Agents Turn Away From Cruise Sales: The Thrill Is Gone

Did you hear? The once-steamy love affair between travel agents and cruise lines is on the skids, as a notable number of agents give their longtime flame the cold shoulder.

One former cruise-only agency now does just 20% of its volume in cruises. Another agency chopped its cruise sales in half, by design, slashing them from 50% to 25% of sales over a two-year period. Another agency owner, determined to steer clear of ocean cruises altogether, gave his business a complete makeover.

The impact on business? All positive, they say.

The disenchanted agents have made a concerted effort to steer clients away from contemporary and premium cruises. Land-based products pay more, they explain, plus land-based suppliers give agents more respect.

Agents also cite by-now familiar gripes with mass market cruise lines – rising non-commissionables, increased post-booking workload and even, some say, a diminished product.

It’s about the money
Agents point to various reasons for their dimming affections for cruise lines, but the obvious standout is money. It’s simple, said Jocelyn Gardner, an agent at Gateway Travel and Cruises, a Vacation.com agency. “It’s because of the commissions.”

Gardner explained that for every booking she makes on a contemporary or premium line, there are about $1,000 worth of non-commissionable charges that she doesn’t get paid on.

On her two most recent cruise bookings – both $3,000 sales – she earned just $80 on one and $100 on the other. That’s “chicken feed,” said Gardner, whose agency is in Colorado Springs.

These days, whenever possible, Gardner steers clients away from contemporary and premium cruises and toward higher-paying land products. “I might offer something like Funjet or Gogo, because I know they’re going to pay us. We’re pushing their products,” Gardner said.

‘Sinks to 4%’
Peter Ulbrich, co-owner and vice president of Holiday Cruise and Travel in Cincinnati, also points to shrinking cruise earnings to explain why his agency, a former Cruise Holidays franchise, now does only 20% of its business in cruises – down from 75% to 80%.

“You book a $4,000 Alaska cruise – you get nothing on the air and you have such high non-commissionables that you’re lucky if you make a $200 commission,” said Ulbrich, whose $1.5 million agency is now a TRAVELSAVERS affiliate.

“The cruise lines will say, ‘We’re paying 15% to16% commission.’ Yeah, but not on the gross sale. It’s what’s left after you take everything out of it. When that sinks down to 4% or 4.5%, you can’t maintain a business on that.”

More gripes
Shore excursions that don’t pay also make cruise sales a less-than-thrilling business proposition, agents said.

“If you’ve got somebody on a 12-day Mediterranean cruise and they want to book eight or nine shore excursions, that takes hours. You could be booking several thousand dollars in shore excursions. You spend all that time, and you get nothing,” Ulbrich commented.

The increased post-booking workload is also driving them away, agents said. They note that many lines no longer supply clients with documents and baggage tags, instead requiring agents to print these out for clients.

“It takes time. It costs money in ink and paper. They dump it on us,” Ulbrich said, echoing a familiar complaint.

What about the product?
Ulbrich is still a big fan of cruises. “It’s a good product, not as good as it used to be, but still a good product for the price,” he said.

Lawton Roberts

But Lawton Roberts, CEO of Country Place Travel, Inc., a storefront agency in Lawrenceville, Ga., said cruise clients are not as satisfied as they once were.

“We began to get negative feedback from repeat cruise customers who noticed changes in the product itself – people who have been taking cruises for 20 or more years.

“The product is not what it used to be,” Roberts continued. “It’s such a high-pressure sales environment from the day you board to the day you get off.”

Converting would-be cruisers
Some agents are more pro-active than others in the effort to redirect business away from cruise.

Lawton’s agency began minimizing cruise bookings a couple of years ago, primarily due to non-commissionables. Now, whenever possible, Roberts steers cruise-inclined clients toward land vacations that yield higher earnings.

Richard Bothroyd of Carefree Vacations, a small home-based travel consultancy, said he and his wife are able to convert as many as three in four would-be cruisers to land vacations.

“We’ll point out all the additional charges they pay on a cruise, that it’s not as cheap as the price looks in an ad,” said Bothroyd, whose Clayton, N.C., business is a member of NEST. They’ll contrast the cruise lines’ “nickel and diming” with the positives of all-inclusive vacations resorts in Mexico and the Caribbean, he said.

Re-thinking promotions
Country Place Travel, an Ensemble agency, has re-directed its marketing efforts, according to Roberts. “We no longer market three- or four-day cruises at all or promote them, because it’s not worth it. The seven-day Caribbean cruises are rapidly becoming not worth it for the same reasons.”

Instead, Country Place Travel focuses its marketing on land-based products and on higher-paying cruise products, notably river cruises and luxury cruises.

“Why should I promote their product when they’re incentivizing the public to bypass me and they’re paying me less and less every year?”

At Carefree Vacations, where email blasts to clients used to promote cruises almost exclusively, the agency’s emails now focus on all-inclusives and other land vacations. The only cruises the agency might mention are river cruises, Bothroyd said.

New business model
The substantial difference in commissions between an ocean cruise and a river cruise drove Mike Davies, owner of web-based RiverDiscounts.com in Abbeville, S.C., to change his entire business strategy in the fall of 2001.

Davies’ original business was Advalue, a cruises-only agency he launched in 1996, whose sales were primarily ocean cruises, mostly contemporary and premium lines. Today he only books ocean cruises for “old clients,” and those bookings account for less than 2% of his total business. Instead he focuses on river cruises.

“The month after 9/11, cruises became an item that cost $390 or even [as little as] $200 for a seven-day cruise, and the non-commissionable portion of that was about 60%. The commission check was like $32.”

It was change or die, said Davies, who works out of a home office. “In river cruising, your commission checks come with a comma.”

Bottom line impact
Since revamping his business, Davies’ sales volume has multiplied tenfold, though he now serves just one-fifth as many clients. Davies and his two independent agents sold $1.2 million in travel last year. Average commission per cabin: $1,000 to $2,000. “It’s much easier,” he said.

Bothroyd said that shifting away from midmarket cruises has “definitely increased profitability,” even in a year of lower overall volume.

At Country Place Travel, reducing cruise bookings from 50% to 20% or 25% of business over the past two years has been a win-win, Roberts suggested.

“Our commission income increased, which was a good thing, because the recession hit big time. And we have a very high satisfaction ratio with people that take land-based vacations.”

Gradual shift
Holiday Cruise and Travel shifted its sales away from cruises gradually.

“I don’t control my agents. We didn’t one day say, ‘Let’s stop selling cruises and sell more land packages’,” said Ulbrich. “We don’t badmouth cruises.”

“Our agents are paid on a salary plus a percentage of commission. They’re not stupid. They look at a cruise, and it’s a $140 commission; they look at sending somebody to Mexico for the same price, and they get a bigger cut. So they say, ‘I’m going to talk to these people about taking a trip to Mexico.’”

The increasingly attractive commission packages and incentives offered by land-based suppliers were part of that equation, Ulbrich said. “Some vendors now, where we’ve gone from selling $100,000 to $300,000, have upped commissions to 13% and 14%, and they will pay 5% on the air.”