Clients, Not Cruise Lines, Are Key to Agency Profits
Clients, Not Cruise Lines, Are Key to Agency Profits

Clients, Not Cruise Lines, Are Key to Agency Profits

This is the second of two parts.

When it comes to making money selling cruises, travel agents need to realize that it is their clients who are key – not the cruise lines, a veteran cruise executive advises.

In the second of two parts, Rod McLeod, CTC, a former executive at Royal Caribbean, Norwegian Cruise Line and Carnival Corp., discusses the future of the agency distribution channel for cruises and shares tips for agents on becoming more successful cruise sellers.

Rod McLeod

McLeod, currently a travel industry consultant and co-founding partner of McLeod, Applebaum & Partners, also offered his perspective on the factors that prompt cruise lines to redeploy their ships in ways that can seem perplexing.  (See sidebar.)

How important do cruise lines view business from travel agents?
McLeod: The world has changed. At my company, we define 18 different pipelines for the North American market, everything from the traditional travel agent – which I define as a storefront on the corner of Main and Elm – to the home-based agent, to online retailers and so forth.

Today, agents are really travel retailers. If they are an ‘agent,’ it is of the consumer. Once they come to that conclusion, accept that reality, the game changes for them.

So agents should charge fees for service?
McLeod: When an agent finds a cruise that is tuned to their customers' needs, they are providing a service and adding value and deserve to be paid by the client. And by the way, you are always ultimately paid by the client – you send $800 to the cruise line and take your commission off the top first, right?

If you're not happy with what cruise lines are paying on the $179 three-day cruise after non-commissionables, charge a fee.

The worst thing for an agent to tell your customers is your services are free. I can't believe some agents still say that.

But what if your client balks?
McLeod: Say, 'I'll find you the very best deal, but I've got to be paid.'

With all the major players in this dynamic pricing scheme we talked about (see Part One), it's a jungle out there. Tell your client you're the expert, and even if they go online and are good at reading all the email promotions and Facebook postings and are experienced in buying items online, you can save them money on their vacation.

In short, deliver demonstrable value to your clients; don’t just be an order taker.

Will the agent-cruise line relationship change in the future?
McLeod: Travel retailers need to accept that cruise lines aren't going to change their pricing policies, do away with their websites or turn off their toll-free phone lines. But there is a cost associated with direct booking.

Cruise lines don’t want to put travel retailers out of business or minimize their role in the distribution and sale of cruise vacation products.

They want the agents to be around, but of course they would like to pay them as little as possible. Agents can take umbrage with that, but agency owners are doing the same thing with their employees.

Agents can lament all they want that cruise lines are making a lot of money. But the cruise lines have also taken all the risk, paying a lot of money for ships, staff and systems, and it's not an easy business.

How can agents make more money selling cruises?
McLeod: The cruise lines are not going to pay people just to make bookings. They look to the agent to create business that wasn't there before.

The truly effective retailer, from a cruise line standpoint, is producing business year-round, including during slow periods such as the fall in the Caribbean.

Agents who want to make money should become part of the solution. Emulate, don't envy, the cruise lines for making a lot of money.

As for your customers, I believe there will always be a role for travel retailers who create value for their customers. The consumer wants to know, ‘Where do I get my best vacation for the best price?’

Over time what gives the agent value is their relationship with their customers, not necessarily the suppliers.

For Rod McLeod’s discussion of cruise line economics and strategy, please see Part One, “Why Do Cruise Lines Do the Things They Do?”, Feb. 2, 2012

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Lucy    February 10, 2012    11:28 AM

Let me see....client walks in, has a budget and I can offer 2 choices for his budget. A cruise or a land vacation..either fits the bill. Which do you think I will offer? Actually, I will offer both but explain to him that with the cruise you will have to add quite a bit more for on-board expenses and I will have to charge you a fee because they don't pay what should be paid. Or, you can take the land vacation, all inclusive, no surprise charges and I won't charge a fee.  This scenerio happens 4-5 times a month. Who do you think the loser is here? The cruise line has lost a booking and more importantly a REPEAT passenger which is their life blood, just as it's mine. The client is out there telling his friends what I did and it circles around. Keep increasing the non-comissionables.

Today agents are really travel retailers. If they are an ‘agent,’ it is of the consumer. Once they come to that conclusion, accept that reality, the game changes for them.

Rod McLeod, McLeod, Applebaum & Partners

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