Frank Del Rio, chairman and CEO of Prestige Cruise Holdings, the parent company of Oceania Cruises and Regent Seven Seas Cruises, sailed onboard the christening cruise of Oceania's Riviera. Cruise editor Donna Tunney spoke with Del Rio during the voyage.
Q: Prestige recently introduced an anti-rebating policy that removes the incentive for any agency to poach a competitor's clients. What has been the reaction by agents to the rebating policy so far?
A: You heard the applause we got this morning during the agent [meeting] when that subject came up. The reaction has been very good. But we did have one [rebating] agency that does close to $5 million with us, and they were put on stop-sell. If everybody is right, we won't lose that business. The clients will go back to the agent who originally spent time with them, and they will book. So the net loss, I think, will be a fraction of that amount.
Q: Prestige's anti-rebating policy states that no commission will be paid to an agency that offers a rebate and steals a client if the booking transfer is more than 30 days from the original booking. Do you expect other cruise lines to match that policy?
A: I'm not surprised that no one has matched yet, but they copy everything else we do, so I think this, too, shall pass.
Q: How did the policy come about?
A: We had lengthy discussions with agency leaders before we announced the new policy. When we approached them we said, "Hey, we're thinking about this, what do you think?" And they said, "You have got to be the line that puts teeth into anti-rebating." All lines, or virtually all, have some sort of rebating rhetoric, but they want to be friends with everybody. We want to be friends with everybody, too, but it takes an experienced agent to book our cruises.
Our product is not a three-day cruise to a sandbar and back. Agents who sell us are spending a lot of time on our more complicated itineraries -- with long-haul flights, [pre-and post-cruise hotel stays], etc. -- but the industry has trained consumers to be greedy. And if an agent is happy earning a third of what they're meant to earn in commission, there's something wrong. We're happy to pay commission, but not in the form of a discount.
Q: Across the industry there are big capacity deployments to Europe the next few years. With the recent anti-austerity votes in elections in France and Greece possibly jeopardizing the resolutions to sovereign-debt issues, should the industry rethink those deployments?
A: Some American companies, such as Royal Caribbean Cruises Ltd., are saying that half or more than half of their revenue is coming from other source markets. But you've jumped to the conclusion that it means that on any ship or any sailing, half the passengers are American and half are not. That's not the case. There are some ships 100% dedicated to Germany, or to the U.K. No ship is ever 50-50, meaning 50% American and 50% another nationality.
But for 2013 and 2014, what I'm seeing is that the new ships are being built for the North American market. The Breakaway [and Getaway by Norwegian Cruise Line] aren't going to Europe. For 2013, we pulled the Regatta out of Europe and put her in Alaska. I think some other [cruise lines] will redeploy out of Europe. You want to take some risk off the table? You go to Alaska.
Q: How is 2013 shaping up?
A: We have the advantage of being able to peer into the future because our guests book so far out. I believe that 2013 is going to be a very good year. All the trends are positive.
For cruise news and updates, follow Donna Tunney on Twitter @dttravelweekly.