Princess Cruises increases base rate commission

By Lee Hayhurst 

Princess Cruises has insisted its move to pay a basic upfront 10% commission on all bookings is not an admission that the move to a headline rate of 5% in 2011 was a mistake.

The Complete Cruise Solution brand has split from its fellow members of the Carnival UK trade arm by deciding to increase its basic agency payment for bookings for 2014 cruises.

Agents were told of the move this week, with UK director Paul Ludlow saying it came as a result of feedback from the trade.

He told Travel Weekly that despite Princess moving to the headline rate of 5% in 2011, along with P&O Cruises and Cunard, it was never actually that low due to other earning options.

Agents were able to earn an extra 3% on the cruise element when booking air through Princess (a so-called ‘air kicker’) and could also earn more by taking out a group deal.

However, these were both paid after sailing on a quarterly basis and Ludlow said agents told Princess they wanted a simpler arrangement so they know what their earnings will be.

“We were never at 5%,” said Ludlow. “We were always more than 5%, but we chose not to pay those commissions at the time of the booking.

“From the point of view of the sales consultant, they saw 5%, and we had feedback that agents liked the extra earning opportunities, but there was a degree of complexity and they wanted it simplified.

“For 2013 Princess is doing very well and we have our new ship Royal Princess coming into Southampton in a few months' time.

“We are not making these changes for 2013, this is for 2014 onwards. So this is not a knee-jerk reaction because 5% has not worked. This is based on agent feedback.”

Under the previous groups programme, agents could earn up to 6.25% extra commission on the cruise element once they had made 16 bookings on a particular sailing.

This came in the form of a free tour-conductor place on the cruise or the equivalent monetary value – an average of the cruise value of the other 16 bookings.

Under the new arrangement, from March 14 both the air kicker and group programme trade incentive will be removed in favour of the 10% upfront payment.

Ludlow said the change should make selling Princess Cruises more attractive for all agents, even those who were good at exploiting the additional earning in the group programme.

“We are improving commission. From a travel agents’ perspective, they could earn more money at the time of bookings. For all agents this will be attractive," he said.

Asked whether the move to 10% would risk reviving big discounting – something the move to 5% was meant to stamp out – Ludlow replied: “The changes that we are making aren’t about reneging on our 5%, it’s about simplifying the offering in the market.”

Ludlow said there were no plans for P&O and Cunard to follow Princess Cruises’ commission restructuring.

“P&O and Cunard have never had the complexity of the airline kicker and the group commission, so as they haven’t had that feedback regarding simplification, I don’t think there’s any need to make that change,” he said.

Ludlow said he had contacted a number of travel agents about the decision, and that feedback had been "very positive”.

CCS moots upfront commission payments for cruise sales

By Melanie Hall13 February 2013 at 08.16 GMT

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Carnival UK has revealed it is considering bringing forward commission payments to the time of booking rather than when the final balance is paid.

Giles Hawke (pictured), Carnival sales and customer services director, said the company was looking at revising its systems to implement the move.

However, he added: “I wouldn’t want to set any time scale.”

Hawke was speaking at a cruise round-table debate hosted by Travel Weekly and Carnival UK. Senior agency and tour operator figures at the event welcomed the potential move.

Chris Roe, sales and distribution director at Virgin Holidays, said receiving the commission upfront would make a “100% difference” to his business.

Miles Morgan, founder of Miles Morgan Travel, said: “It’s a step in the right direction from CCS for a change.”

The suggestion followed a discussion about agents being forced to pass customer payments straight to the cruise lines, which hits agencies’ cashflow.

Last year, Complete Cruise Solution, the trade arm for P&O Cruises, Cunard and Princess Cruises, contacted all larger agents whose customers are not yet paying its cruise lines directly to insist a plan is put in place to make the transition to direct payments, to remove any financial risk from its trade business.

“We have seen the collapse of Gill’s and Cruise Control,” said Roe.

