A Bridge over Troubled Waters: RCCL and WTH Offer Loans to the Travel Agency Channel | Travel Research Online


A Bridge over Troubled Waters: RCCL and WTH Offer Loans to the Travel Agency Channel

Sitting over dinner one night in February, Vicki Freed and Brad Tolkin realized both their companies had come up with the same plan. They would help rescue their partners and friends—and the travel agency channel on which Royal Caribbean and World Travel Holdings depend—by offering low- and no-cost loans to tide them over until the expected flood of travelers hits the road. Or the seas.

The Royal Caribbean program is the more audacious, offering three-year interest-free loans to travel agencies that earned a minimum of about $4 million (the exact number differs state by state) from ships in the Royal Caribbean Group with departures between July 1 to December 31, 2019 (the last full six-month period before the pandemic). Agencies can borrow up to 25% of their aggregate commissions in that period, to a maximum of $250,000. (Some states have not yet agreed to the program, but RCCL continues to negotiate with them and is hopeful they will reach agreements soon, RCCL SVP Freed told me.)



“Thousands and thousands of agencies qualify; that’s how we built our model,” she says—and RCCL will fund every one that chooses to participate.

World Travel Holdings, meanwhile, has set aside $1 million, which it will divide among the pool of its Dream Vacations and CruiseOne franchises that choose to apply. It is offering loans of up to $250,000 interest-free for six months and then 4% after that, with no prepayment penalty. Agencies can use their commissions to offset the loan if they choose.

On the receiving end, travel advisor Tracy Whipple says the $5,000 loan for which she qualified from RCCL doesn’t offset the money she figures her agency lost last year—but it sure helps. Based in Deforest, WI, Travel On A Dream lost more than $115,000 last year, “so compared to that, the $5,000 is insignificant. But every little bit helps,” she says. She will use it to “offset some bills” and to pay for her “web service, phone service, seller of travel filings, insurance, etc.”

Beyond the bottom line, though, Whipple is encouraged by Royal Caribbean’s show of support and its faith in better days to come.

“More than anything, this shows their dedication to travel advisors,” she says. “I am absolutely touched by the gesture to help us stay afloat. Royal Caribbean Group is one company who stands behind us. They know they are going to need us to fill up the ships in the future.”

Freed Dishes on Details for ICs

Travel advisors expressed some confusion over whether independent contractors are eligible; Freed said they indeed are—but only if they have filled out the secondary phone field in their host’s agency profile.

She asked that I repeat this explanation in its entirety: “Hosts that allow the use of second phone field agency profiles with RCG and were approved as of December 31, 2019, would clear the first eligibility hurdle to participate on our Pay it Forward program. The next condition for eligibility would be that these second phone field agency profiles earned $4,000 or more on base commissions for bookings that sailed with departure dates from July 1, 2019 to Dec 31, 2019. The minimum commission earnings threshold RCG set for most states of $4,000 may be higher in certain states such as GA, NM, and RI.” Some states (notably California) have not yet okayed the program at all, but talks are ongoing, Freed said, and she is optimistic things will be worked out.

Freed also noted that it is always a good idea for ICs to fill in the secondary phone field; “it’s so important, so we know who the players are and we can just give them the money directly”—and other benefits, too, such as access to a local strategic account manager. “So if you are in California and your host is in Florida, you can have a California rep helping you, if, for example, you want to pitch cruising to a group. It takes nothing away from the host—they still get your volume and you still get the commission the host has.”

The idea for the Royal Caribbean program arose over concern about the many travel advisors who said they just weren’t sure they going to survive, Freed said. “So we are taking the risk, and hope people can sustain themselves until we are all back in business. We know for sure that business in 2022 is going to be strong; what people need right now is a true partnership, a true friendship. This is our time to help the people who have helped us succeed.”

In addition to the cost of the program, Royal Caribbean is paying a financial services company to act as administrator of the loans. “We are paying way more than $40 million—but we did this because the trade has always supported Royal Caribbean, through good times and challenging times, and we believe in the trade. And it’s our DNA to always give back to people in their times of need,” she said.

Royal Caribbean already has figured out how much each eligible agency can receive and put aside the full $40 million, guaranteeing that every request that is approved will be funded.

When Freed and I spoke on February 17, more than $6 million in requests already had been filed. And while the minimum loan is $1,000, the early requests all were for $5,000 or more.

While RCI is approving the loans, it is not a financial institution—and so it has little flexibility in approving the loans. Because it must work through a third party, “we cannot deviate from the formula; the regulations require us to stick exactly to the policies we stated,” she said.

