Oceania Cruises announced on May 5 that it was eliminating the noncomissionable fees (NCFs) for all new sailings going forward. Cruise editor Teri West discussed the change with Oceania chief commercial officer Nathan Hickman.
Nathan Hickman
Q: Why are you getting rid of NCFs?
A: It’s been long championed by our closest partners. This is not a new topic, it’s one they’ve talked a lot about. And we have five ships on order between now and the next 10 years, so we have a tremendous amount of growth coming, and our travel advisors are the core engine of that growth, so we wanted to make sure that we had programs for them. What they wanted from us [was] transparency and simplicity and advisor-geared economics. We want them to share more fully in the demand that they’re going to help create over the next decade. And honestly, we had a pilot program where we tested this out. It’s been going on the last couple years. And that pilot program proved out to where we felt it gave us the confidence to kind of lean in this direction.
Q: Tell me more about what you learned from the pilot: What specifically was going well, and how did that help you make this decision?
A: We had faith in the pilot, that it would drive the shared success on both sides. That the partners who are part of the pilot would see success and that we would see the incremental lift and demand growth. And that proved out. I think the biggest thing that maybe I didn’t fully appreciate is how important it is for advisors to have that simplicity. That difference between the published commission and effective commission, eliminating that, bringing that down to zero, and just having that transparency. And making sure that the investments that we make to our sales channels go into the advisor pocket.
Q: Your sister brand Norwegian Cruise Line did this five months ago. How did that influence this decision, if at all?
A: We share a lot of data between the brands. So the great thing is that all three brands are always looking at how we can deliver. Because we have a lot of the same partners, and we have the same goal of filling our ships and driving that demand and being the partner of choice for the trade more broadly. NCL doing this, I applaud them. They led in their market segment, and I’m glad they carried the flag. So it certainly made it easier for us to make that decision.
Q: On another subject, you’ve recently announced major refurbishments of the Oceania Nautica and the Oceania Marina. These are happening amid the fleet expansion. How does that fit into the journey of redefining Oceania as a luxury brand?
A: When you look at what we developed with our purpose-built ships, they definitely deliver that luxury platform in terms of just accommodation size, space. And the challenge has been … the Oceania experience on Regatta or Nautica and the experience that we’re delivering on the Allura and what we’re doing around the [upcoming] Sonata class, that’s a pretty big range.
So what we’re looking at is, as we reposition to this luxury stand, which is where our purpose-built ships are and the direction we’re headed, then what do you do with the R-class ships? They have a loyal following from a space ratio. People like the size of the ship. They love the intimacy of it, the service that they get onboard. These are all things they like.
But a 216-square-foot stateroom, it’s hard to say that’s luxury, right? The bathroom, it’s a little smaller than what I think the expectation is today. So the fact that we can address that … in many respects, it allows us to deliver a more consistent experience from what you’ll find on the newer ships that we’re building. So it’s just about consistency.