Keeping the regional advantage at AIDA Cruises

This article first appeared in the Spring/Summer 2015 issue of International Cruise & Ferry Review. To read other articles, you can subscribe to the magazine in printed or digital formats

As the market leader in the German-speaking cruise market with just over 50% share, Carnival Corporation’s regional specialist brand AIDA Cruises still cannot afford to take its dominance of this highly developed cruise source market for granted. As rivals such as TUI Cruises invest in new ships and international players seek stronger footholds in the region, AIDA is engaged in strategies of its own to keep guests loyal and attract new ones.

“The image and perception of cruising is not what it used to be – old people, stuffy, conservative. It has become a lifestyle product,” says Michael Ungerer. In the brand’s target market of Germany, Austria and Switzerland, “going on cruise holidays has arrived really in the middle of the society and demand for cruising in this market is still unrestrained.

“I think we will definitely overtake the UK this year as the major European source market reaching two million cruisers, and we can reach probably about three million by 2020. The economic situation and the parameters in Germany are still very good. “Also, Germans have 4-6 weeks’ holiday a year and going on holiday comes right after discretionary spending on cars. So those parameters will not change as long as supply keeps coming, which it is. We have seen more and more multigenerational cruises, meaning grandparents, grandkids, parents with kids, but also groups of adults of different ages going together.”

If the demographics of the market are holding steady, the line’s new flagship, AIDAprima, is set to bring a new excitement to the brand when she is delivered in autumn 2015 by Mitsubishi Heavy Industries in Japan. Her sister vessel will follow in 2016. Ungerer says of the new prototype: “It’s not just a product development – it’s really a step change that we are building at the moment. Work is progressing very well and the quality is really exceptional.”

That quality has come at a cost, with the yard already having paid substantial fines for delays due to the unexpected complexity of the project. “The Mitsubishi yard takes great pride in building such a vessel,” says Ungerer. “They have the capability, with 160 years-plus experience in constructing vessels, including cruise ships. Their approach is very meticulous and quality minded; they have a manufacturing approach to the way they go about it. What we are building there together with Mitsubishi is really a step change, a prototype in many respects, not just in terms of product content but also technical solutions and that is a huge undertaking.”

There was some surprise in the industry when AIDA opted for the Japanese yard over the European shipbuilders that construct most Carnival Corporation brand vessels. He points out: “They have done a couple of cruise vessels for our corporation in the past and in the meantime have built very highly specialised research vessels, in complexity very close to cruise vessels. They certainly have the expertise.” He admits that the new ship’s specifications would be challenging for any yard: “With a prototype vessel or platform like that you need a lot of time in advance for planning before you start building.”

However, he says: “I’m confident with the new schedule now. Financially we are protected. We have huge consumer confidence – the reaction of our guests to the delay was not negative because they understood that we are about to create something really special and it just happens to take time.”

Given the successful formula that AIDA has had for many years, what motivated this decision to commission such a complicated new ship type? “For us this is a completely new platform, also larger, which builds upon our customer insights and the way we see the market developing,” says Ungerer. “We employed a think-tank years ago already to gain some insights into where the future holiday market is going and we have incorporated all that into our newbuild.”

What strategies does AIDA Cruises have to fill the added capacity of the fleet as the two new larger ships join it? “What we obviously need to do – and this is true for all cruise companies which are growing – is to target first-timers; convince people who haven’t thought of a cruise holiday yet that this is the best holiday there is. Not just from the point of view of product content but also value for money, which is still unbeatable.”

Ungerer says the decision to base AIDAprima in Hamburg year-round will make it much more accessible for this target group, as they can simply drive or take a train or bus to the ship. “Vessels are becoming more of the destination. This is reflected in the product content: there is just more variety, more space, more offers and more individuality. These are the major trends we are seeing.”

Perhaps surprisingly in an age in which the newer big ships feature ever more intensive exercise options, he observes that the German-speaking market is headed in another direction, favouring “less activity, more relaxation”. This, he says, goes for the first-timers as well.

“It is very important to try to understand what our customers really want, in connection with demographic change. We accompany the guest through all those touchpoints – pre-cruise, onboard and post-cruise.

“We changed our marketing mix in the last couple of years, shifting a little from newspaper ads to magazines, starting a TV campaign again, using online media to get in contact. You really have to try and reach these people where they are, also according to what type of media they consume.” Travel agents are still the main way the company sells cruises.

The company’s reputation for green cruising is important to the German-speaking market, he believes.

“We have always been able to build in certain operational efficiencies, also efficiencies related to energy savings. I firmly believe we do have a special responsibility, because we advertise a pristine environment as part of our selling proposition, so we have a special responsibility to keep it that way. Also I don’t really see a contradiction between being environmentally responsible and profits. Every ton of fuel that you don’t need is good for the environment and also for the bottom line. “A year or so ago we decided to invest over €100 million in environmental technology on our newbuilds and existing fleet – from exhaust gas cleaning technology all the way to using LNG technology on our new vessels, and Mitsubishi’s air lubrication system that blows air bubbles under the hull of the ship to reduce friction.” AIDA has also been testing its pioneering anLNG barge in Hamburg in partnership with Becker Marine and plans to start supplying the first vessel from spring 2015.

The brand has been gradually extending the traditional cruise season for the last few years. “We have steadily extended the season in Europe and the Baltic and the North Sea from March to October, in the North Sea we are virtually year-round already, and with AIDAprima we will have year-round 7-day trips from Hamburg, going to what we call the European capitals: London from Southampton, Paris from Le Havre, Amsterdam from Rotterdam, etc. We visit four different capitals within a week.” AIDAprima will dramatically improve the onboard experience during inclement weather, enabling her to sail to more destinations year-round. Instead of a traditional glass magrodome, it will have a plastic bubble dome made of foil cushions so guests can suntain in summer and stay warm in winter.

“The foil domed area on top of the vessel is the main feature in terms of providing a resort type of holiday onboard a vessel if the weather outside is not that great,” says Ungerer. “We will have a beach club in the centre of the vessel on top, themed from beaches around the world, with an activity area, the Four Elements.” Waterslides, rope climbing facilities and the children’s areas will all be under cover. “It’s an industry first,” he says.

Despite his enthusiasm at the prospect of striking out ahead of the pack with innovations such as this, Ungerer says he values the support that being part of Carnival Corporation brings to his brand in terms of synergies in marketing, logistics and other areas. “The big advantage of being part of a large group is scale and resources,” he says. “We have all the best talent in the industry within our group and there is so much to learn from each other, with opportunities for internal benchmarking and best practices adapted to your needs. That is really a huge advantage that no other group has – we get the benefit of the customer insights and experience of various brands.”