This is part one of a two-part conversation with Regent Seven Seas' Mark Conroy.
Without travel agents, luxury cruise lines would have a nearly impossible time convincing potential passengers that their cruises are worth the money.
And that makes keeping travel sellers happy critical to success in the luxury cruise sector, says Mark Conroy, president of Regent Seven Seas Cruises since 1992.
As he celebrates his 20th anniversary at Regent, Conroy spoke with Travel Market Report about trends in the luxury cruise sector. In the first of two parts, he discusses key travel agent issues, including rebating, online competition and the importance of “telling the story.”
An industry veteran, Conroy is the longest-standing president of any cruise line. He joined the cruise industry in 1973 as director of group sales and passenger services for Norwegian Cruise Line. He has also served as vice president of sales for Royal Viking Line; president and CEO of Commodore Cruises, and president of Renaissance Cruises.
What's the pitch for an agent trying to convince a customer to move up to luxury?
Conroy: I don't like to pick on Holland America, but I will. They have a one-week cruise in Alaska that's nearly identical to a cruise we have. For a 350-square-foot suite with balcony, our price is about $5,049, and their price is $2,499.
If the travel agent only mentions the price, they are probably never going to sell us, because the customer has to be asking, ‘Well, it's good, but how is it twice as good? Do they carry me from the dining room back to that suite?’
The travel agent really has to tell the story – that you are one of few passengers versus one of many.
And in the case of Regent, we include the air, the hotel night, all the beverages. There are no gratuities charged, and we include the shore excursions. Add those back into the fare on the Holland America ship and instead of being twice as much we'll either be comparably priced or only a few dollars a day more.
That's why travel agents are so critical to us, because if the story doesn't get told the consumer doesn't buy the product.
How much of your business is driven by travel agents as compared to the past?
Conroy: It's around 85%, down from 90% 10 years ago.
Last year, we booked close to 30% of our business direct, but about half of that went back to agents after the customer booked.
When we do our surveys, the number one reason the customer picked us on a particular cruise was the recommendation of a travel agent, and the second reason was the recommendation of a friend or family member. Keeping the agent happy is critical to our business.
How big a portion of bookings in the luxury segment come from online agencies?
Conroy: The online people we deal with may find their customers online, but I'm guessing that 99% of them talk to the customers and have a call center with experienced agents and probably a team within their call center that specializes in luxury.
This is a substantial investment, so customers want to be reassured and want someone they can hold accountable, a trusted advisor, and that's where the agent's role comes in. I am guessing that very few agencies close a Regent cruise without having a conversation with that guest.
You recently clarified your anti-rebating policy. Why?
Conroy: What we were seeing periodically is you get an agent who works really hard to book a customer and then has another agent come in who says, ‘I'll give you $500 back if you move the booking to me.’ So you have this agent who hasn't done the work, getting the booking just because of the fact that he is willing to work for less.
I can't stop people from doing things in a room between two adults, just like the police can't, but I can make it so that it's not easy for them to do it. (See story, “Agents Applaud Stricter Anti-Rebating Cruise Policies,” June 14, 2012.)
Does rebating hurt the cruise line?
Conroy: We set our pricing based on what the customer has told us they are willing to pay. When someone gets into the rebating mode they are basically resetting your price to whatever they feel they are willing to collect.
The reason we pay travel agencies commissions is because of the fact they earn it. We love them to reinvest their commission on additional marketing and promotion to help their agency. It doesn't make sense for us to encourage them to give that commission back to the consumer.
Next time: Conroy discusses the monumental changes in the cruise industry, the future of luxury cruising and trends in the luxury cruise market.