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News Analysis: Industry Experts Respond to NCL’s Direct SalesOctober 28, 2010 By: Susan Young
In a U.S. Securities & Exchange commission filing about a common stock offering, NCL Corporation Ltd., which operates Norwegian Cruise Line (NCL), acknowledged the importance of its agency partners, but also said 27 percent of net ticket revenue is now generated through direct sales.
So, we asked a slew of top consortia and franchise executives, as well as individual agents, what they thought about the announcement. Is it troubling to them, or a non-event? What does it mean for the distribution model? Should agents be concerned, or not?
Not surprisingly, responses varied significantly. Here’s a representative sample:
Agency Owner: “It's unfortunate that cruise lines continue to say how supportive they are to the travel agent community but they make very obvious plans to grow their B2C [business-to-customer] business. It's starting to feel like we're no longer partners but competing to see who gets to keep the commission.” – Margie Jordan, CEO, ASAP Travel of Jacksonville, FL.
Major Consortia Executive: “The travel agency channel provides the consumer an unbiased perspective in regards to matching the right product with the consumer's unique needs. A single supplier can never fill that requirement. With the travel agency community selling over 75 percent of all cruise and tour products, the agent fills a needed role for the supplier and traveler, particularly when it comes to complex travel. Most cruise and tour suppliers recognize this and actively support the agency channel. A percentage of consumers will always go direct, but it is always concerning when any supplier aggressively chooses to compete with the agency channel that produces the majority of their revenue. It has always been the natural course of business for the agency channel to support those suppliers who best support the agents while meeting the needs of the clients.” – Steve Tracas, president and CEO, Vacation.com
Agency Owner: “This comes as no surprise. At least they have come clean with the number. The question is what can we do about it? With social media, brands can create environments where customers can interact directly with consumers. It seems like a likely outcome that those customers will feel an affinity with the brand and, therefore, choose to book direct because the consumer now has a relationship. Cruise lines need to start to allow agents a chance to interact as well. As consumers become less intimidated about using the computer, it makes sense that NCL's direct bookings are up.” – Carrie Finley-Bajak (@cruisebuzz.net on Twitter), Cruise Holidays of Mission Viejo, CA
Owner of Major Travel Company, Parent Firm of Two Cruise Selling Groups: “World Travel Holdings [owner of CruiseOne and Cruises, Inc.] is having a great year. One measurement is market share penetration. WTH has increased its market share in cruise distribution, based upon the recently released statistics from CLIA. Our home-based division, CruiseOne & Cruises Inc., just returned from our 2010 National Conference aboard Norwegian Epic, where we welcomed more than 800 attendees including franchise owners and agents. In numerous ways throughout the week, Norwegian Cruise Line - as well as our other major cruise line partners - showed how much they truly value our relationship, as well as the travel agency distribution model. I am wholeheartedly confident in the commitment Norwegian Cruise Line has exhibited to the agent community. With a rapidly expanding fleet that includes Epic and two newly announced ships, Norwegian Cruise Line will be smart about their business. They are very well aware of the critical importance of the travel agent channel to their success. CruiseOne, Cruises Inc. and all of WTH are confident that the expertise and value we bring to both the consumer and the cruise lines will continue demonstrating that the travel agency community is the dominant distribution channel.”-- Brad Tolkin, Co-Chairman and Co-CEO of World Travel Holdings, parent company of CruiseOne & Cruises Inc.
Leader of Cruise Selling Franchise Group: "It is certainly concerning to hear that NCL has that much direct business with an emphasis on growing that number. We as agents spend a lot of time and money cultivating our past customers, and to have them now just picked from under us, is discouraging. Suppliers should look at working closer with the companies that support them and leverage those relationships." -- Michelle Fee, CTC, CEO/Co-Founder, Cruise Planners