Group cruises can be a great revenue source for home based agents. One of my previous articles touched upon how to find group prospects as well as how to organize yourself to approach the top priority groups and begin the process of selling group cruises. The next step is one that often flummoxes agents: pricing the group to ensure you make a profit.
Too many agents I know are content to get a group quote from the cruise line, and pass that information on to the group leader, book into the group, and call it a day. While there is nothing inherently wrong with this approach, one has to ask: what value are you, the travel professional, bringing to the table? Especially with the rise of more strict pricing policies, it is harder to differentiate yourself from another agency with access to the same rates and amenity points.
The pricing of groups is something that is very easy to get wrong, costing you commissions or even outright money in the process. The first thing you will want to do is determine a minimum. You want to set a minimum number of guests in your group so that you will be able to accurately gauge costs. Many cruise lines state a group is a minimum of 8 staterooms, or 16 passengers, which makes that an easy number to use for a minimum.
You have the pricing from the cruise line – now, you need to figure out expenses for promoting and escorting the group. Your expenses depend on many factors, and it is important to list them ahead of time. Are you escorting the group? If so, you will want to figure out the costs for you to accompany the group, and split that cost by your minimum number. Will you be advertising the group? Printing flyers, registration forms, cruise documents? Will you be ordering custom t-shirts for the passengers? Will you pay for meeting space for informational meetings or document parties? Total up all your expenses, and divide them by your minimum passenger count. Don’t forget, also, onboard services. Will your group require onboard meeting space, or a private cocktail party? Often, you will have a monetary cost for those services, especially if you do not want to utilize your amenity points for them. Find out what those costs are, and divide them by your minimum. At this point, you’re probably thinking there is NO WAY you can account for all those costs on 16 passengers, and still have the cruise be a good value, especially when compared to individual reservation rates. So, raise your minimum passenger count until you reach a price level that will work.
You can recoup your costs that you figured out above one of two ways: before the cruise, with the deposit, or after the cruise, with your commission. All the cruise lines have a deposit minimum to hold the space for a passenger, typically around $250.00 per person – it can be more or less depending on the cruise line and specific itinerary. If you choose to collect your cruise costs with the deposit, you will need to collect the cruise line minimum, PLUS whatever mark up you have figured above. With a higher deposit, this may be unrealistic. But, if you are able to do this, ensure you have a method in place to collect the funds; if you use a merchant account to collect payment by credit card, do not forget to account for credit card processing fees in your expenses. Once you collect the deposit, plus the program fee, simply forward the deposit portion to the cruise line, keeping the program fees to cover your expenses in promotion and escorting. You may have to charge this two separate fees – one charge by the cruise line for the deposit, and one charge by your agency for the program fee. If you must do this, be sure the client is aware of the situation BEFORE the charges are made, otherwise it may cause problems for you that you do not need.
Another option exists. Most cruise lines will allow you to charge an amount over and above the gross price of the cruise. This amount varies by cruise line; if your program fee is less than the maximum amount they will allow, take advantage of this option – often, you will have to complete a form and get approval from the cruise line, or the cruise line may allow you to charge extra up to a certain point with no pre-approval. This extra amount will then be refunded to you along with your commission after the cruise. This is a great way to get out of paying for credit card processing fees.
Future columns on group cruising will cover how to host a cruise night, and how to escort a group.
Steve Cousino, ACC, CTA, LS is a six-year industry veteran and owner of Exclusive Events At Sea (http://www.exclusiveeventsatsea.com) and Journeys By Steve (http://www.journeysbysteve.com), based in Springfield, MO. In addition to producing special events on board cruise ships, he specializes in vacations to the British Isles. He can be reached at firstname.lastname@example.org.