruise market are considering cruising.

Are we too focused on the those who will not consider?

Are we promoting to those that will consider in the right way?

Today’s over-55s feel relatively sheltered from the economic turmoil as high income and asset ownership as well as absence of dependents afford more financial freedom. The over-55 consumers don’t mind paying a premium price for products of genuine quality.

However, brands’ marketing strategies need to be more inclusive of this demographic, as 2.3 million adults aged 55+ feel that companies and stores don’t cater to the tastes of their age group.

•Ina Mitskavates, Consumer & Lifestyles Analyst, Mintel April 2012

The good news and the bad news?

How we view the market vs how they view themselves

Illusory Superiority

Our View of Cruisers

Are we ageist?

The Majority of cruisers (64%) are over 65

Source: PSA Cruise Review, March 2013

Only 11% are aged 26-44

Source: PSA Cruise Review, March 2013

Biggest Barrier to Selling Cruises was ‘Old Age’

Barriers to selling Fred Olsen Cruise Lines

1%

1%

1%

1%

1%

1%

2%

8%

14%

70%

Booking direct

Wants more commission

System issues

Training requirements

Brochure supplies

Ships need updating

Previous off-sale issues

More advertising needed

Older age range perception

No barriers

Survey of 878 Multiple and Independent High Street Stores

• Average age 67 (from 50 on short cruises to 69 on long cruises)

• Read Telegraph and Daily Mail

• High standards of dress and decorum

• Interests: gardening, reading, classical music, food & wine

• Well-funded pensions and no real financial worries • Prefer tailored communications that recognise their status

• Internet for research but travel agent to book

Current Fred. customer

• Private pensions are worth 30% of what they were and retirement will not be possible as it is known today

• One in 10 people aged 65-75 have chosen to stay in work

• The new generation are GlamMas and SWOFTIES

• Mail online report after gardening and dining, sex is the most popular pastime of the over 55s

• This is a generation that grew up to soft rock (Elton John & David Bowie and the rise of Disco)

• They want to dance, have fun and do yoga

The Future customer

Make love, make war, make money

War Babies

1929-1938

Cash Kids

1949-1958Love Childs

1939-1948

War Babies (aged 75-84)• There are 3.6m which will grow to 3.9m by 2012

• 20% have been on a cruise and 5% still haven’t and are considering

• They feel wealthier than other group and are far less cost-conscious

• They feel invisible in the market place – no one is selling to them

• Daily Internet Usage 15% / Mobile Phone use 77%

• A market here of nearly 1m that are being neglected

Love Childs (aged 65-74)• There are 5.8m rising to 6.4m by 2017

• 70-74 will grow by 23% to 3m

• Biggest opportunity: Companies don't cater to tastes of people in my age group

• 32% have been on a cruise and 39% are considering a cruise.

• Daily Internet usage 37% / Mobile Phone use 80%

• 1.9m existing cruisers and still 800k considering

Cash Kids (aged 55-64)• 7.2m people growing slightly to 7.4m by 2017

• Represent 27% of cruises and remaining static

• Planning holidays is more important (67%) than spending time with family (65%),

• Triple Pension whammy coming

• Daily Internet usage 67% / Mobile Phone use 92%

• 1.5m have cruised and 1.2m would consider

Don’t forget the Swofties?• Smash stereo-types of the ‘old spinster’

• Independent & open to new experiences

• May look and feel younger due to advances in medicine and surgery

• Want to learn and meet new people

• Projected to grow by 27% by 2033 with the biggest growth being in over 55s.

• 18% have cruised and 27% are considering cruise. That’s a market of 2.6m existing and potential cruisers

Fred. Olsen Research

Getting underneath the stats

Focus Groups 1.Newcastle: Cruise Rejecters, 65-752.Newcastle: Cruise Convertibles, 65-753.Newcastle: FOCL: working/retired 55+4.Sutton Coldfield: Competitors: working, 65-755.Sutton Coldfield: Rejecters: working 50-656.Southampton: FOCL, retired7.Southampton: Competitors, 50-658.Southampton: Convertibles, 50-65

What they want?

The key driver remains the destination not brand or ship

They want more time in port to discover destinations

They want to return enriched with stories and experiences (not just a sun tan)

Authenticity

Meeting people and sociability

Local cruises, sampler cruises & cruise & stay

All inclusive

What they do not want?

Cramped public spaces

Ports of no interest

Being ripped off by big bills and high onboard costs

There are polarised views on enforced dress codes with a fear of ‘penguins’

Sell the Destination“Destination, destination, destinationItinerary needs to be at the heart of the cruise marketing message. Almost three quarters of those who have been on a cruise over the past five years and two thirds of potential first timers agree that ‘they are a good way of visiting and exploring destinations”.MINTEL, Cruises, UK April 2012

Reason for choosing to take a cruise holiday

No.1 Itinerary/Destination 70%

PSA Cruise Review, March 2013

What most influenced you to book?

No.1 Itinerary 27%

Travelzoo Cruise Survey 2011

“Destination is THE prime and universal driver of cruise”

Fred Olsen Focus Group Research 2012

What’s important when booking a cruiseNo. 1 Destination (79%)Mail Newspapers ‘Cruise Diaries’ Research

The Experiences is the new Destination

“Who has got the best experience: it’s like who’s got the best tan”

Film Stars & Fast Cars

D-Day Anniversary

Baltic Festivals

Northern Lights

Soft Adventure

Easter Chocolates

In SummaryFish where the big fish are:

The 65-74 age group is the biggest and fastest growing in cruise with 2.7m potential cruises.

Mintel’s advice is to target the over 75s for Cruise – no one is actively doing so and there are 1m potential cruisers.

Sell the sausage not the sizzle: Destination is the driver of cruise bookings not ships

All the single ladies, all the single ladiesThere’s a potential cruise market of2.6m singles, mostly female

who want to meet people and have fun

Question ourselves and be honestAre we promoting the image of cruise that we feel comfortable

with or the image that is the most relevant to the audience?

How to sell the wrong product to the right audience

(or not)

The Hi-fi Store