I’ve heard grumblings from a variety of travel agent sources over the last few months. The complaints vary: cruise lines poaching agency clients, marketing that encourages direct sales, cruise fares we can’t book, and lack of marketing support from our cruise line partners. I’ve touched on some of these topics in the past, but it warrants a revisit in light of the current concerns from travel agents.
Marketing encompasses most of the issues cropping up lately. This includes cruise lines doing direct marketing, poaching agency clients, and not supporting individual agency marketing efforts.
Let’s start with direct marketing. Every cruise line sells direct to consumers, unlike some of our land wholesalers (like GOGO Worldwide Vacations) which exclusively work with travel agents. So, let’s be realistic and acknowledge that cruise lines will continue marketing to encourage direct bookings. In most of their marketing they do include “or call your travel agent” which gives clients the option (and plants the idea) that working with a travel agent is just as good as booking direct. None of the cruise lines are going to switch to an agency-only booking model like some land wholesalers. So we should be surprised that they continue to market directly to consumers; and be glad that they do promote “or call your travel agent.”
Poaching existing agency clients is a bit more tricky. The general gist of the complaints, are that we book our clients on a ship, and then the cruise line starts marketing directly to the clients – theoretically trying to get them to book direct in the future. Again, most of this marketing includes “or call your travel agent.” So, if you have established a relationship with your client, they will more than likely contact you when they get any type of marketing materials directly from a cruise line. However, that hinges a lot on the term “established a relationship.” If someone calls you from a Google search, you book their cruise and that’s it, don’t be surprised if they never return to you for future bookings. However, if you invest some time into developing an ongoing relationship with them, demonstrating that you care about their total vacation experience, and continue communicating with them post-cruise, they’re more likely to return to you for future bookings. But you need to establish that relationship, and then maintain it. Mike Marchev and other marketing gurus will suggest sending birthday cards, anniversary cards, emailing them far enough in advance to suggest booking a milestone trip, etc.
Also, travel agents need to acknowledge that although they have a client, and they booked that client on a cruise or vacation, the client is not exclusively theirs. They are equally a client of the cruise company, resort, or tour company that you booked for them. A cruise line isn’t going to sit back and hope that you re-book them on their cruise line again. No, they are going to actively market to their clients, even if shared with an agency. Study after study has shown that a majority of clients don’t return to the agency that booked their cruise. Why is a cruise line going to idly hope that we’ll do the job of creating a returning client for them, if the client isn’t even returning to us (circling back to our need to build relationships with our clients)?
The other recent complaint has been the lack of co-op from cruise lines. If you aren’t familiar with co-op, it is marketing funds a supplier uses to jointly market with their travel agency partners. This calendar year some agents have been hearing from Business Development Managers (BDMs) that co-op budgets are being severely slashed. We’re still researching the issue, so we don’t know if budgets are being slashed or if BDMs are individually becoming more select in which agencies they’ll co-op with on marketing.
In a recent conversation with Vicki Freed, she reinforced Royal Caribbean’s support of their travel agent partners through the use of co-op marketing budgets. However, it’s not unreasonable to expect that the cruise lines are looking for a return on their investment (ROI). As an example, if a cruise line gave your agency $5,000 in 2017 for marketing, they will expect a sizable increase in your total sales revenue for the year. If your sales are stagnant, or had dropped, you should not be surprised if your co-op funds are reduced for 2018. After all, they are operating a business as much as you are doing so.
This also comes down to building relationships. Take some time to cultivate a relationship with your cruise line BDMs. If your first contact with a BDM is to request money, it may not be as well received as it would be if they already had a relationship with you. Also, don’t put the burden on them to reach out to you. Most BDMs cover multiple states, and probably over a hundred agencies. Make yourself stand out by initiating the contact yourself. Ask for help in developing a marketing plan focused on their cruise product and how you can increase your booking revenue total. Also ask about including opportunities that they can help you identify that might warrant some co-op funding.
Special cruise fares
When I recently spoke with Vicki Freed, we discussed complaints that she had received at Royal Caribbean about consumers being quoted net fares. First, let’s cover what a net fare is exactly. What most travel agents think of would actually be termed net-of-commission cruise fares. That boils down to when we create a booking, there is a gross total (what the consumer sees and owes) and there is a net total (the consumer total minus our commission due). That net total is not a true “net rate.” Per Vicki there are fewer than a dozen agencies total in the United States that can book true net rates, which are sometimes 35% lower than the published cruise fares visible to travel agents or cruise line representatives. These agencies have signed contracts for these net rates, which must be packaged together with other components (hotels, airfare, etc.). They cannot promote nor sell cruise-only at those true net rates.
But can a consumer call and get a net rate, or more accurately a net-of-commission rate? The short answer is no. Per Vicki Freed, no one at Royal Caribbean that interacts with consumers can see commissions on a booking. What those representatives see is what a consumer would see when booking on the consumer website. And let’s think about it. If a cruise line phone representative could see commissions, what would they see? 10%? 13%? 16%? The gross cruise total will be the same for a consumer, regardless of how they book. If they choose a travel agency, the portion of the booking that agency gets paid is based on their commission level with the company; that amount can vary from 10% to 16%. A phone representative speaking to a consumer wouldn’t see any of that, or know what amount would be paid as commission to a travel agent.
More than likely if there is a discrepancy, something is missing, like prepaid gratuities or vacation protection plan, or has been added like a better promotion or a loyalty program discount.
If an agent or consumer calls a cruise line directly, and is quoted something different than what we can quote or book, it is imperative that actual screen shots be taken (or complete the booking process to the point where a PDF confirmation is generated and emailed). Immediately reach out to your BDM (or with Royal Caribbean you can email Vicki Freed directly) with the booking discrepancy information.
What about special cruise fares, like casino offers? Travel agents have complained about these for years. Regardless of the cruise line, some clients receive very attractive offers (mailed directly to them), enticing them to book and sail on a “casino offer.” Some of these offers boil down to non-commissionable cruise fare and taxes are all that are paid by the consumers.
Travel agents have a legitimate beef. If they recommended the cruise line to a client and have booked them several times on that cruise line, it feels like a slap in the face – and as an attempt at poaching a client – by the cruise line. Again, I brought this up to Vicki Freed, and the Royal Caribbean policy is to address these on a case-by-case basis. She will, and has, protected commission for travel agencies where existing clients have received casino offers. All it requires is for the agency to reach out to their BDM (or Vicki) to request that the commission be paid and protected for the agency.
Royal Caribbean also made an announcement this past week, related to protecting commission. Per the March 9th email, “Royal Caribbean has reevaluated the structure of commissions when your clients redeem Future Cruise Certificates.” In a nutshell, starting April 1 and moving forward, when a client redeems a Future Cruise Certificate (i.e. like those issued due to last Fall’s hurricane issues), “you will receive the full value of that booking’s commission.”
What all of this boils down to is relationships. Build relationships with both your clients and your cruise line partners. If something doesn’t sit right with you, whether it’s a special cruise fare offer or a booking discrepancy, have the relationships in place so that you can reach out and resolve issues before they turn into unnecessary angst for you.
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 firstname.lastname@example.org or by phone at (888) 221-1209.