Inclusive Cruise Packages: Good for Agents and Clients?

Since the beginning of 2014 cruise lines have been experimenting with inclusive packaging to entice the more value-conscious client.

Travel agents say the packages enhance their ability to generate healthy commissions, but may be confusing clients.
 
Scott Kertes, president of Garden City, N.Y.-based Vacations by Design @ Hartford Holidays, an Ensemble agency agency specializing in cruising, has recently seen an increase in consumer demand for all-inclusive packages.

But the increase in consumer demand, coupled with dozens of new packages, has created a confusing environment for his clients, he added.
 
“Somebody needs to be able to educate the consumer and make them understand that all-inclusive terminology is really nothing more than a marketing ploy to get them to spend more money up front,” Kertes said.

“In fact, there might be things in there that you are paying for that you may not be using.”

MSC’s experiment
MSC Cruises recently brought it’s inclusive fare structure to North America. The line says that although the program is new, the response from the travel agent community has been positive.
 
“We’ve received extremely positive feedback from the travel agent community on our Inclusive Experiences as it provides the trade an opportunity to upsell their clients, resulting in increased profitability for them,” said Ken Muskat, ‎executive vice president, sales, p.r. and guest services at MSC Cruises USA.
 
The new structure includes four fare levels. MSC will pay agents full commission on the inclusive fares, as well as continue to pay 5% on a la carte amenities.
 
“We just launched this program in North America in October, making it too early to see results,” Muskat said.

“However, this initiative was already introduced in most of our European markets last year with very positive feedback from guests and travel agents.”

Commissions are safe
Many agents agreed that commissions aren’t at risk as the trend toward all-inclusive gains traction. But they warned that guests may not be getting the deal they envision, particularly when it comes to cruising.

Recent examples of cruise lines experimenting to capitalize on consumer demand with innovative packaging are Celebrity Cruises’ 1, 2, 3 go! program, Norwegian Cruise Line’s six-week test of an all-inclusive package earlier this year, and Royal Caribbean’s on-board offer of up to $1,400 in credit for future bookings.

Michael Consoli, owner of a Roswell, Ga.,-based Cruise Planners franchise, believes these offers are good for agents.
 
“Cruise lines are moving more toward adding value, instead of discounting, which is a win/win for everyone,” Consoli said.

“The cruise lines fill their ships and maintain profit levels, the client gets more for their money with all-inclusive beverage packages, etc. and we see happier clients and higher commissions.”
 
(Mostly) good for agents . . .
The promotions and packages are good for agents, because it allows them to be paid a commission on a portion of the trip that is not always necessarily commissionable, Consoli added.
 
“Although the client is paying a slightly higher fare to have these inclusions, they usually represent a great value for them and at the same time we are getting paid on the higher fare the cruise line is charging to include these amenities,” he said. “So our commissions are higher as a result.”

According to Kertes, all-inclusive packages have little impact on commissions, especially when dealing with luxury lines like Regent Seven Seas.
 
“When you are talking about the Regent package, everything is commissionable,” Kertes said. “Our commissions are not eroded by the fact that everything was bundled in. It doesn’t have a huge effect.”

When it comes to luxury bookings, Kathy Burns Lamphier, CTC, ACC, owner of POSH Travel, a Virtuoso agency in Greenland, N.H., agreed with Kertes.
 
“Commissions on all-inclusive resort vacations and on the luxury cruise ships are fair, but heavy discounting done by the mass market frequently has diluted our ability to remain profitable on those sales,” Lamphier said.
 
 . . . But good for clients too?
When it comes to clients, though, Kertes remains unconvinced about the value of all-inclusive packages.
 
“Often whether you pay for it upfront or you pay for it as you go, when you step off the ship, you’ve spent the same amount of money,” he said.

However, clients seem to want more features included in their cruises, according to Drew Daly, general manager of network engagement and performance for CruiseOne and Cruises Inc.

 “When faced with the option, consumers tend to lean more towards the products that are providing them with more items included,” Daly said.

Educating clients
Key to the all-inclusive issue, however, is educating clients about the options.

“In the end it is really about educating the consumer on the value of the packages offered,” said Daly. “When a customer calls to go on a vacation, the travel agent is equipped to educate them on the value of the inclusive cruise vacation as well as the inclusive resort vacation.

 “Travel professionals are in a great spot to be able to upsell their customer and enhance their vacation with a more inclusive product.”