The reduction to a 5% commission rate brought in by Carnival UK for 2012 sailings would not be appropriate in any of the operator’s other markets, according to a US boss of Princess Cruises.
The cut, which sees all agents placed on a flat commission level, some well below the 15% they were used to earn, was brought in, according to the operator, to address the high levels of agent discounting in the UK.
Speaking to Travel Weekly at the UK Cruise Convention in Southampton, Jan Swartz, Princess Cruises’ executive vice-president for customer services, sales and marketing, said the move was “UK specific” and many agents had responded positively.
“We do not have any plans to introduce this in other markets,” added Swartz, who contrasted the UK and US markets in a presentation to Columbus Day delegates, pointing out the higher rate of discounting in the UK.
Asked by one delegate about the commission cuts, Swartz said Carnival wanted to take “price off the table” when agents discussed cruises with customers, a factor she said was “unproductive”.
“Rebating is much less frequent in the US,” she added. “Agents there are really focused on how to sell on service and value.
“Certainly it does happen, but nowhere near the extent that it happens in the UK market.
“While these changes were quite significant, what they were intended to do was to take the price conversation [between agents and consumers] and minimise it.”
Speaking later, Swartz said although there was more newspaper advertising for cruise in the UK than in the US, too much of it had focused on price rather than the value of the product.
“Many agents use newspapers to sell on price, so a lot of advertising here, by its very nature, does not leave a lot of space to tell the brand story or explain why cruising is great value – things that would convert a ‘non-believer’.”
Giles Hawke, Carnival UK sales director, said that since Princess Cruises sailings for 2012 first went on sale six weeks ago under the new commission setup, the operator had had some “really positive feedback from agents”.
“When we announced it, we saw from agents a reasonable degree of trepidation and fear of the unknown, with people not knowing how the market would respond or how they would get across their unique selling point,” he said.
“But since, we have had some agents actually thank us, saying they are making more money now than ever before. Not having to rebate means they can sell confidently knowing they won’t be beaten on price. And this is from large and small agencies alike.”
Swartz said the appointment this week of Paul Ludlow as a standalone UK director of Princess Cruises marked a “milestone” for the operator in the UK.
She said she saw huge potential for growth in the UK, where Princess Cruises has surpassed 100,000 annual passengers, particularly due to its focus on destinations and its programme of non-UK sailings.
Despite Princess Cruises recently going its own way on some trade activities, including group bookings, deposit levels and payment deadlines, the line would continue to be a key part of the Complete Cruise Solution trade arm in the UK, Swartz said.