Carnaival reducing direct sales. Will RCI follow?

[Cruising89143]

From Seatrader. Copyright article so I cannot post the full article.

http://www.cruise-community.com/ShowStory.asp?ID=14524

 

Here is a snip.

 

Arison: Carnival is reducing direct sales

19/6/2008

Carnival Cruise Lines is decreasing its direct business but expects to see higher yields and lower costs by selling more inventory through travel agents, corporate chairman and ceo Micky Arison said.

 

Also......

 

http://www.cruise-community.com/ShowStory.asp?ID=14531

 

A snip of the article.

 

WTAA hails Carnival stance on direct sales

20/6/2008

The chairman of the World Travel Agents Associations Alliance, Mike Hatton, responded immediately to Micky Arison’s announcement that Carnival Cruise Lines is reducing direct sales in favour of the travel agency network.

[golfer1966]

cruises, flights, cars...etc. I hope they dont reduce direct sales. If the T/A's want more sales, have them hump up and do more marketing and strategic selling. The cruise line shouldnt reduce direct sales in order to help them imo.

[negc]

cruises, flights, cars...etc. I hope they dont reduce direct sales. If the T/A's want more sales, have them hump up and do more marketing and strategic selling. The cruise line shouldnt reduce direct sales in order to help them imo.

 

I suspect that Carnival has concluded that it costs them less to channel sales through TAs and other outside sources than to hire their own personnel to handle direct sales. Their decision has more to do with internal cost effectiveness than any desire to help TAs.:)

[isujim]

Gordon I haven't read the article yet.........so when I do it may answer my question.

 

But how can costs be reduced by having more sales through a middleman so to speak than through direct sales? Maybe I can see the higher yields part of it but not necessarily the reduced costs, especially when commissions are involved.........

 

ok.......off to read.:)

[Richiebaseball]

cruises, flights, cars...etc. I hope they dont reduce direct sales. If the T/A's want more sales, have them hump up and do more marketing and strategic selling. The cruise line shouldnt reduce direct sales in order to help them imo.

 

The cruise line isn't reducing direct sales to help TA's, they are reducing direct sales because their bottom line is better using a distribution business model rather than a direct to consumer model.

[isujim]

I suspect that Carnival has concluded that it costs them less to channel sales through TAs and other outside sources than to hire their own personnel to handle direct sales. Their decision has more to do with internal cost effectiveness than any desire to help TAs.:)

 

 

OK......now that I might buy...........but would require a reduction of personell........which I suspect is a high turnover rate for that type of job anyway.....although I don't have any facts to back that up.

[tmn9761]

cruises, flights, cars...etc. I hope they dont reduce direct sales. If the T/A's want more sales, have them hump up and do more marketing and strategic selling. The cruise line shouldnt reduce direct sales in order to help them imo.

 

Pardon me. As a cruise based travel agency owner, I can tell you that the cruise line's yield MOST of their sales from us, not from direct sales, and please be aware that there are many marketing restrictions placed on travel agents by the cruise lines, so in a "perfect world", perhaps we could "pump up and do more marketing and strategic selling" if we were allowed to do so. Also, unlike the multi-billion annual take that each cruise line or corporation sees, my tiny, independent business sees a nano-fraction of that revenue, so they can AFFORD the expensive marketing campaigns that I cannot. Trust me, the cruise lines are not doing this to "help" TA's in any way, shape or form. We bring them more revenue than their direct sales. I also provide superior customer service and handling for my clients which is an incentive for MANY to book through me or other TA's than going directly through the cruise lines. I do not impose "agency fees" or other revenue generating "traps" I've seen people talk about, and I do not pad my pricing either. Give me (and other TA's) a break! Your remarks are quite offensive to me.

[critterchick]

I had a brief stint as a TA and can attest to the amount of work that a good TA does for a client. But now I book my own cruises directly and turn them over to a TA just before final payment. I would object to being forced to use TA:

 

Unlike airlines and other travel providers, the cruiselines will not deal with the passenger if a TA owns the booking. Therefore, if I come across a price reduction on the weekend, my TA (who deserves a weekend off as much as I do) isn't in the office, and I have to wait until Monday, hope that the reduction is still in place and then get hold of him or her. If I want to change my cabin, I can't do it directly. If I want to make sure my Air Canada account is listed on the reservation, I can't do that, either.

 

Also, if my TA is not providing satisfactory service (and it has happened), oh, well, boo hoo - RCI still won't talk to me and I'm just stuck unless the TA fails to respond to RCI's request to talk to me. How whack is that?

 

It's all very well and good to say, "well, then pick a good TA," but everybody has a bad patch, and if the passenger is helpless to do anything during that bad patch, well, there's not much benefit to watching your price drop evaporate, your favorite cabin go away or your cruise not be cancelled on a timely basis.

 

So I would be unhappy to see RCI follow in Carnival's footsteps on this one, but if it leads to cost savings for them, I guess I won't have much choice.

