Are Low Cruise Prices Impacting Travel Advisors?

 

Seven-night cruises from Celebrity for as low as $399. Fifty percent off cruise fares from Holland America Line. Forty percent off Virgin Voyages cruises. Thirty-five percent off NCL cruises and third and fourth guests for just $99 each.

It’s almost never been less expensive to cruise than it is for the rest of 2022. And 2023 may end up being affected as well, some analysts say.

“While 2023 pricing is holding for now as it is still seven months out from the first 2023 departures, 2023 cumulative booking pace continues to decelerate and is significantly below comparable 2019 levels,” said Truist analyst Patrick Scholes in a note last month. “Unless the 2023 pace reverses trend, we believe significant price/promotional activity will be needed to fill the ships, a similar scenario to what is occurring in 2022.”

But what does all that mean for travel advisors?

Travel Market Report reached out to several cruise sellers to see what impact, if any, the lower prices are having on their business. The answers weren’t as consistent as you might expect.

“Things are great,” said Jesse Morris, owner of We Book Travel, LLC, an independent agency in the Avoya Network, adding that his dollar volume of sales between May 1 and June 15 is nearly triple what it was in 2019. “Almost none of this is via future travel credits as those in my portfolio have already been booked. The current rate environment combined with people who have been sitting on the sidelines waiting to take a trip and being unable to is driving significant volume. After the last two years, this is sorely needed.”

Another Avoya-member agency owner, Penny Rushing, owner of Four Points Travel, agreed.

“The cruise lines have lowered the cruise fare a bit from what the prices have previously been to initiate interest in cruising again. My gross sales last year were the highest during my five years with Avoya. This year, I’m running about 20-25% ahead of that pace.”  

While Morris said he does see how lower rates are means lower overall profits, he doesn’t look at it that way. “I see this is a marathon and not a sprint. I am earning new clients who will book with me year after year and refer more people to me. This is very good for my business overall.”

More Work
Other advisors TMR spoke with said the low cruise prices are making booking management more difficult and time consuming.

“Prior to COVID, we weren’t dealing with so many price reductions after final payment,” said Richard Stieff, owner of a Cruise Planners franchise. “They are back and it’s frustrating as all,” especially since advisors and cruise lines had been promoting the idea that the earlier you book, the better the pricing. “Which has been the case for quite a while – until now.”

Rhonda Day, owner of a Dream Vacations franchise, agreed. “Booking and servicing clients takes a significant amount of time now… lots of second-guessing. Lots of rechecking, etc.”

But Amy Madsen, also an owner of a Dream Vacations, said many of the lowest priced sailings are close-in bookings that actually take very little time.

“They pretty much have the cruise picked out and are handing it to us to confirm best pricing and to make the payment. It’s a quick sale,” she said.

Less Money
The current situation is reminiscent of the early days of COVID-19 when advisors were working day in and day out to cancel and rebook cruises without getting paid for their work.

“We are again in a situation where we are working and putting more time into a booking for a reduced compensation,” Stieff said. “Most times after final payment, we cannot just adjust the pricing, we have to call in and have it manually adjusted by the cruise line. This can mean hours on hold.”

Still, getting bookings coming in, even if they don’t pay as well as they should, is better than no bookings.

“Don’t get me wrong,” Stieff told TMR. “I’m so thankful to be having these kinds of problems vs. the ‘season is cancelled’ issues we faced the last two years.”

Better than No Bookings/No Commission
Justin Smith, president of The Evolved Traveler, a member of Ensemble Travel Group, agreed.

“I look at it this way, lower commissions right now beat the ‘no commission’ days we were all experiencing in 2020 and 2021. I think this is another way we ride this out right now. The cruise industry has always been good partners to the advisor community, and now we need to help each other get back on our respective feet.”

Smith also told TMR that being a member of a consortia, franchise or national host group can help mitigate some of the losses that come from lower pricing, because these groups usually give agencies and advisors access to higher commission rates.

Ultimately, Rushing said, the low commission rates are balanced out by the larger numbers of bookings. “With the lower cruise fare prices that are being offered, I am doing the same amount of work for obviously slightly less commission per sale, but as noted above, my overall number of sales are higher.

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