Cruise operators plan to increase their direct sales but not at the expense of travel agent business, according to the new UK boss of Royal Caribbean Cruises.
Speaking aboard new £1.2 billion ship Allure of the Seas, Dominic Paul insisted there was no intention to follow airlines by cutting out commission and focusing on direct sales.
Paul, former chief executive of BMI, said the cruise industry was in a very different situation to many carriers.
“There is always going to be a role for good travel agencies. The intermediary can play an important role in helping consumers navigate what’s on offer. Having said that, cruise companies will continue to build up their direct business.”
Currently, fewer than 10% of cruises are booked direct and Paul would not be drawn on what proportion he believed was healthy. He said: “We need to see how the market develops over the next few years.
“I’m a real believer in being honest and upfront,” he added.
“If we say that we have a plan over time to gradually increase our direct business and to continue to work strongly with trade partners who understand our business, that is a clear and honest message.
“That leaves plenty on the table for agents and makes it clear we are not on a fast track to get 100% direct.
“I have not had a conversation with a single travel partner who has not understood that we would gradually increase our direct business.”
Video interview: Dominic Paul on TWnewsmaker
Paul is concerned about the high customer acquisition costs in cruise – with commission forming a significant part – not just for the line itself, but for agents that support it.
“It’s so important travel partners think about who their customers, and their potential customers, are,” he said.
“The better the service they offer, the more they will attract guests and retain them. If they are just churning customers, their acquisition costs will be too high.”
Relying on bargain prices to attract clients will only compound the problem, he warns.
Paul is not against discounting in principle, but suggests it is unacceptable for agents simply to use discounts to take customers off one another.
He believes the prices and discounts put into the market by the cruise lines should be sufficient to attract customers in the numbers cruise lines need to fill their ships.
“When you get into the game of deep discounting, how can you afford to give the consistent level of service the cruise industry needs?
“The industry is not going to get rid of discounting overnight, but it’s important we work with travel partners who do not have to compete on price.
“Many of our partners understand that the way to win a consumer is not always on price.”