With 21,112 more cruise ship berths on the seas today than last year at this time and a horror-show economy that may have only just begun, one would expect that cruise lines would take any reasonable steps to incent travel agents to fill their ships. After all, those new berths don't need to be filled just once this season; they need to be filled every three to seven days, which translates to 500,000 to 750,000 additional passengers this season alone.
And more capacity will be delivered in 2009. Which brings us to the question of the moment: Is eliminating noncommissionable fees a reasonable thing for cruise lines to do to incent agents to push cruising?
In pondering this question, cruise lines must consider that travel agents represent, by far, their most important distribution channel. And they are aware that, as a result of the recession, many agencies are in serious trouble. While the cruise lines likely have contingency plans in the event that travel agents no longer function as a critical component of their operations, they don't seem to be in any hurry to see that day come.
My travel agent and consortium friends tell me the cruise lines must do more to help agents get through this rough period, which could last well into 2010. Some are sincerely worried that the recession will spell the end of the travel agency system as we know it, and they believe the lifting of NCFs is the key to agency survival.
Most of my cruise line friends, however, say they have little incentive to lift NCFs on a wholesale basis. They don't believe that NCF concessions would earn them the one prize that significant numbers of travel agents have withheld from the lines: brand loyalty.
There is plenty of research, some conducted by Travel Weekly, to suggest that agents influence their clients' decisions. Yet there is also plenty of reason for the cruise lines to believe that commissions alone are not enough to change travel agent sales patterns.
After airline commissions were cut, TWA, reeling toward oblivion, trumpeted that it still paid 10% base commission. It didn't help the airline. Of course, in that instance, it might have been difficult for an agent in a city that had weak TWA presence to push its less convenient schedule, but other suppliers noted that commissions alone didn't move the needle.
Perhaps more to the point, MSC Cruises, which has added two ships to its inventory since the last winter season, has for years paid commissions on airfare and shore excursions but has not been rewarded with a commensurate rise in market share.
Why is this so? Good travel agents have always said, sensibly, that their relationships with clients are primary and long-term and that it's in their best interest to put clients aboard the ships, planes and tour coaches that will make them happiest. Period.
This sentiment was reinforced after airlines stopped paying base commissions and it became standard industry practice for agents to charge fees to clients. That complicated the question "For whom do travel agents work?" Even before the age of fees, most agents kept their clients' happiness front of mind, even though suppliers were their sole means of support. Now that their clients also pay them, there is even less temptation for agents to be influenced by straightforward commission issues.
And agents don't want to limit themselves to one brand or family of brands, as former Carnival Cruise Lines President Bob Dickinson will attest. He never got traction in his dream to start Carnival dealerships.
But times are desperate, and things change. The results of Royal Caribbean Cruises' Agent Support Action Program and Regent Seven Seas' recent decision to eliminate NCFs will be closely watched. (Regarding ASAP, Azamara and Celebrity Cruises CEO Dan Hanrahan told me late last week that he has received emails, letters and calls of thanks, but it is "too early to say if a share shift is occurring.")
NCFs are the hot-button issue, but Regent is a poor test case. It's among a competitive set where overall quality is high, and there's little risk that moving a wealthy client to Regent (or Seabourn, or Crystal, or Cunard, or Silversea) will result in client dissatisfaction.
I share the consortia leaders' concerns that the agency system is facing a crisis of unprecedented proportion in this current recession. And I observe that tour operators are being unusually aggressive in pointing out that, as a direct result of NCFs, agents will reap greater rewards selling tour products that have equivalent amenities, prices and satisfaction levels.
If cruise lines are skeptical that they can move market share or gain loyalty with money alone, they might look back at what I consider to be a successful, game-changing effort in another industry segment a decade ago. In 1999, Marriott announced that if agents wanted to continue to receive their current commission rates and be eligible for industry discounts and fams, they had to sign up for Hotel Excellence, a training program created by Travel Weekly columnist Marc Mancini and designed to both better familiarize agents with Marriott products and improve their sales skills.
The initial reaction from travel agents was outrage and protest, and agent groups lined up to denounce the program. But subsequently, these same groups admitted their concerns were unfounded, and agents have rewarded Marriott with significant market share increases (in 10 years, agents went from talk of boycott to booking Marriott's brands more than any others).
As MSC's situation demonstrates, financial incentives alone won't necessarily work if agents don't know the product well. But Marriott demonstrated that building brand loyalty might require a carrot and a stick. Perhaps cruise lines could eliminate NCFs and reserve fams and discounts only to those taking a similar training program. This combination of product education and financial incentives/disincentives might increase brand loyalty and, as a side benefit, help save the travel agency system as we know it.
Email Arnie Weissmann at [email protected].