Will NCFs ground the cruise industry?

Posted on by in Agent Perspectives

As anyone who has sold cruises over the past few years will tell you, the commissions earned are falling. They are not falling because of reduced commissions. They are not falling because of reduced fares. They are falling because of the increase in the Non-Commissionable Fee or NCF.

As an agent that prides himself on offing transparency and value to my clients, I see two problems with the NCFs.  First, the very idea that I have to explain the acronym to a client takes away from a smooth and fluid selling process. An agent should not be discussing commissions or non commissionable charges—ever! The mere fact that the word “commission” must be discussed is just plain wrong. Secondly, when quoting prices, the client is likely to be put off by “plus this and plus that”. The client deserves better. On many cruises, the add-ons can approach or exceed the base cruise fare. Cruise lines need to offer a more transparent and simpler pricing strategy. And, I am not alone in my thinking.

For a good example of how complex pricing strategies fail, we only have to look to the airlines. If you travel on a Monday between 9 AM and 11 AM and book 7 days in advance and stay over a Saturday night the fare is one price, but if you leave on Tuesday, it…well, you get the point. Consumers became frustrated and turned off –just like the agents.

The solution is simple. The cruise lines simply need to build their current  NCF charges into a commissionable cruise fare; and  build in the additional cost to fairly compensate their sales agents. This works for everyone involved in the process. The consumer gets a tranparent price, the cruise line still gets their extra fees and the agent earns a full commission on the cruise lines’ product.  If other cruise lines follow the Regent lead, the pricing of cruises will be more clear for the traveler and more profitable  for the “valued partner”—the travel agent.

I strongly believe that many competing cruise lines offer a truly comparable experience, pricing and itineraries. Agents need to align themselves with the cruise line they believe will deliver the best experience for their clients and then faithfully support that brand. This will result in moving market share to their preferred line. Moving share and growing business is the best way for agencys to reinforce their worth to their cruise line partners.

With capacity and technology growing the last thing we want is for the cruise lines to start thinking the way the airlines did in the mid 90s when they expanded their efforts in the direct to consumer business model. Look how well that has served the airlines.  I don’t think that will happen with cruises in the near future for any number of reasons, the least of which is that the product is much more complex. But business is business and if agents don’t show they really can market and grow business, then that possibility can become reality.

So in the end let’s hope the cruise lines will embrace a simpler and more transparent pricing strategy and that agents will expand and enhance their marketing and brand loyalty by moving market share to their partners and growing their business with the myriad of marketing tools at their disposal.

Scott Grody is a world traveler and an expert resource on all aspects of the industry. With 40 years’ experience, Scott is the owner of Scott Grody Travel based in Delray Beach, FL. Scott can be reached online at www.scottgrodytravel or by email at sg@scottgrodytravel.com.

  7 thoughts on “Will NCFs ground the cruise industry?

  1. Well put! The fastest way to lose a client is splitting out nickels & dimes. The clients do mind paying when they know what they are buying. The NCF’s vs port fees are a pain to explain. Many clients see the NCF’s as my fees & my profit. When it was Port taxes – they wanted to know how much per port. Just give us the bottom $$ number & we’ll sell it. By the way – add in the onboard tips – they have to pay them — so charge it upfront.

  2. 1Linda says:

    It has also been my experience that a lot of customers use us agents to get the information they need and then go directly to the cruise line and book directly themselves. Claiming that they don’t need a travel agent, but yet they used an agent to find them the cruise they were looking for. I personally don’t understand, as the cruise lines do not award them any extra perks. It must be the personal satisfaction of thinking they did it all themselves. But, when things go wrong, who do they turn to? The cruise lines must do something to assist us agents in a manner that would deter our potential customers in booking directly with them, and book the cruise with us. Otherwise, we agents are suffering from a slow but sure death.

  3. 1Nina says:

    I could not agree more. The cruise lines could cut the NCF’s instead of the rate so agents, their partners, don’t keep losing revenue. I pine for the old days that when the rates decreased, commission was protected at the original booking rate and the only add on was taxes.

  4. 1John Van houdt says:

    Hello Scott,,

    Congratulations on your excellent article!!! I could not agree more. I have been saying the same thing
    for years. It seems the cruise lines are NOT realizing they are shooting themselves in the foot by trying to go direct and by trying to get us out of business increasing volumes to stay at the same commissions while
    decreasing the portion of the sale over which they pay us commission. (This despite the rhetoric of
    “we love agents”). In addition to that they are also marketing direct and are offering our clients incentives to do so. Daily I get mail and e-mail from the cruise lines (having been on 85 cruises) enticing me to book direct. (rarely a mention of a travel agent).

    For the last 23 years I have been encouraging people to take cruises. First while I was a realtor and enthusiastic cruiser and since 1991 as a cruise only travel agency owner. My wife and I have spend several
    hundred thousand of our own dollars over the past 18 years promoting cruises and cruise lines. We have
    a large client base and sell tons of cruises, we have rarely been busier and YET it has been VERY
    hard to pay the bills. What is wrong with this picture?? We do charge a myriad of fees as well,
    Although this helps somewhat, the REAL solution is to get paid over the whole amount of the transaction
    at a decent commission rate.

    An additional solution is for the cruise lines to charge a REALISTIC amount for their cruises.
    Cruise ships have NEVER been more beautiful and have NEVER offered more amenities and have NEVER
    been to more beautiful places around the world, yet they cheapen their own industry by virtually given
    their product away.

    You ask, “why then stay in this business?” After asking this ourselves every day, it is because we STILL believe cruising is the BEST way to travel, people SHOULD go out there and travel the world to broaden their minds and to meet people from other cultures AND it TAKES travel agents like you and I to introduce them to this world. We have also developed numerous friendships through this business, both with clients AND with people in the travel business. The cruise lines CAN NOT survive if we do not survive.
    “WAKE UP CRUISE LINES” and pay us what we are worth!!!

    John van Houdt, president

  5. 1Tom Woodward says:

    I agree and is exactly why when I send a quote to a client I only show the complete price as one entity … I seldom itemize beyond breaking out airfare or hotels and even less often, have a client ask for a breakdown.

    But the bigger issue to me is why the cruise lines don’t stop playing all their games and when a past cruiser books a second cruise direct with the cruise line after being inundated with their weekly emails a year or two later, the last booking agent who was responsible for introducing the client to the cruise line is paid if not a full commission, at least some type of consideration or being notified their clients are on the move again.

    On those emails they are sending out, it would be no problem for them to say in their call to action; to “Call XYZ your travel agent” NOT call XYZ cruise line directly to book. Today it would be nothing for them to do this. The auto, insurance and brokerage industries have been doing this for years. But then, they look on their providers as professionals not just cold call agents.

  6. 1Linda Grauer says:

    I have been quoting one of the cruise lines like it tells it’s direct callers—the fare is 100 + 225.00 (the 225.00 I call port, tax and cruise lines fees!) Actually 2 can play at this game. I am tired of people calling me after this cruise line and say they got a rate of 100.00
    As for tips…they aren’t commissionable so why ask?

  7. 1Sandy says:

    Linda,
    Your post hit me where I’m hurting as well – great idea to name it ‘cruise line fee’ as that is what it is! Thanks.

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