Norwegian says sales uplift vindicates 10% commission move

Norwegian says sales uplift vindicates 10% commission move

By Phil Davies

Norwegian says sales uplift vindicates 10% commission moveNorwegian 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

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.

_Adam Goldstein“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.

Royal Caribbean will reduce European capacity in 2014

Royal Caribbean will reduce European capacity in 2014

IN: Europe

Royal Caribbean is planning to make more reductions to its fleet of cruise ships offering European sailings in 2014.

Included in Royal Caribbean’s first quarter financial results, the company indicated it plans to reduce 2014 year-over-year capacity in Europe by an additional 10%.  This change will mean in 2014 its European cruises will account for 25% of its capacity.

Royal Caribbean has steadily been scaling back the number of cruise ships it sends to Europe after a few years in a row of mediocre sales thanks in part to financial instability in the region as well as negative media related to the Costa Concordia tragedy.

Royal Caribbean did report demand for its “micro-deployment” of Oasis of the Seas to Europe in 2014 is showing “exceptionally strong” demand.  The two-month adventure to Europe for Oasis of the Seas centers around a scheduled drydock stop in Rotterdam.