“I can see why CCS is doing it, but it is tarring every agent and tour operator with the same brush.”

Hawke said that the company had a ‘bad-debt’ fund worth millions of pounds in case retailers went bust, 
but CCS had made a decision that it 
was not going to carry that financial 
risk any more. “No banks would give you cash for nothing,” said Hawke.

But Seamus Conlon, managing director of Cruise.co.uk, said: “The average agent has to pay staff. I’m increasing cashflow to create your deposits, which you then bank for a year. CCS is screwing up everyone’s income.”

CCS cut base commission to 5% in 2011, sparking cuts by other cruise lines.

UK's Top Cruise Company SPLIT UP!

Carnival UK announces new sales structure to create “unrivalled” agent partnerships and deliver a “new generation” of cruisers

Carnival UK has announced changes to the structure of the agent facing sales teams for its three major brands.

From early March 2013 there will be two separate sales teams, one supporting P&O Cruises and Cunard Line and the other supporting Princess Cruises.
 

This change recognises the importance of each brand’s market position and product differentiation. As each brand evolves, their subsequent distribution and marketing solutions vary and this structure will enable more dedicated resource to work with our agent partners to fulfil those needs.

The Complete Cruise Solution sales team has driven significant increases in cruise business through many agents in this country over a number of years. Now is the time to underpin that solid foundation, encourage a new generation of cruisers and build on that growth to further commercial success.

The introduction of two sales teams will increase the internal resource available to maintain the current high standards of travel agent support and encourage unrivalled business partnerships. It will drive business growth and extend the marketing to the benefit of each of our three cruise lines and their agent partners.

The award winning agent extranet, www.completecruisesolution.com, will continue to provide top-quality booking and training services for all three brands, and will continue to receive significant investment.

The new Princess Cruises sales team will report into the newly created head of sales position, which will in turn report to Princess Cruises UK director, Paul Ludlow.

The sales team for P&O Cruises and Cunard will report into the newly appointed head of sales, Chris Truscott, who will join the organisation from early in the new year. Truscott will report to Carnival UK sales and customer services director, Giles Hawke.

All three brands are committed to continued commercial collaboration to provide a consistency of approach and to creating new sales organisations capable of delivering exceptional account management for mutual benefit. 

Despite Costa crash, two retailers say business continues to thrive

By Donna Tunney

Industry analysts this week predicted a short-term dip in cruise bookings following the Costa Concordia disaster, but some travel agents reported that — so far — their cruise business is holding steady.

“We have had no cancelations to date,” said Dwain Wall, senior vice president and general manager of CruiseOne and Cruises Inc.

“We had a couple people booked on future Concordia cruises and they called and asked us what would be done for them. We’re working with Costa to reaccommodate them — even they haven’t canceled,” said Wall.

A comparison of the first three days after the Jan. 13 accident with the same three days in 2011 showed that sales actually are up year-over-year, Wall said.

“I would expect a bigger impact,” he said, “but we’re not seeing it.”

Agent Mark Comfort, who owns Cruise Holidays Kansas City, said he’s been checking with his staff every day on booking levels.

“It’s been fascinating to me that while this has been horribly tragic, it has not seemed to create any scare in the minds of [cruisers], at least none that has come to our notice. People who already are booked or considering a cruise are not changing their minds,” said Comfort.

“What you don’t know,” he noted, “is how many people won’t call now if they were thinking about a cruise.”

Down Under overview: Cruise growing by leaps and bounds

By Donna Tunney

The cruise industry in Sydney is in an extraordinary growth phase, and it doesn’t look like it will slow down, according to Chris White, chairman of Cruise Down Under, the cruise marketing organization representing the Pacific region’s national and state tourism agencies, regional ports, shipping agents and cruise operators.

In his recent year-end report, White said there were 214 ship visits to Sydney in 2011, up from 150 in 2010; that represents a 43% increase.

