Disney Cruises Cuts Travel-Agent Commissions on Onboard Bookings

Disney Cruise Line on Monday lowered its commission cap to 10% (from 16%) on rebookings made by passengers while on board a ship.

It was a move that even in its timing suggested a certain disdain for the travel-agency community, coming as it did during the Ensemble Travel Group International Conference. On the podium there, Royal Caribbean SVP of sales Vicki Freed noted that “when we saw the announcement, we knew we needed to get the message out quickly that we will not be matching this.”

“We want clients to rebook when they are onboard, when they are in the moment,” Freed said, and will “absolutely not” be cutting commissions. “We don’t ever want to misbehave with our travel-agency partners; we want to send them back to you and pay you a full commission.”

Indeed, Freed said she sees an opportunity for Royal Caribbean to head in the opposite direction and do a promotion that offers higher commissions on rebookings. She already has “called (RCCL president and CEO) Mike Bayley about finding a way to incent you to encourage even more people to book on board for their next cruise.”

Freed declined to cite exactly what percent of cruisers on RCCL rebook while on board, but estimated that industry-wide it’s between 5% and 20%.

“Once somebody leaves the ship we could lose the client to a competing cruise line and then we’ll have to do all that remarketing, and it’s risky for the travel agency, too,” she told TMR. Statistics show that 3.5 out of 5 cruisers buy their next vacation from a different agency, she noted—and “they switch not from bad service but from indifference.”

The power of Mickey Mouse
Among the agency community, some expressed a little fear of the concept spreading; some saw it as an action only Disney could take; and some saw it as just another example of the dog-eat-dog world of the travel business.

“It’s a very disappointing development that any partner could choose to take this course of action with our most valuable guests, the repeat customer,” said Sanjay Goel, president of Cruise Connections in Vancouver. “I believe that for both me and many of my colleagues this would give us pause when it came to developing future programs with that vendor.”

“We’re going to support those that support us,” agreed Kirrily Miller of Charleswood Travel in Winnipeg. “I’m very upset about it and worried about it setting a precedent, and hoping there will be enough push-back from agents to make them reconsider. Often I recommend to clients that they book their next cruise while onboard, to get the extra benefits, but I won’t do that for Disney.”

Off the record, others were more sanguine. “I’m not concerned that it will spread to other cruise lines,” one agent told TMR. “Disney can fill its ships with or without our support, so they can pull things no other cruise line would dare.”

Agreed another, “Disney is confident about its brand and has absolutely no fear that the customer will book a different Mickey Mouse cruise. I don’t put my faith in any supplier; I don’t expect any of them to have my best interests at heart, no matter how sweet they talk. If they could figure out a magical way to bypass us, they would—but that won’t happen. Having travel agents sell their product at very little cost is working perfectly well for the suppliers.”

The news comes during a period of time when cruise lines have been going out of their way to cater to agents. In September, Carnival announced that it was lowering the requirements for its commission structure, making it easier for agents to earn a higher commission on bookings.

Norwegian Cruise Line over the past year instituted a program called "Partners First," with an agent-centric website and dedicated programs, including a guaranteed commission from onboard bookings.

And last month, Holland America changed its air booking system to make it easier for agents to book their clients' air travel around a cruise's sailing dates.

Pic: Nathan Forget