processor
Travel Research Online
The voice of the travel agency community
Travel Research Online

TravelResearchOnline.com Blog

Sending up signals?

July 24th, 2010 . by John Frenaye

Over the past year, have you noticed that cruise suppliers are becoming less and less of a “partner?” Are you getting a sense of déjà vu with flashbacks to the mid 90s? Over the past month, the cruise lines have taken a beating from agents on several recent changes.  Are the cruise lines headed the way of the airlines? Is the criticism fair and just? Consider the following and decide.

Travel Market Report published an article where two cruise line executives got a little defensive when questioned on the ever increasing non-commissionable fees (NCFs) and the move to a direct to consumer model. Royal Caribbean’s Vicki Freed, a longtime advocate of the travel agent, simply said “It is what it is. It is the portion of a cruise fare on which we don’t pay commission.”  And on the move to direct to consumer marketing, Justin French a managing director for Carnival Cruise Lines said direct marketing was necessary for Carnival, as the line is trying to reach cruise “rookies.”  Both positions seem to be pretty firm, and if you read between the lines, French is telling us that Carnival believes that we are not doing a good enough job; and Freed is saying that the NCF portion of our compensation should not be a concern or ours.

Travel Market Report followed up with Freed based on the flurry of comments they received and the tone did not seem to get any more agent friendly. When specifically asked to define the NCFs, Freed claimed the industry had already defined it (this agent must have missed the memo) and suggested we move on and alluded to how the agents all focused on Delta when they eliminated commissions.  Freed dodged several other bullets and when asked what it takes to increase earnings in today’s cruise marketplace. But, she did say that you must be a significant player and earn a back end override to offset the NCFs.  She highlighted America’s Vacation Center and Vacations to Go… as examples. Most agents today, even the superstars, are not on the level of those two agencies. From there, Freed continued to highlight her dedication to the agent community and the different ways that Royal Caribbean will work with agents including one on one mentoring.  There is no doubt that Vicki Freed is a friend of agents and has been for many, many years. I simply suspect that we are operating in a “new normal”, her hands may be somewhat tied.

In a recent interview with Lyn Cathey at Travel Research Online, Carnival’s Joni Rein attempted to explain the new policies recently implemented by the line and to dispel some of the misconceptions surrounding them.   While she would not comment on the percentage of direct sales, she did say that travel agent sales accounted for the majority of the line’s revenue. Joni did take responsibility for the communications effort from Carnival and gave herself a “D”. Perhaps it is this lack of clear communication that has ruffled the feathers of the community.

Last weekend, I discovered that my consumer booking link to Carnival was not working. When you clicked on the link, it took you to a Carnival “page not found” page and then encouraged you to go to Carnival’s home page and continue your surfing. Was this a glitch? Or was this an attempt to gain some direct business from several thousand websites who have installed this link hoping to grow their Carnival business? I asked other agents in the TRO Community and many indicated (to their surprise as well) that their links were not working either. BookCCL.com now seems to be devoid of any mention of a consumer booking link for agents.  Knowing that Carnival is a little touchy lately on phone calls,  I used the online form to send a message to the “Internet Marketing Department”. The response—“we’re having trouble, your message did not go through.”  I emailed my BDM and she told me to call E-Services Solutions. E-Services Solutions does not answer the phone and you are forced to leave a message with a promise to respond within 48 hours. As of now, it has been 114 hours and no response. The only conclusion I can draw is that Carnival has discontinued the program and disabled all of the links. I cannot locate a memo or announcement. I’ll give Carnival an “F” on this communication! Boy, I hope no one used that link from my site to book a full charter. Guess I will never know!

In the TMR piece, Freed said, “The more agents talk about shifting their business to all inclusive land vacations, the more they signal to cruise line that the lines had better figure out another way to build their business. Is that really what you want?”

Based on the actions of several cruise lines over the past year, I suggest that the cruise lines may be doing a bit of signaling themselves.

If you enjoyed this post, please consider leaving a comment or subscribing to the RSS feed to have future articles delivered to your feed reader.

Join the Discussion - Post your comment  24 Responses to “Sending up signals?”

  1. Anti-NCF Says:

    There’s one huge problem about Freed’s comment about back end overrides (highlighting VTG and AVC). The individual AGENTS do not share in overrides. So it’s all fine & dandy for large producing agencies to get overrides, but the individual agents are still screwed by the decreasing commissions as cruise fares decrease and NCFs increase.

