Will Viking’s ‘All Commissionables’ Start a Trend?

AccompanyingTravel Market Report’s article last week on Viking River Cruises announcement of its new non-NCF (non-commissionable fare segments) policy was an online poll asking: “All things being equal for your client, will you shift more business to Viking as a result of their new no-NCF policy?”

The answer was a resounding “yes,” at 98%. TMR also received some interesting e-mails from travel sellers explaining their votes, so we decided a follow-up article was in order.

The most burning comments and questions from travel sellers TMR received centered on whether the move by Viking River Cruises’ CEO Torstein Hagen to pay commission on the total fare with no exclusions would gain support and, possibly, some traction in the industry.

As previously reported, mass-market lines TMR contacted declined to comment. This happens often when writing about hypothetical future questions of this type. Several river cruise suppliers did, however, point out that their prices, generally excluding taxes and tips, are practically ACFs (All-Commissionable Fares) already. (See story.)

Acknowledging Agents’ Role

Among agents, everyone agreed that, at least symbolically, Hagen’s move is an important step in the right direction and shines a light on an important issue for the industry. “As cruise lines continue to reduce what is commissionable, while increasing agents’ workload, such as e-docs, online registration, online brochures, more online booking and change issues, it is refreshing to see that a cruise line values agents,” said Mary Evans of A Piece of the World Travel.

Marty Harris, owner of Dream Vacations, LLC, agreed. “Viking’s decision to pay commissions on the gross amount of the booking is helpful to agents. With many of the larger, more popular cruise lines, agents have to continuously work harder and harder every year just to make their numbers. By decreasing their base ‘commissionable’ fares and increasing the non-commissionable portions, the larger cruise lines are able to control the amount of commissions they pay out.”

Added Lisa Silvestri of Silvestri Travel, “It would be great to see changes in what commissions are based upon. Really, do any of us know what NCF’s are? Is this just some internal cost that the various suppliers want to keep all to themselves, even when travel agents are driving so much business and overall revenue to fill ships and tours and planes? With travel going strong, even in the economic times the world finds itself in, there is enough to go around for all of us who are dedicated to the life experiences that travel gives us and our clients!”

All stressed that serving their clients’ needs is their first priority. So TMR wanted to know if agents actually would shift business to Viking to reward them for their support of the agency distribution channel. Two agents, who asked not to be quoted by name, emphasized the importance of Viking’s move, while underlining the fact that commission policies of almost all river cruise companies have very few NCF’s.

However, a number said they definitely would be moving business to Viking because of its strong statement of support for agents.

Harris said, “I am personally going to focus on moving market share to Viking River.”

“It’ a no brainer from my viewpoint,” said Anne Rose of Celebrate-Travel, Inc. “Our agency books very few mass-market cruises because we find it so unprofitable. It is much more profitable to sell river cruises and FIT land and escorted tours that generally pay commission on everything.

Agents were especially critical of the NCF policies of the larger cruise lines.

Rose explained: “When travel agents tell me that they get 15% or 17% by selling a particular cruise line, I ask, ‘15% of WHAT?’ Here’s a case in point: We recently booked a client on a cruise to Alaska, only because it was a repeat client I might add. Their total booking came to $2,547.06, and our commission on that was $181.80. Do the math: comes to a whopping 7%. Plus, you don’t make money on the shore excursions, and who are they coming to for advice on which shore excursions they should choose?” she exclaimed empathically.

“Contrast that paltry income with a recent river cruise I sold, getting commission on all elements. The river cruise came to $12,648, and my commission is $2,025.96: 16% commission. It’s pretty obvious, isn’t it? 16% vs. 7%,” she said.

Equally important, Rose stressed, “With a river cruise, my clients get a truly all-inclusive product—no nickel-and-diming to eat in a specialty restaurant, take a shore excursion, have a drink with dinner, etc. We earn more than twice as much by selling this product, and our client doesn’t come home to a $1,500 tab for shore excursions and drinks.”

Will Policy Take Hold Elsewhere?

Said Silvestri, “It is certainly true, it seems, that what one vendor does, others follow, at least when they are increasing prices, i.e. fuel surcharges in the case of cruise lines. And with airlines, whatever one does, the others fall in line whether it is the base fare or withdrawal of various amenities or all of the sundry charges we are assessed for the privilege of flying.” Silvestri continued, “I can only hope that our travel suppliers will recognize the indispensability of travel agents to their bottom line and consequently decide to share with those who fill their ships, etc.”

Harris said she thought that Viking’s move “should” cause the other cruise lines to rethink their policies, noting that service levels to both travel agents and consumers have been sacrificed with the growth of the mass-market mega lines…they simply compete in a different market than Viking River and I personally don’t foresee them re-thinking their NCF policy as a result of Viking River’s decision to pay commission on the gross package price.” He concluded by saying, “I would love to see it spark a change throughout the industry. Unfortunately, the reality is likely to be different. I hope I am proven wrong

Some agents are not taking a wait and see attitude. When Evans saw the Viking article in TMR, she kicked into action. President of TABS (Travel Agents of Brooklyn and Staten Island), she forwarded the letter to her roughly 260 members with an eye towards forming a steering committee to push for change. “I’m also active in ASTA, Evans said. “I think if we communicate our position en masse, it might have some effect.”

Tauck Pays on All Components

While Viking’s new river cruise commission policy is to be applauded, a Tauck spokesman said that Tauck has paid commissions on 100% of its river cruise components all along. Tauck Small Ship Cruises offers European river cruises aboard the ms Swiss Jewel, ms Swiss Sapphire and ms Swiss Emerald, and plans to inaugurate a new river ship in Europe next year. The spokesman said, “Tauck has paid commissions of 100% of our river cruise components all along, as we do on our other cruises and land-based programs.”

Coming soon: Viking River Cruises has thrown down the gauntlet in creating no NCF fares. Agents contrast Carnival’s recent moves as the antithesis and some are doing more than complain.