Discounts devalue cruises, claim agents

Saturday, 02 Nov, 2003 0

ABTA Convention Special: Travel agents have complained that cruise companies are devaluing their product by failing to control the way their holidays are sold.

Andrew Dickson of St Andrews Travel in Bolton said reservation centres at cruise consolidation companies were selling the product solely on price.

Mr Dickson, speaking during the ABTA Convention session on cruising, said: “The discounts after the Gulf war brought a lot of people into cruising who normally wouldn´t have come into the market.

“My complaint is that cruise companies put out five star brochures but don´t control how the big cruise reservation centres sell their product.

“They give away every bit of the commission except the two per cent override and unless an agent wants to sell a product for buttons, he simply can´t compete.”

David Dingle, UK managing director of Carnival Corporation, which owns P&O Cruises, said: “I believe this is a distribution issue.

“No operator can dictate to an agent what they can do with the commission, because that´s illegal. It´s an issue for the travel distribution network.

“But the cruise category requires the support and goodwill of agencies more than any other.”

Mr Dingle said Carnival was keen to work with agents who were interested in increasing cruise bookings.

“We try to give people an even playing field to compete on,” he said. “We pay overrides of two per cent through our preferred agents´scheme and we want to help agents who want to join the scheme.”

Mr Dingle denied there was overcapacity on the cruise market despite the glut of new ships being launched.
“All the evidence from the UK market is that the additional capacity is being absorbed.

“Capacity is increasing at a compound global rate of six per cent per year but demand is rising by eight per cent per year.

“By 2005, demand will outstrip supply.”

During the debate, Michael Bayley of Island Cruises, a joint venture between Royal Caribbean Cruises and First Choice, claimed its cruises had attracted a new market.
“We are targetting the family package market and we have to explain to them that we are offering a superior purchase,” he said.

“We have managed to bring the average age down to high 30s and early 40s.”

He said they had not experienced any Faliraki-style problems with young yobs on board, but could not rule it out in the future.

“The advantage for us is that we sell almost exclusively to the British market,” he said. “The problems in the past on ships have been when different nationalities have clashed.”

Mr Dingle defended the policy of offering up to 40 per cent off cruises on brochures, even though Lawrence Hicks of Norwegian Coastal Voyages claimed the policy undermined the product. Mr Dingle said different people were prepared to pay different prices for cruises.

“We don´t do it because we´ve got a price problem,” said Mr Hicks. “That´s absolutely not the reason. We do it because we have to yield manage up from that price. We have a range of prices and it´s our job to maximise revenues at every opportunity.”