P&O Cruises and Cunard raise commission

P&O Cruises and Cunard are raising their commission levels from 5% to 7.5% across all products

The email said: “Great News! As part of our commercial transformation and Agent Matters programme, we are delighted to announce that we are improving travel agent commercial terms for both P&O Cruises and Cunard.

“In recent months we have appointed a new commercial directorship team and just some of the initiatives we have implemented are to extend our Mediterranean fly cruise programme earnings which allows agents to earn commission on flight packages, we have implemented a new fare structure to support you to sell cruises earlier in the booking curve and tested various agent initiatives across the market.

“As a direct result of agent feedback and the success of the above initiatives, we have developed a new travel agent remuneration package following months of consultation with you, our trade partners. We believe travel agents are critical to our business and the new commission structure recognises the absolute value we place on travel agent partners.

“A new base rate of commission payment has been agreed, together with tailored marketing support for individual agents. A base rate of 7.5% commission will be paid to all agents for both brands from 09 December, 2013 and covers all departures from this date onwards.

“Please also join us in welcoming Jeremy McKenna to the team as our new Head of Sales. Jeremy will start on 02 January, 2014 and will lead the business efforts working with our trade partners. Jeremy brings with him a wealth of sales and commercial experience leading teams in customer centred environments and can’t wait to get started in his new role!”

Sales and distribution support director Chris Truscott said the cruise operator would also be offering tailored marketing support to individual agents as well as the commission increase.

He added:  “The new commission structure recognises the absolute value we place on agents, who are critical to our business, and is part of a much wider process of positive change for both brands.”

Complete Cruise Solution, the trade sales and marketing arm of P&O Cruises, Princess Cruises and Cunard announced plans to cut commission from 15% to 5% back in 2011.

The move was met with fierce opposition from agents. In March this year Princess increased commission on the cruise element of bookings for 2014 departures back up to 10% but at that time there was no change for P&O or Cunard.

MSC pays 5% commission on prepaid cruise activities

By Tom Stieghorst

MSC Cruises said it will pay 5% commission on cruise activities that cost extra, if they are prepaid and booked through a travel agent.

The line said commissionable activities include spa treatments, specialty restaurants, beverage packages and celebration packages. MSC said they are in addition to the current commissionable shore excursions, hotel packages, transfers and air. Details are at msccruiseagent.com.

Few if any other cruise lines pay commission on such items.

MSC also said it will pay 25% commission on balcony cabins on MSC Divina later this year on sailings between Aug. 2 and Dec. 20. The travel must be booked May 27 through July 31 and apply to categories B1, B2 and B3.

Also, starting June 2, agents can earn tour conductor credits for selling a certain number of FIT bookings. The credits are typically earned when booking groups, but MSC said agents to not need to block group inventory.

One tour conductor credit will be awarded for every 20 full-fare guests on the same sail date, for bookings made up to 75 days prior to departure.

Triton would have stopped cruise cuts, says Freudmann

By Lee Hayhurst

Tui eventually had to reverse its decision, but the group fell apart acrimoniously due to what was described as a clash of personalities within the Triton board.

The recent cuts to cruise commission would never had happened if the old consortium superpower Triton had still been around, according to its former chairman.

Steve Freudmann, also a former Abta president and now ITT chairman and chief executive, said the now defunct Triton would have acted as a powerful force in opposing the cuts.

The super-consortium was formed by Advantage, Worldchoice and Global in the wake of Tui’s decision to cut commission to 7%, announced at the Abta Travel Convention in Marrakesh in 2009.

Speaking to Travel Weekly on Wednesday during filming ahead of this year’s annual Barclays Corporate Travel Forum, Freudmann said:

“Had Triton still been in existence the reduction in cruise commission would not have taken place and we would not have seen some of the problems we have seen in recent years.

“Unfortunately it [Triton] fell apart due to personality clashes around the board table.”

Reflecting on the Triton era this week after he announced his retirement from Advantage, John McEwan said there were ideological differences of opinion.

“Triton did not work for different reasons. There were differences of opinion in how to lead things.

“George Begg (the Global owner) was clearly interested in optimising performance of the company for himself.”

Freudmann accepted Begg did have personal commercial motivations for making Triton a success but that these were shared by the entire membership.

“George was trying to maximise the value of his company but to do that he had to maximise the benefit for all of the members that formed part of the overall company.

“Yes, it would benefit George, he owned the thing, but ultimately we all had the same interests at heart but we could never see eye to eye.”

In the aftermath of the Triton fall out Global’s Australian owner Stella Travel Services was linked with buyouts for Worldchoice and Advantage, which unlike Global were both owned by their agent members.

However, The Travel Trust Association swooped for Worldchoice and the deal was finalised in October 2008 as Advantage officially left Triton. McEwan was chairman of Triton at the time.

McEwan said: "We [Advantage] have had approaches along the way but when I evaluated those offers with the board we came to the conclusion that there was insufficient value available to make it attractive for each member.

"It was felt we were in a position of strength. We were already the largest consortium by some distance. Members were really happy with what they were getting at the time and a one-off cheque for their shares was quite transient."

Both McEwan and Freeudmann agreed that since the Triton days the consortia have become far less cut throat in terms of competing against each other and have developed in different ways.

"When I came in you had three groups all vying with each other for members. There was not the gap then that there is today.

