By Tom Ogg
Back in the early 1970s, all-inclusive pricing for tour packages did not exist. All tour brochures were produced with a “Plus 10% Tax and Service.” Of course the “Service Charge” was actually the travel agent’s commission if they sold the tour product. It wasn’t until the mid-1970s when the all-inclusive pricing of leisure products became a reality and travel agent commissions arrived at a true 10%.
Back then, brick and mortar storefront agencies ruled the industry and were seen as the retail distribution arm for all travel suppliers. In this era, travel agents did not use the CRS/GDS systems and depended on “Agency Desks” at the various airlines for booking and faring. Travel agents also depended on tour operators for their destination expertise and operational support.
The distribution system made a lot of sense. Travel agents provided consumers access to global travel expertise through the extensive support networks made up of hotel chains, tour operators, airlines and other suppliers who saw the investment of a percentage of the consumer price-point to support the agency distribution channel as an excellent way to market. Travel agents provided local marketing in newspaper travel sections, local radio spots, newsletters, local presentations to groups, had booths in local fairs and events and so on.
The commissions paid travel agents fueled an unprecedented market outreach at a consumer level that fueled growth and profits for the suppliers who were paying the commissions to support the distribution model.
Then came the Airline Deregulation Act, e-tickets, the Internet, technology and crisis pricing actions by suppliers during exceptionally difficult times of war and economic downturns. These pricing actions changed the very nature of the way that consumers thought about the travel value proposition and introduced the idea that price was a very important factor that would define the purchase decision. In effect, every consumer wanted a “deal”.
Today, price shopping for “deals” on cruises and tours is simply a matter of fact. Airlines stopped supporting the agency distribution model, which moved home-based as a result. The airline’s “yield management” programs taught consumers that the most important aspect of travel was the price that they paid. Today, certain companies are moving into a consumer direct distribution model hoping that travel agents won’t notice.
While not the only culprit to reduce, or eliminate travel agent commissions to a level where agents cannot afford to provide the local outreach which fueled the growth of leisure travel, CruiseCompete.com is the epitome of it. Consumers know that they can consult (showroom) their local cruise expert for all the details for their vacation and then shop it on CruiseCompete.com and generally save a bunch of money by booking it with someone that is willing to give up all their commission just for the sake of volume. I even know of an operation that uses cheap labor in the Philippines to respond to CruiseCompete.com leads 24-hours a day, 7-days a week. Earning maximum overrides from various cruise lines makes it easy to outbid orthodox agents competing for the booking thus eliminating the “showroom” agent that actually sold the client in the first place.
This is what makes NCL’s action so important for cruise professionals. It returns the focus on selling cruises, not discounting. So how can you return the support to NCL?
Use Plan to Go Agreements When Selling Cruises: Protect yourself from being “showroomed” Unless you are certain that a client is going to book with you and not shop the cruise that you worked to sell them online, you should always use a “Plan to Go Agreement” to protect remuneration for your work. If you are unfamiliar with how to use these here is a link to instructions and a sample agreement. Understand that the odds of losing a client when selling NCL are miniscule compared to other mass-market lines. This in itself should be reason enough to refocus your selling efforts on NCL.
Join NCL University and Learn Everything You Can About NCL: NCL has done an outstanding job of creating a substantial training program for agents. If you have not started NCLU, now is the time to do it. Be prepared to sell NCL with up-to-the-minute training on NCL’s ships, itineraries, ports and more. You should also take the opportunity to cruise on NCL by accessing their industry rates for students of NCLU to thoroughly understand the NCL value proposition, which is considerably different today than it was even just a few years ago.
Become a Norwegian Breakaway Specialist: The revolutionary Norwegian Breakaway is set to start sailing soon. Cash in on NCL’s commitment to support you in your business by helping fill this exceptional ship from its first sailing. Join NCLU and start training for your Breakaway Specialist Designation so that you can make sure your clients understand just how spectacular this cruise experience is going to be for them. The Breakaway, and its sister ship, the Getaway promise to be two of the most exciting ships introduced in years.
Be Vocal: Let other cruise lines know that you have moved your loyalty to NCL because of their incredible wisdom in removing CruiseCompete.com from their distribution channels in favor of supporting smaller cruise professionals and to stop rebating on NCL cruises..
Be Thankful: When you talk with you NCL BDM be sure to tell them how much you appreciate their actions regarding rebating and that it motivates you to sell more NCL. When you are at Cruise3Sixty or CruiseWorld, seek out the management of NCL and tell them too.
Give NCL a Booking: Make an effort to move your next client off of a competitive mass-market line onto NCL. This is the best reward that you can give them to thank them for supporting you. Prove NCL’s decision was the right one by moving market share from cruise lines that still support the rebating business model. Cruise lines that reward rebating with overrides, group rates and back-end promotional support are only killing smaller agencies that are creating the demand for the cruise line’s products and services. It just doesn’t make any sense. I applaud NCL for recognizing the impact that CruiseCompete.com and organizations like them impact the big picture.