Cruise Execs Vow to Maintain 10%

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MIAMI -- Top officials from Carnival, Disney Cruise Line, Holland America Line, Norwegian Cruise Line and Princess committed publicly to maintain minimum 10% commissions.

The only holdout appearing on a panel at the Seatrade Cruise Shipping Convention here was Royal Caribbean, whose president, Jack Williams, said that commissions should not be discussed in public. He added, however, that Royal Caribbean will provide "competitive commission programs in all respects."

In making the pledges, which came in response to a question from the audience during a state-of-the-industry panel, some of the executives implied that override structures still might be in a state of flux. Several lines already have changed their override agreements with consortia in an effort to base them on productivity, not membership.

Bob Dickinson, president of Carnival Cruise Lines, said during the panel that he is concerned with the "tremendous amount" of rebating in the agency community and might look to change his line's override program. One way to discourage rebating, he said, is to pay agents a base commission with overrides coming at the end of the year rather than at the time of booking. Agents might be less prone to give away money they don't have in hand, Dickinson later explained.

Echoing an earlier pro-agent speech given by Rick James, senior vice president of Princess Cruises, Peter McHugh, president of Holland America Line, said that cruise lines need to do more "to drive consumers into travel agencies."

Rod McLeod, senior vice president, marketing, for Carnival Corp., said cruise lines, as they enjoy the current boom market, need to recognize that agents, who constitute their core distribution system, are "clearly challenged."

All of the executives on the panel -- which also included Hans Golteus, president of NCL; Art Rodney, president of Disney Cruise Line, and Peter Ratcliffe, president of Princess Cruises -- painted a pretty picture of the industry and its future.

Ratcliffe, for example, said the cruise industry is experiencing "an unprecedented feeling of optimism."

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The cruise industry is experiencing boom times with record occupancies and profits for the biggest three companies, and record numbers of ships under construction. But its best insurance policy for an equally healthy future is travel agents, according to Rick James, senior vice president of Princess Cruises. James, who is also chairman of Cruise Lines International Association, said cruise lines, in turn, are the best insurance policy for the future of agents, who he noted have been hit hard by airline commission cuts.

"We are mutually dependent, and let's not forget it," James said in a speech at the Seatrade Cruise Shipping Convention here. "The future of travel agencies does not lie in business ticketing and the future of the cruise lines does not lie in bypassing agents."

He urged the cruise industry to work with all agencies, not just those that have merged with large firms, although he said those agencies have helped increase the level of professionalism in selling and marketing cruises. James urged his colleagues, "to support the efforts of our agencies to become more sophisticated in direct marketing and to use information technology to the greatest advantage." And he urged the cruise lines to make their inventories more available through the computerized reservations systems.

James noted that between Carnival, Royal Caribbean and Princess, 40,000 more berths will come on line in the next four years.

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