"We have become different, we have a much more diverse mix of members. Global has a different model and Worldchoice has been subsumed in to the TTA. It retains its brand but the closure of the Peterborough office is a real break with the past.

"Advantage has a powerful corporate travel membership and in lesisure we have got a much different mix. We have all the big players in the UK like Barrhead and Dawson and Sanderson and we have lots of individual location members as well.

"Other consortia have large members but by and large the majority are smaller retail members."

Freudmann said the consortia no longer see each other as major competitors. "They see the independence of the consumer as being their biggest challenge rather than the guy across the road [other consortium] because the guy across the road is having the same problems and challenges."

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.

Royal Caribbean CEO defends agent compensation to investors

By Tom Stieghorst

Royal Caribbean International CEO Adam Goldstein said he sees stability in the compensation paid to travel agents.

Asked by a Wall Street analyst to elaborate on commission strategy during Royal Caribbean Cruises Ltd.'s conference call on first-quarter earnings, Goldstein said Royal Caribbean takes pride in its travel agent relations.
"Clearly, that relationship is predicated on us giving them competitive compensation to produce business for us," he said. "If they don’t feel we're giving them a fair shake on compensation, they may love us and our products, but they're going someplace else."

Goldstein said he doesn't blame travel agents for asking for more compensation, nor does he blame investors for pushing for lower commission costs.

"It is our responsibility to navigate the right balance to reflect the great value they bring to the success of our business model and neither underpay nor overpay," Goldstein said.

He said the foundations of travel agent compensation in recent years "have been much more stable than unstable."

"It's pretty clear what the building-block elements of travel agent compensation are, and it's pretty clear travel agents are willing to produce good business for us with the existing components of their compensation," Goldstein said.

Cruise lines 'are paying agents extra under the table'

By Lucy Huxley 

He added: “The fact that Princess moved back from 5% to 10% shows it was a mistake. You have to have mutual respect for agents and, by cutting commission, they were basically saying the value of an agent wasn’t important any more.”

Cruise lines that have cut commission are giving money back to travel agents “under the table” as they accept that reducing payments to 5% was a mistake, according to the UK boss of MSC.

Giulio Libutti, UK managing director, told Travel Weekly: “Under the table, these lines are now starting to give money back.

“They aren’t going back to fixed rates of 15% or up to 18%, but they are offering double commission for certain months, or bonus commissions.

“Through variable means they are making it back up.”

Libutti’s comments come a month after he accused lines of “underestimating the value of agents” by cutting commission.

MSC revised its terms to offer performance-based commission rates of up to 13%, a move Libutti claimed had increased revenue by 35% year on year in 2013, and had also developed new agent partnerships.

“We are now working with some small cruise specialists that a year ago were doing no business with us at all,” he said.

Libutti said competition was particularly challenging as growth in the cruise market had stalled due to the economic crisis and high-profile incidents involving Costa, Carnival and Thomson Cruises.

“Cruise will continue to grow but it is suffering so we all need to find travel agent partners who understand and share our targets.”

MSC expects to attract about 100,000 passengers from the UK in 2014, up from an anticipated 70,000-75,000 in 2013.

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”.

Royal Caribbean takes more relaxed stance on discounts

By Lee Hayhurst

Royal Caribbean Cruise Line has told agents it has decided to “relax its approach” to policing discounting after feedback from the trade.

Travel Weekly understands that since the start of the year the operator had been closely monitoring pricing and threatening to act against agents who continued to discount.

Questions have been raised about the legality of this sort of approach, as Travel Weekly reported on January 24.

One cruise agent, who asked not to be named, said: “Royal Caribbean has relaxed the rules and are no longer policing what people do.”

She added: “I’ve not noticed any immediate upturn in discounting levels.”

Another claimed the change came after an agent challenged Royal Caribbean over the legality of its attempt to maintain prices in the market. Royal Caribbean denied this, saying 
the change was part of its “consultative approach” to trade relations after it reduced commission to 
10% in January.

A spokeswoman said: “Based on some agency feedback we have decided to relax this approach.

“We have advised our agency partners and continue to work closely with them on promoting our brands.”

She added: “We encourage agents to continue to sell on value and maximise their earning potential. We are impressed with the results that our marketing campaigns, training and incentives have delivered and the enthusiasm from the trade.

“We will continue to invest significantly in driving consumer demand to agency partners, in addition to incentivising them directly.”

- See more at: http://www.travelweekly.co.uk/Articles/2013/02/28/43305/royal-caribbean-stops-policing-cruise-discounts.html#sthash.JgoMcVcg.dpuf

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.

MSC Cruises revises 2013 commission levels

By Melanie Hall |  

MSC Cruises has decided not to follow its competitors by introducing a flat rate of commission for agents.

The cruiseline announced it would opt for a variable commission rate of 10%-14% and is also scrapping its 5% online discount.

It said in a statement that the new commission levels have been set "according to season and product".

MSC said the new rates “will remain competitive within the market”, adding that it will offer more marketing support, together with a “lucrative” overrides scheme.

The cruise line said it is setting up the new commission levels after completing commercial agreements with travel agents.

It also told agents that as part of the 2013 commercial agreements, they must stop discounting “as this is confusing customers and causing frustration among the trade”.

Giulio Libutti, MSC Cruises UK and Ireland managing director, said: “MSC Cruises will take appropriate action if agents continue to discount MSC Cruises product. I hope this move will bring more clarity and a level playing field to the market.”