  2. jharaty Says:

    I push RCL with my clients at every opportunity and I sail RCL at the going rate, not the travel agent rate, quite frequently. Does Vickie not realize that agents are turning to all inclusive because it is the only way they can survive as the NCFs continue to increase with no explanation? Why doesn’t Royal be the first contemporary cruise line to decrease NCFs and see how that drives business to their cruise line? As an independent hone based agent I will never reach those high and mighty overrides and neither will thousands of other home based independents that loved selling cruises but can no longer survive without changing strategies. Cruises were sold by agents because it was a win, win, win situation for the agents, the clients and the cruise lines. That is no longer there.

  3. GalaxSea Cruises Says:

    Thanks for the heads up. I checked my website link to Carnival and discovered the re-direct to Carnival. The link has been removed! I am maintaining my link for RCI and Celebrity as they are still functioning as originally intended. The NCL link was previously removed as it was not functional, but at least they did not re-direct to their own website.

  4. Peter Ulbrich Says:

    Have you lookied at the misleading Vacation to Go ad that says that the major cruise lines give them unsold inventory at better prices then are available in general. If I could afford to run such an ad which clearly violates the discounting policies of most of the cruise lines then we would be selling more. But the cruise lines don’t care how they get the business. Yes our all inclusive sales are up about 100% over past years and cruise sales are down proportionately and we love the commissions we get on the land packages. Eventually the cruise lines will go the route of some of the other non-existing lines. Nothing lasts forever.

  5. John Frenaye Says:

    Another point to make is that many of the all inclusives (Sandals and Beaches) will now pay commissions on tours and spa treatments. SO the agent gets paid a commission on the TOTAL SPEND of the client they placed.

  6. Susan Says:

    Hey, here’s a question … do resort TOs, escorted tour companies, etc. pay back-end overrides at year-end? Being small potatoes myself, I’m not 100% sure.

    But, if they do NOT, then more TAs will continue to shift cruise business that way. Think about it. No back end bonuses, no NCFs. Instead full package price (including taxes) are commissioned. And as previously pointed out, many (not all) will pay commission on sightseeing tours, transfers, and other optionals that can be pre-booked (and if they are all inclusive, they’re also paying commission in essence on alcohol sales).

  7. Growing Dissatisfaction Says:

    At least our BDM told us the direct booking link was going away, though the reasoning wasn’t sound…not enough use, too many errors, etc. (Funny – always worked just fine for us). It is just another step in taking away a source of agent bookings. I still can’t believe that cruise line execs think we are that naive not to see the big picture.

  8. Jerry Vaughn Says:

    The defensive attitude of Vickie Freed and other cruise line execs toward the issue of NCF’s will be their undoing. For them to believe just because they say “Forget it” that agents will forget it is a sign of arrogance. Both Carnival and RCCL just reported very good quarterly profits and it was on the backs of the TA community who didn’t see the corresponding increase in their profits.

    If Vickie Freeds comment about how cruise lines may have to look at other ways to fill their ships if agents shift to booking more all inclusives is a veiled threat, she may want to rethink her position. Alienating more of the agent community with this kind of posturing will only make her job more difficult. Anyone can say they are the agents best friend but it is their actions that tell the true story. With friends like the cruise lines, agents really don’t need any enemies today. Viking River Cruises is probably the smartest of the bunch with their recent announcement they are paying on the total cruise fare and no more of this NCF nonsense with them. Viking will get more business because of it.

  9. Steven Overing Says:

    OH Vicki, Vicki, Vicki…when did you get so nasty? Threatening the B&M’s and HBA’s is know way to unruffle feathers. What haven’t we done for you all these years. Of course we went after Delta, and we were right. If GM were developing robots (androids) for car manufacturing, I’m sure the humans would be upset. Increase your rates, the clients will still go (as long as it’s not exhorbitant), but you can’t steal your servers wages.

  10. SO Says:

    OOPS, that should be “NO WAY” to unruffle..

    SO

  11. DCTA Says:

    So first let me say that in some wasy I don’t disagree with Vicki….. the two worst “actors” in terms of NCFs are NCL and Princess – and as the yield is not really worth my time, I sell very little or either of those lines. CCL’s cruisefares are so low that I really can’t afford to sell much of them without charging a fee, and honestly, the average CCL passenger is offended at paying a fee anyway – I have not sold a CCL cabin in many years (I think not since 2004).

    As to overrides or higher commission levels – why is it that TAs don’t really understand the benefits of a consortium? Join one with a limited list of Vendors and try to do more than 85% of your business within that list – it’s that simple. Your commissions will be at a higher percentage and your back end overrides will grow faster. Unfortunately, many of us join consortia with HUGE “preferred” lists and spread the wealth just way too thin – there’s no advantage to the TA in doing that.

