An Open Challenge to the Cruise Industry
This article is written by Lawton Roberts, CEO, Country Place Travel, Inc. Snellville (Atlanta), Georgia.
Historical Perspective
Recently, it’s been suggested that the cruise industry would be well-served post-pandemic to ensure a rapid restart of their cruise sales by committing to sell cruises only through qualified travel agencies and not through in-house (and often outsourced call center) staff.
However, even with the cruise lines agreeing to only sell cruises through qualified professional travel advisors on a commission-paid basis, that alone would not be enough to incentivize travel advisors to jump back onto the ocean cruise bandwagon we all rode to mutual success, especially during its formative years of the 1980s and 1990s and even into the early 2000s.
The reason? NCCF’s (non-commissionable cruise fares), plain and simple. Why do you think several originally cruise-only agency groups actually changed their initial names and selling focus from one limited to “cruises only” to one expanded to include land-based travel products like all-inclusive vacations and guided land vacations over recent years? It was a good business decision then, and in the face of an ever-increasing percentage of NCCF’s each year in the cruise pricing model, it’s an even better business decision now.
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The Financial Problem Facing the Cruise Industry
I shouldn’t have to remind our friends in the cruise industry of just how serious this financial crisis is for them, with even the largest cruise holding companies staring insolvency in the face within just a matter of months.
Financial Wall Street analysts are united in their very negative view on the dire outlook for the entire cruise industry, including all three major cruise holding companies represented by the stock symbols of CCL, RCL and NCLH, which together represent 90+ percent of all ocean cruise products. Selling or scrapping older ships, deferring new build orders and continuing to raise desperately needed cash either through increasing debt load or trying to sell more shares of stock equity is not a long term solution.
The Cruise Industry Challenge
I challenge the cruise lines to make all portions of the ocean cruise product both on and off the ship 100 percent commissionable, much like the river cruise industry has, and much like the guided tour industry has for many years.
Of course, that would require the cruise lines to eliminate the very disingenuous NCCF’s entirely from their fare structure. No more playing games with the crumbs of “points” of any kind, “amenities”, etc. when attempting to motivate travel advisors to actually sell an ocean cruise product, especially a mass-market cruise product which represents the majority of all cruise line products (including contemporary, premium, upper premium, etc.).
The Reality Facing Cruise Lines and Travel Advisors
It was true prior to the pandemic, and it will be true after the pandemic, that there are many other types of travel products that are much more profitable for a travel advisor to sell than mass-market ocean cruises, simply because these other travel suppliers don’t play games segmenting their travel product into commissionable and non-commissionable portions in order to reduce the commissions they pay travel advisors.
The pandemic has caused all travel advisors (those who plan to survive this crisis) to seriously reevaluate all facets of their business model, and at the top is a review of which travel products result in the greatest revenue for our business. Needless to say, mass-market cruise products are nowhere near the top of the list of most profitable travel products to sell, due primarily to the infamous non-commissionable cruise fares.
Time to Get Serious
So it’s time we all get real serious about our various businesses going forward. And for the cruise lines, that should include coming to realize they have a sleeping giant of a sales force in tens of thousands of well-trained, experienced and in all ways well-qualified travel advisors who are already well-positioned to begin selling (not just booking) ocean cruises (especially mass-market ocean cruises) once again; but only if we are adequately paid for our services.
Otherwise, our agency, and I believe the vast majority of all professional travel advisors, will continue to move away from the sale of ocean cruises, especially mass-market ocean cruises, at a pace even greater than before the pandemic. And that would be a tragedy, especially for the “Big Three” mass-market cruise holding companies, and especially at a time when they need a truly dramatic sales boost like never before. Their survival to a large degree, and the survival of the travel advisor industry to a lesser degree, depend on us working together, in more of a true partnership.
Time to Shock the World, Again
Recently, United Airlines shocked the world by announcing a major change in its business and revenue model when they announced the elimination of change fees on all domestic airfares. Within hours, all other major domestic airlines followed suit, as they all saw the long term value in eliminating this very onerous (to their paying passengers) revenue stream.
So who’ll be the very first of the “Big Three” mass-market cruise line holding companies to shock the world with an announcement eliminating the very onerous (to the travel advisor) non-commissionable cruise fares? Once just one cruise company steps forward to make such a bold announcement, I predict a similar stampede among its competitors.
The Outcome: Thriving, Not Just Surviving
I also predict that the short term loss in earnings each cruise line would suffer due to the elimination of NCCF’s would be more than offset by a very substantial increase in actual “sales” of that cruise line’s product by travel advisors, much more than would occur anyway because of an increase in travel advisor cruise “bookings” when the pandemic is over.
So to the big three cruise line holding companies: Wall Street analysts are watching, your shareholders are watching, your creditors are watching, and your best sales force, travel advisors, are watching. Cruise lines: give travel advisors an incentive to actually “sell” your cruise products once again. It will be a win-win if you do. Either way, it will not be business as usual for travel advisors, and it does not need to be business as usual for the cruise industry either.
Together, post-covid pandemic, we can grow faster, and not just survive, which seems to be today’s focus, but thrive well into the future … together. The choice is the cruise industry’s to make.
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