Norwegian says sales uplift vindicates 10% commission move

By Phil Davies

Norwegian Cruise Line attributed its switch to 10% commission a year ago to a big lift in UK business - and stressed there are no plans to alter its course on remuneration.

Executive vice president sales Andy Stuart revealed that business from the UK was 25% ahead of this time last year.

This vindicated the move to cut commission as it helped eradicate retail cruise discounting and provide price clarity to consumers.

And Stuart stressed that his door was always open to negotiate with Advantage Travel Centres after the consortium took the rare decision to take the line off its preferred supplier list due to the reduction in commission.

"We were clearly disappointed because we felt we were doing something positive to discourage rebating in the industry," he said.

Speaking as Norwegian showcased new 4,000-passenger ship Norwegian Breakaway in Southampton to 2,000 UK agents, he claimed Advantage had "misunderstood" the company's intentions and there continued to be ongoing positive dialogue.

"We believe 10% is a fair commission which will result in a higher retention and better margins for agents while ensuring that consumers are less confused about pricing," Stuart added.

More than 100 Advantage agents were on board for the overnight showcase of the ship and the opportunity to earn additional commission by ensuring they saw different parts of the vessel.

Stuart conceded that the line would continue to run tactical promotions such as the current short-term bonus commission offer to coincide with the introduction of Norwegian Breakaway.

But he insisted that there would be no shift in the ongoing 10% level as part of Norwegian's Partners First philosophy.

He declined to be drawn on a rise in the company's share price but industry observers believe investors see positive returns from ongoing improvements in profitability and the introduction of both Breakaway and sister ship Norwegian Getaway from Miami from January 2014.

Stuart revealed that there would be tweaks to the second new ship to reflect its Florida home port.

Norwegian expects UK passengers to be attracted to the Miami-based ship due to the popularity of Florida as a holiday destination and good levels of airline capacity.

The line is aiming for "more than double digit" percentage growth from the UK in 2014.