[Lollipop's Mom]

You know, if Carnival would STOP FRICKING PHONING ME twice a month trying to sell me cruises, they could save a lot of money. I keep telling them, I didn't like my cruise, we are cruising Disney next and please stop phoning me...... but this TA they have there keeps calling and keeps mailing me info and updates and her business cards......

But I won't even go there....

[wingnutphl]

You know' date=' if Carnival would STOP FRICKING PHONING ME twice a month trying to sell me cruises, they could save a lot of money. I keep telling them, I didn't like my cruise, we are cruising Disney next and please stop phoning me...... but this TA they have there keeps calling and keeps mailing me info and updates and her business cards......

But I won't even go there....[/quote']

 

That is ridiculous!! I would call and speak to a supervisor and request to be placed on the "do not call" list.

[smeyer418]

http://www.cruise-community.com/ShowStory.asp?ID=14531

 

here is the direct link...

[Richiebaseball]

So I would be unhappy to see RCI follow in Carnival's footsteps on this one, but if it leads to cost savings for them, I guess I won't have much choice.

 

Actually Carnival is following in RCI's footsteps. Nowhere does it say that Carnival is going to end direct booking. It appears they will just not promote it as heavily as they have in the past as their bottom line is apparently healthier using a distribution model. The opportunity to book direct will continue to be there. This is something that RCI has been doing for quite some time.

[yogimax]

Intuitively, this doesn't make sense.

 

Using travel agents incurs a fee that the cruise line has to pay to the agent.

 

It would seem to make more business sense to encourage direct bookings.

[Mark42]

I have a different "theory" based on my personal observations.

When I have set foot in several local Travel Agencies and they find out I am looking for Cruise Info. they IMMEDIATELY try to push Carnival.

I have even had them almost argue w/ me when I say I'm interested in Royal Caribbean. One gal tried to sway me to Carnival because they have the best pizza!!!!!!!!! LOL!

So my theory is that they must make more in either commissions or bonuses or both, by pushing Carnival, and this latest move by Carnival seems to make the most sense, that they are greasing the wheels for the TA's

[Cruising89143]

I have a different "theory" based on my personal observations.

When I have set foot in several local Travel Agencies and they find out I am looking for Cruise Info. they IMMEDIATELY try to push Carnival.

I have even had them almost argue w/ me when I say I'm interested in Royal Caribbean. One gal tried to sway me to Carnival because they have the best pizza!!!!!!!!! LOL!

So my theory is that they must make more in either commissions or bonuses or both, by pushing Carnival, and this latest move by Carnival seems to make the most sense, that they are greasing the wheels for the TA's

 

Any TA that tries to push a customer towards one line without knowing what the customer looks for in a cruise is not worth a hill of beans. I would turn around and walk out the door but would first tell them that they need to learn how to do their job. Matching a customer up with the wrong cruise line would not only lead to the possibility that they will not return to them for future business but may also not return to cruising depending on the experience.

[negc]

Intuitively, this doesn't make sense.

 

Using travel agents incurs a fee that the cruise line has to pay to the agent.

 

It would seem to make more business sense to encourage direct bookings.

 

Actually, I believe that if you do a real cost analysis, you will find, as apparently Carnival has found, that the commission that the cruiseline pays to the travel agents is considerably less than it costs them to employ the number of CSRs that they would need to handle the equivalent number of individual bookings, especially when you consider the overhead, the salaries, taxes, social security, and other benefits that have to be considered. The travel agency distribution system delivers passengers to the cruiselines at far less cost than direct bookings.

Whatever failings Carnival, RCI or other cruiselines may suffer from, cost and benefit analysis is usually not one of them.:)

[papakaiser]

Just a little food for thought. It does make sense for a cruise line to encourage booking through a TA rather than emphasize direct booking for one reason.

 

Yes, they do have to pay a commission to a TA for a booking, versus paying an employee a set rate for a direct booking. But when you add in the cost of that employees health care, vacation, and other mandated benefits, the cost savings for their outsourcing is the reason for a healthier botom line.

 

No, I'm not a TA. No, I'm not a cruise line employee. Its just my humble opinion.

[negc]

Any TA that tries to push a customer towards one line without knowing what the customer looks for in a cruise is not worth a hill of beans. I would turn around and walk out the door but would first tell them that they need to learn how to do their job. Matching a customer up with the wrong cruise line would not only lead to the possibility that they will not return to them for future business but may also not return to cruising depending on the experience.

 

Exactly, and unless the potential cruiser gives off some sort of vibes that a TA associates with a typical (or stereotypical) Carnival cruiser, it is counterproductive to push that person to a particular line based on a relatively slight difference in commissions. Successful sellers, whether the product be travel or hard goods, aim for the rewards of a long term, continuing relationship, rather than a quick, immediate gain which might end up being the only business they ever get from that customer.:)

Placing a client on a ship that will not match his tastes, lifestyle, or whatever is a guaranteed way to lose any future business and also runs the risk of having that unhappy client spread the word about the poor quality of the service the agent provides.

