For years, professional travel agents -- who typically sell 85 percent or more of all cruise line bookings, and a higher percentage of luxury bookings -- have complained about the big contemporary brands whittling away at their revenue base by selling directly to consumers. And for many years, the lines collectively have said, "It's not a big deal. Most sales are made through our valued travel partners."
But in a United States Securities & Exchange commission filing on Oct. 26, NCL Corporation Ltd., which operates Norwegian Cruise Line (NCL), acknowledged that 27 percent of net ticket revenue is now generated through direct sales. It also said it was increasing its direct sales force.
The information was disclosed within a Preliminary Prospectus for an initial public offering of common stock. Here's the verbatim paragraph about direct selling within the prospectus:
"Direct: We continue to grow our direct business through investments in our brand and our website as well as increasing our direct sales force. Passengers booking directly with us tend to book earlier and in premium category inventory which provides higher Net Yields. This direct sales channel is at a significantly lower cost for us and has grown from 13.3 percent of our net ticket revenue in 2007 to 27 percent for the first nine months of 2010, and we expect to further increase our mix of direct business in the future.
As for the trade, the prospectus included the following language:
"Retail/Travel Agent: Through our worldwide Partnership 2.0 initiative, which began in 2008, we are strengthening our ties with our travel agent partners. We have implemented close to 100 individual projects specifically designed to improve our efficiency with the travel agency channels and our guests, ranging from more timely commission payments to aggressive call center quality monitoring. We also restructured our travel agent sales force, allowing us to more effectively support the larger accounts, which represent approximately 50 percent of our customers, with specific expertise and also gain access to a significantly larger number of travel partners through an outbound call center based in our Miami headquarters. In a recent survey, 91 percent of travel agent respondents stated that they witnessed a material improvement in our business practices and overall communication since the arrival of our new management team."
The full SEC filing is available for viewing at http://sec.gov/Archives/edgar/data/1318742/000119312510236693/ds1.htm.
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