ACE: Commission cut ‘achieved objectives’, claims Carnival UK

ACE: Commission cut ‘achieved objectives’, claims Carnival UK

Just over a year after the decision to cut base commission Carnival UK claims the move has helped it achieve its aims and it has not appreciably undermined agent support.

The operator angered many agents when it moved to 10% commission and scrapped volume-based overrides in a bid to tackle rampant discounting caused by agents giving away their earnings to customers as they competed for bookings.

Speaking to Travel Weekly at the sixth UK Cruise Convention on Tuesday, Giles Hawke, Carnival UK sales director, said the move had brought price clarity to consumers.

And he claimed trade support had been broadened. “We have achieved the support we hoped we would and we are getting the volumes from travel agents that we hoped as a result.

“We have seen a marginal increase in our direct business but it’s in the region of what we lost from Gill’s [Cruise Centre] disappearing and probably one of our reasonably sized agents deciding it [the new commercial terms] did not work for them as a model.

“We made a big change and one of the initial trends we saw was we had more individual travel agents selling our holidays than ever before. That has been maintained. There has been a big growth in share of small to medium sized travel agent business because of their ability to compete and serve the customer based on the knowledge that they have.

“We have seen big travel agent partners remain big, where we have seen a drop in share is probably those agents who have sold on price as their USP in the past. Now it’s about who can sell well, who can sell the benefits of the product. People who it’s working well for are those who are finding different ways to market,” added Hawke, who highlighted how Planet Cruise and Liverpool Cruise Club are using digital television channels to reach customers.

Hawke conceded the move to 10% had polarised agents into those who could work with it and those who could not, but that many were making a smaller margin after discounting when the base commission rate was 15% than they are today.

Paul Ludlow, UK managing director of Carnival brand Princess Cruises, said: “It’s a fact, we have grown our distribution in the last year with the new commercial arrangements.”

Ludlow said the new US-style trade terms on group bookings and the more flexible Flight Select booking system offering additional earning opportunities had really bedded in with agents who were grasping the opportunities to boost their earnings.

“Commission is just one form of the way we support travel agents. Agents view their relationship with us in the whole rather than just around commission.

“In terms of our strategy for direct sales nothing has changed. With our groups programme agents can add value to consumers to book with them.”

Asked if he was surprised no other cruise lines had followed Carnival’s lead, Hawke said: “We made a decision that was right for our business. When we considered it we thought about what difference it would make if others followed us or not. But our decision had to standalone for our business regardless of what other companies did.

“Because it’s working for us what others are doing or not doing we do not believe has a bearing on how we need to react as a business.

“We are getting support from travel agent partners and seeing the yields we need and a much cleaner environment around consumer clarity and visibility of price and a big reduction of confusion among customers about what is the best price.”


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