Cut cruise commissions? No way

Wednesday, 27 Mar, 2006 0

A Goldman Sachs report suggesting cruise companies could save millions by cutting agent commissions has been rejected by the two largest cruise lines.

In addition, the American Society of Travel Agents (ASTA) has refuted the report’s logic.

“The recent statement by Goldman Sachs shows a complete lack of understanding of the travel agency and cruise industries and travel agents’ relationship with the consumer,” said ASTA CEO and President Kathryn W. Sudeikis.

She said, for example, the report did not attempt to analyze cruise lines’ competitive position against land-based tours.

“Nor did it attempt to analyze the impact of a shift that might occur should a drastic commission change happen,” she added.

She quoted figures showing that the cruise industry grew by 8.2% annually from 1980 to 2004. More than 88% of Royal Caribbean Cruises and Carnival Corp’s berths are sold by travel agents.

Said Ms Sudeikis:

“Cruise lines may not be ready to risk potential movement to land-based competitors and need a highly skilled and experienced sales force to create demand for cruising over land vacations.”

Carnival and Royal, the world’s two largest cruise lines, both said they had no intention on following the recommendation by Goldman Sachs to reduce travel agents commissions.

The report, which stirred a buzz in the industry, assumes that agents book 90 percent of cruises for an average 14% commission. Reducing that to 10% would save Carnival $330 million and Royal $140 million.

“We have no plans to do this,” said Michael Sheehan, director of corporate communications for Royal Caribbean Cruises.

Report by David Wilkening

David

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