Agents concerned about Carnival change in commission tiers

By Tom Stieghorst

Carnival Cruise Lines' new structure for commission tiers has some travel agency leaders worried.

"Travel Leaders Group is very concerned about this news," said CEO Barry Liben in a statement Thursday.

Barry LibenLiben said agents are under pressure due to the economy and other factors.

"Changing commission structures at this time only exacerbates the situation," he said.

Travel Leaders is the largest travel franchise company in North America, with 1,250 agencies.

Carnival announced on Wednesday it will increase the number of cruises agents must sell to qualify for incremental increases in commission.

For example, agents now need to sell about 300 cabins a year to earn a commission rate of 16%. Starting with cruises sold after Dec. 31, they will have to sell 1,000 cabins to get that rate.

“Obviously, whenever commissions get reduced or changed, there’s always an impact,” said Nina Meyer, recently re-elected president of the American Society of Travel Agents.

“I think this will affect a lot of independents,” Meyer added. “If they’re not associated with a consortium or host, they won’t easily be able to get to the higher commissions.”

Lynn TorrentCarnival said it has not changed commission tiers in 10 years and is making the move partly to bring it back into alignment with competitors.

Lynn Torrent, Carnival's executive vice president of sales and service, said the changes would chiefly affect agents whose Carnival sales production hasn’t kept up with growth.

“More than half of our agents shouldn’t see any change,” she said.

As part of the overhaul, Carnival will no longer calculate tiers by the number of guests. Carnival had a unique system tailored to adjust for its large number of short cruises.

Each guest on a two- to five-day cruise counted as a half-guest in the tiered system, while agents earned credit for a whole guest for six- to nine-day cruises and a guest-and-a-half for 10- to 12-day cruises.

Carnival said agents regarded that as cumbersome and confusing. So it will now count cabins sold in determining tier thresholds.

Some agents said they do not consider the change in tiers to be as important to agent revenue as the non-commissionable fare that Carnival and other lines deduct from gross sales.

“In the end, they take it all back in non-commissionables,” said Peter Ulbrich, owner of Holiday Cruise and Travel in Cincinnati.

Torrent asserted that U.S. agents can profitably focus on Carnival because more of its inventory is deployed in the U.S than other lines, and it caters predominantly to the U.S. market.

Also, as a brand, Carnival is often on television and markets through other channels to stimulate new bookings.

“When we’re investing in consumer marketing, we fuel their sales machines,” Torrent said.

Follow Tom Stieghorst on Twitter @tstravelweekly. 

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