Royal Caribbean reserves judgement on commission cuts

Royal Caribbean reserves judgement on commission cuts

It is too early to assess the impact of Complete Cruise Solution’s commission cut or decide how to respond, Royal Caribbean UK managing director Dominic Paul told an industry forum on Thursday.

Asked about the move to a 5% flat rate by the trade marketing arm of P&O Cruises, Princess Cruises and Cunard, he conceded it had cut out discounting during the 2012 launch period.

However, Royal Caribbean believes the long–term impact will not be known until the launch period is over and much of the lines’ past passengers have booked their cruises.

Paul, who was speaking at the Barclays Travel Forum, said: “Some trade partners we have spoken to are saying it’s working, it’s getting rid of discounting for 2012. They have definitely got rid of discounting, the key for agents is what are their retained earnings.

“If they are similar or better then they will be in favour of it, if it’s reduced they will not be in favour. The trade is a very important part of our strategy, it’s very important to keep the trade onside.

“We will do the right thing for our business and our partners. CCS has done a certain move and that’s their decision. We will do what’s right for our partners. We are not in any rush to make changes.

“If we do make any changes we will do it in consultation with people in a considered way. Later in the summer it will become clear what the impact is of what CCS has done.”

Chris Photi, senior partner at industry accountancy firm Whitehart Associates, said agents would find a way of making money out of cruise by packaging up their own deals.

“Agencies are amazingly resilient – their view is we will make money however we can. You really cannot run an agency business on 5% commission so what are they going to do? They are going to find a way of making money round the core cruise.

“You will see people selling things like cruise excursions and transfers and they will take excursions income from the cruise companies I believe”.

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