Last week, Les-Lee Roland’s column sparked a lot of comments. Usually, Les-Lee has a well formed opinion but this time she wasn’t so sure. The issue surrounded the lowering of an agency commission when a cruise line re-prices a cruise. Certainly it is to the consumer’s benefit; but the agent has already done the work to earn the commission and now the cruise line is adding more work and taking more money away. Les-Lee wrote:
An agent has complained to RCL about the commissions she is losing when a rate is lowered for her already booked clients. Sure RCL is honoring the new rates. If the sailing is imminent, the clients are getting the difference in a shipboard credit. The agent is upset because her bottom line is affected.
This is indeed a tricky situation. As I read the column and the comments that followed I had to chuckle at the irony. Several months ago, I spoke with a senior cruise line executive and we discussed the nasty habit of agents taking the path of least resistance. This executive could not understand the concept of price watching and adjusting prices to appease the client.
But don’t we now have the same situation? The cruise lines need to make money and be profitable as does any business. And, as with most businesses, you can make money on quality or quantity. So, when a cruise line drops the price, aren’t they really taking the path of least resistance themselves? There certainly are other ways to earn a profit. They could increase the price of shore excursions, or increase those clandestine NCFs we all hate, or they could add more amenities that demand a higher price. But the easiest thing to do when your sailing is not making enough money is to drop the price and hope it fills up with people. Does anyone else see any parallels with the “oh so profitable” airline industry? Here is some unsolicited advice to the cruise industry—don’t follow them!
There is not a real easy solution. As I said last week, we are likely to be operating in a “new normal” environment for a long time. Clients will not only expect the lowest price, but for you to monitor it for lower prices. If you are not going to be compensated by the cruise line for your efforts, it logically needs to come from the client. I have heard of several agencies that do not monitor pricing, but for a $100 fee, they offer a “concierge” service that does include monitoring. Perhaps that is a sensible way to insure yor bottom line is not eroded.
But in the interest of keeping things simple, the best solution is for the cruise lines to protect the commissions at the rate it was initially sold. All vendors like to tout the “partner” line with their agents, but few truly are. Maybe it is time for one to step to the front of the line and truly partner with the agencies that sell and market their product. Who’s first?