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”.