Cruise Holidays, the cruise-only franchise network, demonstrated its considerable muscle when it gathered eight current cruise line presidents, several who flew into Miami just for the event, for an audience of 130 Cruise Holidays franchise owners.

Holding its 2006 annual convention in the cruise industry's backyard, downtown Miami, also helped; it is usually held on a cruise ship over several days, which doesn't enable the head honchos to duck in and out.

"That's why we did it on land," said Roger Block, executive vice president of the Carlson Travel Franchise Group, Cruise Holiday's parent company. "You can't get this level of participation on a ship; 100% of the invitees showed up."

Many groups could never get this level of participation. Cruise Holidays calls itself the largest cruise-specialty franchise network in North America and said it sells more cruises than any travel network with the exception National Leisure Group.   

"The reason [the executives] come is because of the support we give them day in and day out," said Peter Thomson, Cruise Holidays' vice president and COO. 

Block, who also moderated the panel, did not let the opportunity go to waste. Many of the franchise owners in attendance later said he raised important issues, even if the executives skirted some of them or, as per Securities and Exchange Commission rules, couldn't address them.

He asked the executives what was going on with yields and what the future held for pricing. He also asked about the perception among cruise sellers that the rate of non-commissionable fees, or NCFs, is increasing.

But not all the questions put the executives on the hot seat: Block also asked them to give the cruise sellers tips on improving productivity.

As usual, the pricing question drew several "no comments" from the public companies, in addition to the now quarterly echo that, yes, the Caribbean is soft, and, yes, Alaska and Europe are strong. But Adam Goldstein, president of Royal Caribbean International, cautioned Block that he might want to reconsider asking the public cruise companies about pricing and yields. 

"It's not appropriate," he said after the panel. "At Seatrade [the annual cruise industry convention in Miami] we have the same issue. We are public companies, and we have four chances a year to give this information out, and at no other time."

Sales advice

When it came to giving advice on making sales, the cruise lines were more forthcoming and the executives commended the Cruise Holiday sellers for being among the best.

"Cruise Holidays agents on the front line have always been very knowledgeable," said Goldstein.

Bob Dickinson, Carnival Cruise Lines' president, said, "Successful agents create a database and manage it" and proceeded to quiz agents on whether they did. In most cases, they didn't.

"We grew our business by adding ships," he said. "You can't grow your business without adding people or changing dynamics." 

The executives brushed off the NCF question plainly; Colin Veitch, CEO of Norwegian Cruise Line, called the issue a red herring.

He said that mathematically, NCFs couldn't possibly be much of an issue to cruise sellers except to the ones who focus on the least expensive accommodations.

"Sell balcony cabins and suites," he advised audience members. "If your business is three-day inside cabins, then NCFs are a big deal."

But the franchise owners later said that despite selling only premium cabins, the growing NCFs are a challenge to their business, especially in a climate of lower costs.

"The cruise lines say, 'We haven't lowered commissions', and that's true," said one franchise owner. "But they put more of the money in the NCF category."

But the executives were adamant that that wasn't the case, and many franchisers said Veitch's and the other executives' points were valid.

Goldstein said the rate of NCF has been stable over last few years.

Dan Hanrahan, president of Celebrity Cruises, said the issue is "blown out of proportion" and that since 2003 the multiple on yields far outstrips the NCFs, and in that time, Celebrity has paid its highest commissions in history.

"NCFs are things that happen outside of ships," said MSC Cruises President Rick Sasso. "Stevedores, port fees. Let's get the cruise cost [to consumers] up, because our costs don't change."

Shore pay

Sasso earned the biggest applause of the morning when he said MSC would offer 5% commission on its shore excursions.

The other cruise lines defended their no-commission policy.

Mark Conroy, president of Regent Seven Seas Cruises, said the profit on shore excursion is marginal. "We want to pay commission but need to earn profits, too," he said.

Rounding out the panel were Princess Cruises President Alan Buckelew, and Stein Kruse, president of Holland America Line.

In an interview after the event, Block said that one of the great benefits of having such a panel discussion is the morale boost it can provide to franchise owners.

"It's an opportunity for these folks to build relationships at the senior level," he said. "It gives them the idea that at Cruise Holidays they have one-on-one access to the top. That's worth the trip itself."

Despite the success, it may be hard to replicate the stature of this panel again next year. The event will be held on the Celebrity Mercury, out of Seattle.

But despite having to possibly give up the lofty pedigree of the panel, many Cruise Holiday franchisees were happy about this news.

The cruise ships, they said, were more intimate and fun, and the close quarters led to more mingling.  

To contact reporter Johanna Jainchill, send e-mail to [email protected].

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