Road to Recovery
“A wrecking ball from the side”
James Prescott, Managing Director of Harding, the Flemingo International-owned, UK-headquartered cruise retail concessionaire, was featured recently in one of the most compelling episodes of The Moodie Davitt Report’s In Crisis – Travel Retail Voices podcast series. In it, he reflects on the travails of a cruise line sector which has been hit with devastating speed by the COVID-19 crisis. In the process, the sector has suffered much adverse publicity, and unavoidably, a complete cessation of business for the foreseeable future. He spoke to Martin Moodie about dealing with such calamity and planning for the better days which he is convinced will come.
The COVID-19 crisis arrived amid a period of rapid market expansion at Harding Retail, the Flemingo-owned cruise specialist, after it captured a series of key concessions and prepared for some landmark ship launches. But it took just days for the wider cruise business to be hit both by a complete cessation of business for the foreseeable future and by a wave of adverse publicity.
Harding Retail Managing Director James Prescott says that although there were warning signs from the early fallout in China, the collapse of the sector’s trading “came like a wrecking ball from the side”, and no amount of risk provision could have prepared him or the company for what has come to pass.
“The scale, magnitude and severity of this really is like nothing we have seen before. From 12 March, when the first ship stopped sailing, within 48 hours there wasn’t a single cruise ship left sailing. To cope with that has been extraordinary, [although] even without any business we are busier than ever.
James Prescott: The business is now about preserving cash and making it to the other side of crisis
“Although in the scheme of travel retail we are one of the smaller companies, we have been growing a lot, and have doubled [in size] in the past three years. If we finish this year at half the size [of last year] we’d be doing well, and most companies would settle for that.
“For us, it’s all about the preservation of cash and fighting our way to the other side. We’re part of the Flemingo Group, with similar challenges. And everyone is in it together. We have had some very understanding supply partners, and some very proactive cruiseline partners.”
Brighter days will come for the cruise industry, says James Prescott (in this image the Red Arrows perform over Queen Elizabeth, Queen Mary 2 and Queen Victoria from Cunard; Image: Christopher Ison)
Harding has been forced to furlough about 90% of its UK staff, with about 20 people still currently working. “We have been able to move quickly and as part of Flemingo, we are agile and flexible. You are no good to your employees, partners, creditors if you don’t make it to the other side, so your only obligation is to take all the measures to make it through to the other side, having learned a lot.”
The core mantra for Prescott and his team is to communicate consistently and effectively, both internally and externally. “We are still communicating regularly with our people, even if they are off work; with investors; with bankers; with our cruiselines and suppliers. Nobody really knows how this will play out, which is an extraordinary starting point. You just cannot over-communicate. People fear the unknown but if everyone is in the same position, we can all march forward one step at a time together. I think on the whole we have made good decisions, while accepting that we are all in the dark. You have to trust people with the truth and the facts.”
How might this crisis alter how business is done in cruise retail and indeed the shape of relationships within the industry, we ask?
“I don’t see how things cannot change,” says Prescott. “Travel retail is a lean margin business. Seeing business halve or even disappear overnight will make companies much more risk-averse. We all have investors who will be more prudent and risk-averse in future.
“Cruise retail is a stock-intensive and people-intensive business and the economics of that won’t be the same. Time will tell which companies survive and thrive, but we’ll all need to have to a deep breath about how it works. Maybe as an industry we have been too short-term in our thinking in the past, whether that is in airports or in cruise.”
Despite recent setbacks, Prescott remains positive about Harding Retail going forward and the future of the cruise business as a whole, which he says will be able to adapt to post-COVID-19 realities.
“The cruise industry has reacted impressively so far. They have been talking about managed social distancing, perhaps removing buffets onboard, making gaps wider between people when they’re seated, testing them as they come onboard, single occupancy cabins for crew.
“If you were looking at going on holiday after this, where could you better manage social distancing: on a plane or on a cruise ship? On a cruise ship you can have very good, proactive social distancing. You already have medical facilities onboard, and they are talking about enhanced facilities at ports, testing before people go onboard, so a lot of it comes down to how fast things can be put in place, and the messaging and reassurance around that. People will want to go out and will want to go on sun holidays, and cruise is well positioned to offer that.”
He says that cruise travellers are a resilient group so the industry can be expected to bounce back, probably with loyal consumers first, with new guests likely to follow (mirroring the view of Starboard's Lisa Bauer, interviewed on the page that follows.)
“I think the potential is there,” Prescott says, “it will probably just take a bit of time to ramp back up again. I remain optimistic that it will come back… it will just take a little longer perhaps than any of us would have liked.”
The crisis has been a challenge like no other but it has also forced individuals and organisations to think afresh about how they move forward.
Prescott says: “This will be the biggest extreme, we hope, that we will ever face as people and companies. It brings out true character. There is a feeling of solidarity as we work through practical solutions to problems. The way we work now has also taken away some of that business formality, and I hope that will be a sustained thing, and that the human element is not forgotten in 12 to 24 months.
“If we can keep that in an industry that was already people-focused, that will be one positive to come from it. We have had to work with more speed and efficiency, with the ruthless prioritisation of what’s really important, of what adds value and what does not. If we can learn from that, those who make it through will help put the industry in a better position for the next ten, 15, 20 years, not just the next six months.”
Harding recently announced new five-year retail contracts with P&O Cruises (including the new Iona, above) and luxury cruise line Cunard
The Moodie Davitt eZine
Issue 279 | 4 May 2020
The Moodie Davitt eZine is published 12 times per year by The Moodie Davitt Report (Moodie International Ltd). © All material is copyright and cannot be reproduced without the permission of the Publisher. To find out more visit www.moodiedavittreport.com and to subscribe, please e-mail firstname.lastname@example.org