For the 2012-13 season, 264 ship visits have already been booked.
Sydney’s harbor is the only one in Australia with two dedicated cruise passenger terminals, he noted.

This winter, several ships will make their maiden visits to Sydney, including Costa Cruises’ Costa Deliziosa, Royal Caribbean’s Radiance of the Seas, Celebrity Cruises’ Celebrity Century, Holland America Line’s Zaandam and Princess Cruises’ Sea Princess.

February will be the high point of the cruise season, said White, with a new record of 33 ship visits, up from 27 for February 2011. Cunard’s Queen Elizabeth is one of the ships that will call at Sydney next month.

The Sydney Ports Corp., which develops and maintains the city’s facilities, is taking steps to improve the services and infrastructure necessary to sustain the city’s growth in cruise shipping. It is, among other initiatives, planning a significant upgrade at Sydney harbor’s Overseas Passenger Terminal at Circular Quay during the next couple of years, said White. And it will begin work soon on a $57 million terminal at White Bay, which is part of Sydney harbor where a temporary dock has been operating.

Meanwhile, said White, other developments are springing up in the Pacific region. The Papua New Guinea Tourism Promotion Authority, for example, has set its sights on luring more cruise ships by 2013. About 100 ships called in Papua New Guinea in 2010. Numbers for 2011 were not yet available.

“Papua New Guinea, the world’s truly last frontier, is waiting, beckoning to be explored and experienced. Every step in this uniquely diverse country of 800 different languages, tribes and peoples is an experience on its own,” said White.

A cruise port and terminal is located at Port Moresby, on the Gulf of Papua. Tourism officials are working to raise awareness of the destination with additional marketing projects and by attending major trade shows, such as Cruise Shipping Asia.

On the shore excursion front, Cruise Down Under recently announced a new product that might be an eye-opener to cruise passengers who visit Tasmania.

It’s a guided tour of the Coal Mines Historic Site, a former convict site, near Port Arthur.

“Located in a now peaceful bush landscape about 30 minutes’ drive from Port Arthur, the Coal Mines is a little known element of the great experiment in crime and punishment on which the Australian nation was founded,” said White.

Participants will explore the ruins of houses, barracks, offices and the underground cells of those who once lived and worked at the Coal Mines, a place where the “worst of the worst” convicts were sent for punishment.

Fred Olsen seeks to reduce risk of selling through agents

By Lee Hayhurst |  Jan 10, 2012 17:27PM GMT

Fred Olsen Cruise Lines could start asking agents for a bond or other financial security if it cannot secure credit insurance to cover the risk of doing business with them.
The operator says it wants to take a collaborative approach with the trade and that it is in talks with agent partners about how it can manage financial risk.
The move mirrors similar changes leading cruise operator Complete Cruise Solution has made to the way it works with agents. CCS, however, does not have credit insurance for agents.
Fred Olsen said it was looking to secure credit insurance to protect itself against agency failure but that this was “becoming increasingly difficult”.
The current economic climate means many insurance limits are being reduced or removed, it said.
Nathan Philpot, sales and marketing director for Fred Olsen, said it has credit insurance secured for 80% of agents but the remainder still posed a substantial potential risk.
“This has got to be a dialogue, not a one-size-fits-all solution. We started conversations before Christmas, it would be great if we could have something in place by the end of January,” he said.
Agents which Fred Olsen insurer, Euler Hermes, refuses to cover will be given a range of options including putting up a bond or bank guarantee.
Another option could be increasing the frequency of payments or, as CCS is trying to bring in, getting agents’ customers to pay the line direct.
Philpot said head office solutions could also be sought with consortia. Although Fred Olsen is an Abta member association rules provide limited cover for agency pipeline monies.
Since 2007 operator pay outs have been restricted to three times annual subscriptions in any given year.
Philpot said: “There probably needs to be dialogue with Abta about whether this works for everyone because clearly it’s not adequate if a significant Abta cruise retailer goes bust.”