    I am employed by a medium sized agency (over all our offices we probably hav a total of 80 employees and another 20 Indy’s) – we are very, very good at focusing on “preferreds” and as a result high commissions come in and nice fat quarterly checks come as well. And the TAs do get a piece of that. We do about 50% cruise and 50% land and of the land, probably only 50% of that is AI.

    AVC is an American Express Rep Agency (essentially a member of the Amex consortium) – Amex for 2010 had a preferred list (not counting air/car/ins) of just 37 cruise lines/tour operators. Just curious, how big are TravelSavers and Vcom’s lists? One really, really has to think about this – will you have a better return/yield focusing on a smaller group of vendors or will you do better with a very large stable of vendors? Do your commission rates go up based on productivity? How will you increase productivity to specific vendors?

    It was 2003 that I made (I made the choice for my agency then) to move from Vcom to Ensemble and I saw what a difference it made to focuse on a small group of “preferreds” – I’ll never go back.

  12. Lynn Dudish, CTC Says:

    Remember when one of CLIA’s selling points was to do a land vacation and compare it to a cruise vacation to demonstrate not only savings for the consumer but increased commission for the agency? Other than air booked via my GDS, mass-market cruises are the least profitable part of my business. And now that I have to complete and print the documents it has become even less profitable than when I did this study last year.

    When a client plops down $10,000+ for a vacation I am embarrassed to hand them documents that I have printed and stapled together. I’m ashamed that the client cannot get a printed shore excursion booklet and that I have to give them bag tags that can rip and tear unless I cover them in tape because if I laminate them they have trouble attaching them.

    The cruise lines have done everything they can to cheapen the cruise experience. Clients are not willing to pay a premium to be treated so poorly, nor am I willing to allow them to do so. Since closing our storefront and moving to a concierge positioning in the market place I sell away from cruises, especially the mass-market cruises. My time it too valuable to handle them. It is the same way I feel about published airfares that quote a price and then tack on all the extras.

    The mass-market cruiselines are flirting with becoming a commodity, many consumers see them as being one in the same, they base their decision largely on price. Fine by me, I’m not spending countless hours explaining the differences for a commission on half the selling price. Let the cruise reps do it. They seem to love going around me for contact with my clients, so I want them to have them from the hand holding day one! Regarding the upgrades, clients and I had a good laugh about that earlier this year. They were book on Princess, in a suite, a week before sailing they were upgraded….across the hall. They looked like idiots.

    In 33 years of being a travel agent, I’ve only seen one other debacle like this one.

  13. DCTA Says:

    I do want to comment on something Lynn mentioned above – I am tired of the cruiselines pretending that by going to e-tix they’ve gone green! They KNOW full well that someone is going to print all that mess and that this negates any “green” advantage there may have been. All they have done is shifted the cost of the documents to the Travel Agent or to the direct-book client who prints them. Has anyone seen docments from Crystal, Silverseas, SeaDream Yacht Club, or Oceania lately? Now when a client receives those, s/he feels like s/he is actually getting something! And really, nowadays – a passenger in a suite on CEL, RCCL, NCL, etc. is not paying that much less than any of those four!

  14. Greggs Travel Says:

    The 800 pound gorillas must think that they no longer need us to fill their massive behemoth cruiseliners. I am more than happy to point out the value of the all-inclusive vacations versus the cruise vacation. Especially the fact that the nickel and dime approach by the airlines is being implemented by the cruiselines. so what’s next charging for luggage too???

  15. JustService Says:

    It’s so obvious NCFs are just the cruise lines’ way of continuing to keep agents from their rightful earnings after they got in trouble for the “port charges and fees” issue. Since they can’t cheat us by hiding behind the government or port authority any longer, they decided to do it directly. (Hey, at least it’s a more “honest” approach.)

    Most cruise lines also undermine our commissions by continually reducing their cruise fares (but NOT the NCFs). So once our clients are booked and the puny commission earned, then we are supposed to do more work researching these advertised lower rates, and if they are applicable, we will make even less commission! The cycle continues…More work, Less money!

    Upgrades are another issue. While they can be a great enhancement if handled properly, some cruise lines have started certain practices that seem to undermine us as TAs and advocates for our clients.

    One example: Recently a cruise line upgraded clients to a new cabin without advance knowledge or consent, which actually created problems for the pax involved for a variety of reasons. The agent knew what the clients needed and booked the original cabin accordingly, so when advised of the change she tried to reverse the situation but the cabin was not available and the client had no choice but to use what was assigned (and with no compensation for their inconvenience).