Freed said she was thrilled when Tolkin mentioned that World Travel Holdings also was offering a loan program. “We both came up with the same idea—and I applaud them for doing it. The more money that’s out there for the trade, the better,” she said, and her hope now is that other suppliers will step up to the plate.

Cruisin With Drew

Even as RCI was putting its program together, the management team of Tolkin, Daly, and Debbie Fiorino also was brainstorming ways to help—and came up with its “We’re There to Help” Stimulus Plan, a commercial loan program for Dream Vacations and CruiseOne franchisees.

The company has set aside $1 million of its own money to fund the program, and also has partnered with a bank to help franchisees apply for PPP loans.

“Cash flow is key—and our program and the PPP and the Royal Caribbean program are all designed to increase cash flow, and keep small businesses in business,” SVP and general manager Drew Daly told me.

Its grants are up $25,000 per agency, based on performance, but new franchisees will be given special consideration. “We recognize the headwinds faced by those who are just starting and don’t have the historical performance to get a loan from the government,” Daly said.

In announcing the program, WTH co-CEO/chairman Brad Tolkin cited “the biggest pent-up demand for travel in history and extremely strong bookings for the end of 2021 and into 2022,” combined with agencies suffering through “more than a year of minimal travel and sales,” as motivation. “We know the future of leisure travel is bright and we want to assist our travel agency franchise owners to be ready to meet this demand.”

During the first week in March, all the applications will be reviewed and the money parceled out. There is not enough funding for every one of the 1,500 franchised locations to receive the full amount, “but we are not expecting every location to apply,” Daly said. “We don’t have a number in mind; it could be the floodgates open, but we just don’t know. Ideally, as long as they meet the criteria we want to be able to approve them.

“Our ultimate goal obviously is to reinforce the ongoing support and care we offer our franchises—it’s nothing more than that. We want to prevent people from even thinking about throwing in the towel. Nobody thought we’d be without cruising for this long, but we’re all really optimistic and excited for the future.”

The Pros Address Loan Pros and the Cons

Asked what they think of the two programs, many professional travel advisors say they hesitate to borrow money or have alternative sources already lined up.

“Debt is never a good way to survive. I would much rather push pause on my business than go into debt for it,” says Heather Olah, owner of The Everyday Escape LLC in Greensboro, NC.

But others are in.

“I applied; why not?” says Beth Schulberg, owner of Cruise and Travel Specialists in Gastonia, NC. “There is no telling when we will start traveling again. I’ll put the money away just in case; I can always give it back if I don’t need it. And I’m also going to invest in RCCL stock. I have faith in them!”

“Fortunately 2019 was good to us, and we were in good shape to deal with the issues from 2020. But coming into 2021, the cruise lines are canceling farther out, which means cruises are not paid in full so commission is no longer protected. So there will a gap in our cash flow in the coming months,” says Amy Madson of Dream Vacations – Madson & Associates in Orlando, who is applying for loans from both Royal Caribbean and WTH “for the ‘just in case’ scenarios. We intend to invest in training and marketing opportunities, particularly with more small, premium and luxury cruise lines, so we will be better suited to promote and sell luxury and small ship experiences. So why not apply for some extra support to ensure our business strength moving forward?”

“We will take the RCI zero-interest loan instead of using up our cash flow that is earning more than that at present,” says Gary E. Smith at Dream Vacations TravelPerks in Eugene, OR. “I understand the feelings of those who are home-based with virtually no overhead not wanting debt, but we have several employees we’ve been paying out of our pocket, plus the overhead of the building, etc. Managing the cash and debt is critical to the future of our operation and these organizations deserve recognition for providing another set of options to consider in the mix.”

Indeed, Smith has taken the maximum from Royal Caribbean plus a PPP loan and also refinanced his house to stay in business. “All in all we’ll be more than $300,000 in debt and will have lost much more by the time 2021 ends,” he says. “But we’re still building toward the future and have been adding partners during the crisis. That just won’t pay off until 2022 and beyond.”

And back in Wisconsin, the program was just what the doctor ordered for Tracy Whipple’s ailing agency. When time come to repay her loan, it will cost about $200 a month. “I am confident that once sailings resume our business will be booming again,” she says, “and paying back the loan won’t be a hardship.”


Cheryl’s 40-year career in journalism is bookended by roles in the travel industry, including Executive Editor of Business Travel News in the 1990s, and recently, Editor in Chief of Travel Market Report and admin of Cheryl Rosen’s Group for Travel Professionals, a news and support group on Facebook.

As an independent contractor since retiring from the 9-to-5 to travel more, she has written regular articles about the life and business of travel agents for Luxury Travel Advisor, Travel Agent and Insider Travel Report. She also writes and edits for professional publications in the financial services, business and technology sectors.

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