Cruise Lines May Be Courting Agents Again
by Maria Lenhart

The highly publicized cruise ship disasters of the past two years have strengthened cruise lines’ reliance on travel agents, while slowing the growth of online channels for cruise distribution.

That’s one of the findings in PhoCusWright’s (PCW) recently released U.S. Travel Online Review 13th Edition, an annual study of the U.S. online leisure and unmanaged business travel marketplace.

“The tough couple of years for the cruise industry has created an interesting dynamic causing cruise lines to lean more on intermediaries than they otherwise would,” PCW analyst Maggie Rauch told Travel Market Report.

“They are looking at offline channels for support because they feel that consumers need the confidence of talking to a person.”

Relying on agents
Cruise growth stagnated in 2012 and 2013 largely because of ship disasters, according to  the study. (See sidebar.)

It suggested that cruise lines are counting on agents to not only reassure their clients about cruise safety and promote the value of cruising, but to yield the most from transactions that do go forward.

“Since traffic is down, there’s the desire to extract maximum value from each customer,” Rauch said. “The idea is that it helps to get the client on the phone – whether it’s directly with the cruise line or with an agent – and do some upselling.”

Slower drop in share
Traditional agents have steadily lost their share of the cruise distribution market, plummeting from nearly 80% in 2006 to a projected 60% in 2013. The rate of decrease, however, has slowed sharply in the last two years.

Agents’ share dropped by just one percentage point from 61% in 2012 to the anticipated 60% in 2013.

The PCW study predicts that traditional agents will lose share at a somewhat faster rate in 2014, with their overall share slipping to 57%.

OTAs inch ahead
Online travel agencies (OTAs) have benefitted from a weak cruise market that has cruise suppliers relying more on intermediaries, the study found.

While cruise line websites and OTAs evenly split online cruise revenue in 2011, the ratio shifted to 51 to 49 in favor of OTAs in 2012 and is expected to favor OTAs by 52 to 48 in 2013.

Cool reception from agents
Stung by the fact that cruise lines have steadily turned more to direct and online sales, not all agents are responding to cruise lines’ growing need for their support.

As a result, cruise suppliers in 2013, “found it more difficult to lean on agents,” the study noted.

“Some cruise lines have reported that many agents that sell both land and cruise vacations began focusing more on land, and that some agencies which once sold cruises almost exclusively have begun to diversify,” the study said.

However, the study also said that some cruise lines reported stronger relations with “their best agent partners” and that “cruise lines are working more closely with established partners.”

“They are also turning to agents for more help in upselling, giving them more access to onboard services.”

Cruise web strategies
While growth of online bookings on cruise websites has slowed, cruise lines are certain to keep pursuing this channel in earnest, the PCW study concluded. The benefits are too good to resist, it added.

“They [cruise lines] avoid paying commissions and have better opportunities to generate pre-trip sales of shore excursions and onboard packages,” the study said.

When considering future growth, cruise lines are likely to mirror what airlines have already done to drive more bookings to their sites, according to the study.

“Cruise lines will adjust their web strategies to focus on drawing traffic, simplifying the shopping process and selling more than just a berth on a ship,” the study predicted.

Selling ancillaries
“Improving merchandising of ancillaries like shore excursions will be crucial, and cruise suppliers will invest more toward giving shoppers access to the best published airfares.”

Rauch noted that online penetration of cruise bookings is still low – about 17% of the overall market – but said the long-term outlook for growth is positive.

“Prior to the bad cruise ship incidents, there was an online shift going on,” Rauch said. “And that momentum could come back.”

Strategy for tablets
Rauch expects cruise lines to develop strategies for tablets in particular, because tablets may soon overtake PCs for travel bookings.

“People are using their tablets at home, they’re easy to use on the couch or in the kitchen, so this is an important channel that the cruise lines need to look at,” she said.

Yet mobile technology, especially smartphones with their small interface, presents some obstacles for the cruise industry, Rauch added.

“The big challenge for booking cruises on mobile is the complexity of it,” she said. “People want to take their time, do their research and get all the information they need.”

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Peter    12/10/2013 3:50:05 PM
I have said it and written about it a 100 times. Regardless of how much fun a cruise is, agents have to make enough money to survive. You can not do that on cruise commissions and growing NCFs. Agents have a choice and our choice has been land packages where you can even get some money on the air fare booked. Cruise lines just don't listen because they have been banking on direct bookings and OLAs that are just order takers and don't promote the cruise lines like brick and mortars did. Pete  

Susasn    12/10/2013 4:22:16 PM
Interesting that the cruise lines want the travel agent community to "help" them when for the past number of years their direct emailings to the clients that "we" counseled to go on their particular line have directed them more to them, the cruise lines that now want our help.  Funny thing about this is that two of the major lines that have some personnel from the others line working with them now, both recently inaugurated new booking engines on their sites for the travel agents to use,  are amazingly similar.  At the same time the send out emails  to "our" clients where it simply states to  "book on line", "call" or contact "a" travel professional".    They increase the "Fees" and lower the base prices, a.k.a. commissionable price of the cruise and now appear want us to do more work , and still for less, to help smooth the ruffled feathers that have hit them over the past few years....   Am I missing something?   Or is the travel agent community that supported them thru the Gulf war and more still supporting them for some warped reason while we work harder for less money????????

peter    12/10/2013 4:32:08 PM
Cruise lines need our support now? What happened to yesterday ? Cruise lines simply do not make any sense to me. I am judged by year to year sales. This is just not right since most traffic generated from cruise lines is by them for them not for the agencies who really try to promote cruise sales.  So Now I am supposed to believe that they need me?  If they need me so much why are they only interested in giving me a small percentage this year because of last years sales? I would appreciate the days of having Reps to talk with and a look at loyalty over the many years my agency has supported them good and bad. This idea of selling cruise lines now over because they need us is hogwash. Look at the new ship builds and ask if they are hurting? Why build new ships if you can't sell existing berths? Pay me for my loyalty not what I did today.  Bring back people who help me sell getting rid of Reps to help sell is a mistake.  We deal with real people and real people help you sell.. Pete F

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