    Another incident involved a couple booked in the least expensive interior category on RCL’s Freedom, then being offered a 16 category upgrade to a Balcony, which was awesome. Too bad WE didn’t get to offer it to them! They just got the call directly from RCL without even so much as a “nod” to us as their partner. The clients accepted (of course) and then called us to inquire as to why we didn’t call them. The agent had to come up with something on the spot so she didn’t look stupid, because we hadn’t even been notified and weren’t aware it had happened until the clients called. That’s so backwards! When she challenged RCL about it, they said there wasn’t “enough time” to go through us, they needed immediate approval from the client, but that has never been an issue in the past.

    The more these incidents keep cropping up, the more we are convinced the cruise lines are trying to drive a wedge between pax and TAs.

  16. DaveLTravel Says:

    As an independent affiliate (agent) of America’s Vacation Center, I hate NCFs. On mass market cruises, when 25% of the fare is non-commissionable ($125 of a $499 fare), it’s really just a huge reduction in the commission rate to us. What have I done? I’ve steered my clients towards (and sought clients for) those higher end cruise operators who pay commission on a full all-inclusive price.

    However, as far as the overrides are concerned, as long as my host agency (AVC) is using /funneling that money back into marketing, to generate new leads for me, I’m fine with that. AVC’s New Client (formerly Live Lead) program has enabled me to grow my bottom line while outsourcing my entire marketing effort to them.

  17. Happywithhost Says:

    As an independent affiliate of AVC, as far as the overrides are concerned, as long as my host agency is using /funneling that money back into marketing, to generate new leads for me, I’m fine with that. AVC’s New Client () program has enabled me to grow my bottom line while outsourcing my entire marketing effort to them.

  18. Josephine Travel Agency Says:

    I wonder if the Cruise lines and Airlines decision makers realise that their determination to eliminate the Travel agents does nothing good but creating unemployment. But, what goes around comes around because one day someone who has more authority over them will decides that they too are unnecessary to the travel business and therefore they will be eliminated and replace with computer.

  19. Joanie Says:

    Maybe the existing cruise lines should recall that there was once a back-stabbing line called Renaissance Cruises. Thanks to travel agents, they no longer exist even after they promised to change their ways and work honestly with TA’s. This can happen to any and all cruise lines if we TA’s would all work together.

  20. Joanie MKG Says:

    Maybe the current cuise lines should be reminded there was once a back-stabbing cruise line called Renaissance Cruises. Because we TA’s worked together we were able to drive them out of business. This same effort can happen again.

  21. Sherri- TA Says:

    As long as the cruiselines keep the NCF, I will continue to push all-inclusives, where my bottom line is fair and consistent with the work I do for the customer. Currently I charge a fee to book cruises as the commission does not justify my time spent consulting with customer and making the reservations. They should keep the NCF for the agents that require more assistance and can’t book via automation and give the other agents the full commission that do not cost them more by using their call center reps to make a reservation. A salesperson is never happy when their commission is reduced after generating good business for the company. If they need to cut costs, take it from your top dogs, but don’t take it from the people generating revenue for you year after year.

  22. Paige Says:

    Is Joni Rein not an alumnus of Renaissance?

  23. John Frenaye Says:

    @just service. I am not sure there is anything as a “rightful” commission. The vendors are able to and should set commissions however they want.

    THe issue is that they know how sensitive (and dangerous) screwing wiht commissions can be, so they adjust in different ways. Raise the NCF, lower the cruise rate, move to a tiered program for consortia and franchises, raise the threshold to attain the tiers, tweak the T/C berths.

    They all add to the bottom line of the cruise lines. I feel we are being treated no different than the passengers. The cruise lines make no money in port (other than the kick backs they demand from the stores), so now the ships are built/modified to BE the destination. Port stays are shorter and sea days are more plentiful. The client may not see this on the surface, but it is a shift to get them to spend more money wiht the lines. OBR is king.

  24. Scrapebox Proxies Says:

    I am pleased that I discovered this website, exactly the right info that I was searching for! .

Join the Discussion - Post your comment Leave a Reply

Username:
Password:

Register Now!

Forgot your username or password?


This Week’s Featured Supplier



 Subscribe to the TRO Travelgram
Click Here

Your source of leisure and corporate travel news from top consumer sources delivered to your inbox daily.


365 Guide
1:1 Interviews
Deck Plans
Agent Perspectives
Editorial Musings
Outposts
Point-to-Point
Publisher’s Corner
Thumbs Up, Thumbs Down
Soundings
Supplier Profile
TRO Tips
60-Second Geography
Travel Agent Diaries