A recent decision by Regent Seven Seas Cruises to begin invoicing part of its cruise fare as noncommissionable has some travel agents singing the blues over a loss of revenue.
Others, while not applauding the move, say Regent has built up goodwill in the past two years by paying commission on every item bundled into a cruise except airline tickets.
“Regent tried to lead the way, and nobody else followed,” said Judi Walker, owner of Alliance Travel Partners in Scottsdale, Ariz. “As competitive as the cruise lines have become, from a business standpoint I kind of understand what they’re doing.”
Starting with bookings made on Oct. 1, Regent will classify $20 per passenger per day as noncommissionable. So for a seven-night cruise, a $5,000 fare will yield an agent $729 instead of $750. It will also make non-commissionable taxes and government fees up to $19.50 per passenger per day, an additional loss.
“It certainly is disappointing,” said Linda Terrell, head of Brownell Travel, a big retailer of Regent in Atlanta. “It was always just nice. Let me put it that way: I have appreciated the extra income.”
Terrell said she will continue to recommend Regent and that she won’t make budget cuts at her agency.
Two years ago, Regent announced that it would pay commissions on port charges, government fees, taxes and included shore excursions, a departure from the industry’s general practice.
Silversea Cruises a year ago made all costs, such as port charges and taxes, a part of the commissionable fare, and it also began paying a 13% commission on economy air tickets included in bookings. A Silversea spokesman said it has not changed its policy.
Regent spokeswoman Susan Robison said other changes should mitigate the effect of any drop in agent commissions. Regent is reducing the air credit allowance for passengers who arrange their own flights by $200, which effectively raises commissions, she said.
Also, revenue yields are up 5% this year, boosting commissions. Regent’s average booking yields $2,665 in commissions, which Robison said is the highest of all cruise lines.
“It is important to look holistically at the changes we made in order to understand the net effect,” she said.
As for why the changes are being made now, agents speculated that Regent’s costs have risen or that demand has strengthened enough to make it feasible.
Robison declined to be specific, saying that Regent routinely makes modifications that benefit both the cruise line and its partners.
Agents point out that other cruise lines also invoice a part of the cruise cost as noncommissionable, but they generally vary it by itinerary and ship. Cruise lines say the amounts cover non-cruise items like security costs at ports, but the exact formulas are not disclosed to travel agents.
Michelle Fee, CEO of Cruise Planners, a travel agent franchise operator in Coral Springs, Fla., said she’s optimistic that Regent will raise overall prices for 2013.
“I understand it,” she said of the new NCF, “but at the same time nobody likes change.”
Sarah Fitzpatrick, an agent at Unique Travel in Delray Beach, Fla., expressed similar sentiments. “It’s kind of like no Christmas,” she said. “It’s never a happy thing.”
Fitzpatrick said her agency worried when it first learned of the new policy. “We do a huge amount of business with Regent. Something like that could really affect our bottom line.”
But some testing put the commission loss per booking at $100 maximum and $40 on average.
Fitzpatrick said she was a little concerned that Regent would come back seeking further cuts.
Robison said Regent’s new policy is not a change in direction. “Our travel agent partners will continue to receive the benefit of making a commission on shore excursions, hotel stays, wine and even gratuities because it’s all included in the price,” she said. Follow Tom Stieghorst on Twitter @tstravelweekly.