[ubdkjrb]

Something to keep in mind is the fundamental difference between RCCL and Carnival's pricing. Carnival allows TA discounting whereas RCCL does not. Given that the pricing is even (other than the bottle of wine or OBC), there is REALLY no economic incentive for RCCL to de-emphasize direct bookings. Just like Dell and the airlines, the direct sales model accompanied by easy internet access and easy site navigation, will win every time. Commissions are currently 25% of RCCL's revenue. This is a huge pile of money to re-direct into direct sales. In this computer age, no one wants to waste their time and money going thru a middle man. I know, I know - the TA's offer better service. Yeah, right. The reason most people use TA's for RCCL bookings is to get their tips or insurance prepaid or $100 OBC. It's not for the service. See the former TA's post above as an example. Don't think that RCCL doesn't monitor the number of direct bookings that are transfered just before final payment! One day that will stop because the commission they're paying really isn't increasing revenue.

 

Carnival is kind of like the Walmart of the cruise industry - cheap pricing, say and do anything to get you onboard. With a product like that, it does make sense that you need some carnival barkers to drum up business. RCCL's product stands on its quality. That's why they can make the direct sales model work.

 

Peter

[lvtotrvl1]

Actually, I believe that if you do a real cost analysis, you will find, as apparently Carnival has found, that the commission that the cruiseline pays to the travel agents is considerably less than it costs them to employ the number of CSRs that they would need to handle the equivalent number of individual bookings, especially when you consider the overhead, the salaries, taxes, social security, and other benefits that have to be considered. The travel agency distribution system delivers passengers to the cruiselines at far less cost than direct bookings.

Whatever failings Carnival, RCI or other cruiselines may suffer from, cost and benefit analysis is usually not one of them.:)

 

Negc..you are correct..an example.....let's take a booking of 2000.00 (commissionable) at an average comm of 15%...the commission paid on that booking is 300.00. Doesn't come close to what an employee is paid by the time you add in training,benefits etc. Not to mention the time spent on customer service issues.....the agents handle all for the small % of commission...no cheaper way of doing business!

[abcten]

When I have set foot in several local Travel Agencies and they find out I am looking for Cruise Info. they IMMEDIATELY try to push Carnival.

 

My opinion is you are best off avoiding any local travel agencies. Use a combination of booking direct with the cruise line over the internet and then transfer the booking to an online travel agent. Local travel agents are dinosaurs.

[TEXASMUNK]

To begin:

 

A cruise line is paying people while they are 100% non-productive.

A cruise line has dedicated HR staff solely out chasing applicants for a very high turnover job.

A cruise line pays a salary, 50% of the SSAN on top of the salary, benefits, etc. If you pay a res agent a meager $9.00 an hour times 40 hours time 52 weeks, plus taxes and benefits you are probably looking at close to $25-30,000 in the course of a year.

That person must sell $250,000 in cruises for the cruise line to just break even.

They pay the TA NOTHING until the TA sells something.

 

This is not a "good guy" decision on the part of any cruise line, it is a money decision.

[nycruiser80]

abcten,

 

Local TA's do exist! We are not dinosaurs. The ones that have survive go the extra mile. I do everything for my clients...book the cruise (which we get commission on) I also book their shore excursions, pre-register their immigration info for them, arrange for car services to the airport or pier from their home, book dining and spa reservations for them if I can before they cruise. The only thing I make money on is the cruise all the extras I do I do not get paid for. I highly doubt an online TA will do all that. We offer personalized service.

[negc]

My opinion is you are best off avoiding any local travel agencies. Use a combination of booking direct with the cruise line over the internet and then transfer the booking to an online travel agent. Local travel agents are dinosaurs.

 

You are so right - NOT.:rolleyes: All a good local travel agent offers is "service", "knowledge and experience" and accessibility and a personal relationship with a travel professional. Try walking into an online travel agent's office to discuss your cruise or deal with any problems that may arise, and count on those online travel agents or a cruiseline's Customer Service Representative going to bat for you if your booking or your cruise experience go awry. Often those local travel agents can match or better the deals the online agent can offer, but even when they can't, is a minimal OBC or other perk really the only criteria that determines whether you are being well served? Price isn't everything, but good service is "priceless".:)

[abcten]

abcten,

 

Local TA's do exist! We are not dinosaurs. The ones that have survive go the extra mile. I do everything for my clients...book the cruise (which we get commission on) I also book their shore excursions, pre-register their immigration info for them, arrange for car services to the airport or pier from their home, book dining and spa reservations for them if I can before they cruise. The only thing I make money on is the cruise all the extras I do I do not get paid for. I highly doubt an online TA will do all that. We offer personalized service.

 

I stand by my OPINION...I did say it was my opinion or did you not see that part. For someone who knows exactly what cruise they want and is capable of making the initial reservation on line via the cruise line website, they may as well get the better price they are sure to get by using one of the online T/A's instead of a local T/A when they transfer the reservation. Local T/A's are generally a ripoff and you can usually get a much better price using online T/A's. Also, a local T/A is just as likely to screw up the reservation as an online T/A. The only people who should use local T/A's are those that are completely unfamiliar with and inept at making any kind of arrangements themselves.