Smaller Agents Are Vital Link, Norwegian Exec Says

2013 is shaping up to be a crucial year for Norwegian Cruise Lines.

In January, five years after a management change shifted the company’s direction, Norwegian began trading its shares publicly, and over the next 12 months, the cruise line will launch two new North America-based vessels.

One thing that won’t change, according to executive Andy Stuart, is the line’s dependence on travel agents for the majority of its distribution. Even as other suppliers shift their focus to consumer-direct, Norwegian expects travel agents’ share of its business to remain constant.

Travel Market Report spoke this week with Stuart, executive vice president of global sales and passengers services, to discuss the importance of travel agents to Norwegian’s distribution and the company’s post-IPO plans.

Will agents continue to be core to Norwegian’s distribution system?
Stuart: The vast majority of our sales come through agents. The share has been pretty stable over the last couple years, and we haven’t seen significant channel shift.

What kind of customer do you get from agents?
Stuart: We see a very valuable customer coming from travel partners. The beauty of the travel agent distribution system is that agents reach customers we could never reach.

I talk about all travel agents, especially the smaller home-based travel agent, [as being] in the center of their community. Our marketing would never reach those communities, and we’re reaching them because there is someone in the community who is an advocate for our brand. It would cost us a fortune to generate that number of eyeballs.

Will new tools and technology shift how the agent side of distribution functions in coming years?
Stuart: We definitely see a more efficient travel agent distribution system developing. I come back to the smaller home-based agent who has been empowered by technology; they have the benefit of being small, nimble and able to reach out with very sophisticated marketing tools. That’s something we get excited about; it’s a channel that is very personal with consumers.

With so much going on at Norwegian, from going public to launching new ships, what are the organization’s priorities going forward?
Stuart: I can walk around Norwegian asking what people are focused on, and no one has any doubt: No. 1 is travel partner advocacy, being sure our travel partners are telling the story of Norwegian first.

Second is guest experience – telling everyone who will listen that this is the place you get the best vacation on earth.

Third is telling the story of the brand and what Norwegian stands for.

Can you discuss how your Partners First program for agents fits into your strategy?
Stuart: Having Partners First as a lens through which the entire organization can examine every new initiative has helped us internally and externally to maintain the story of the brand. We ask, ‘Does this meet our promise to travel agents, and can we live up to the brand standards in everything we do?’

This has been the foundation that’s helped us do a better job communicating what we’re doing for travel partners.

What are upcoming opportunities for agents working with Norwegian?
Stuart: We have very significant capacity growth over the next three years with Breakaway coming in May, Getaway in January 2014 and the first of the Breakaway Plus class coming in the fall of 2016. The most important thing is driving incremental demand for the brand. In my view, that really allows for tremendous growth for agents.

I don’t think we’ll see significant share shift between travel agents and our direct business. We’re in the business of driving demand, and that gives everyone the opportunity to grow their business while growing our business.

What markets look to gain the most from your growth?
Stuart: Most of the capacity is going to be in North American markets. The Breakaway will be year-round out of New York, and it is being sold predominately by North American travel partners.

One thing our travel partners have been saying is that we need to be year-round in Miami, because summer is a strong market for seven-day Caribbean cruising. Travel partners have not sold it all summer long in the Caribbean, so we’re excited about the Getaway departing from there.

Can you comment on Norwegian’s recent activity warning agents against using CruiseCompete?
Stuart: We believe rebating creates a lot of confusion for the customer. They make no decision, because they don’t know what to do. We take it very seriously and don’t think it’s healthy for the travel industry to be rebating commission. We need a healthy distribution system and we don’t want consumer confusion. (See Norwegian Warns Agents Against Bidding on CruiseCompete, April 5, 2013.)