Royal Caribbean Updates Group Policy
Onboard the Harmony of the Seas pre-inaugural sailing, Vicki Freed alluded that changes in Royal Caribbean’s group policy were forthcoming. At the time she didn’t have a timeline. In the past week, Royal Caribbean announced changes that will take effect on January 1, 2018. Although it’s not customary for cruise lines to give us a 10 month head’s up on policy changes, this is a major change and Royal Caribbean is making sure their travel partners are given plenty of time to adjust to the new policy.
In a nutshell, Royal Caribbean is changing how they calculate tour conductor credits. According to Freed onboard Harmony of the Seas, this change is in response to feedback they have received from travel agents.
How it Works Now
The current policy is straight forward and doesn’t involve any calculating. You look at your group, you determine which room category has the most bookings, and that category is the value of the tour conductor credit. In the case of a “tie” the lower category value is used for the credit amount. Here is an example:
Your group includes 24 rooms, all double occupancy. The tour conductor ratio is 1 for every 16 passengers (8 rooms). So your group has earned 3 tour conductor credits. The room categories and commissionable cruise fares booked in your group are as follows:
- (4) junior suites at $1,899 per person
- (7) D2 balconies at $1,109 per person
- (6) G ocean views at $659 per person
- (7) N ocean views at $529 per person
Under today’s policy your tour conductor value is $529 for each credit earned.
The New Calculations
Starting January 1, 2018 tour conductor credits will be based on an average of all cruise fares booked into the group space. So using the group example above, the total cruise fare by category is:
- junior suites: 8 passengers multiplied by $1,899 = $15,192
- D2 balconies: 14 passengers multiplied by $1,109 = $15,526
- G ocean views: 12 passengers multiplied by $659 -= $7,908
- N interiors: 14 passengers multiplied by $529 = $7,406
- Total commissionable cruise fare for the group = $46,032
When you divide the grand total $46,032 by 48 passengers in the group, your average cruise fare is $959. That is the new tour conductor credit value, which is $430 more per credit compared to the current policy.
So this is all great, right? Yes, maybe no. If you already book groups with Royal Caribbean, go through your past groups and any current 2017 groups and recalculate the tour conductor value using the new formal (average of all commissionable cruise fares) to see how the new policy might affect your groups going forward.
I looked at groups over the past few years. Some had a significant increase in the tour conductor value, while others dropped. An example of one that dropped was that my highest booked category was a balcony and that was the value of the tour conductor credit. When I averaged in the ocean view and interior rooms in the group, it tanked the value of the tour conductor credit. Overall, my groups would have netted more in tour conductor value. So if I pocket all tour conductors as bonus commission, I come out a head in the long run.
However, if you have a group leader that is earning the tour conductor credits, they may get a boost in their credit value or it may be lower.
Personally, I have always group leaders that the credit they can earn is based on the least expensive cruise fare in the group. This has been a tactic to get them to encourage group members to book higher category rooms, because that’ll increase their credit. I always set expectations low, and if they get more credit than they expected they’re never upset. Even with the new policy of averaging the cruise fare, I will likely continue to advise group leaders that it’s based on the lowest room category in the group. It makes the math easier for everybody.
Susan Schaefer is the owner of Ships ‘N’ Trips Travel located in Tennessee, and specializes in leisure travel with a focus on group travel and charity fundraisers. Through their division Kick Butt Vacations, she focuses on travel for 18 to 23-year-olds. Susan can be reached by email at email@example.com or by phone at (888) 221-1209.