| Cruise lines save by using smaller agents

A US investment analyst has published a
report which claims that cruise lines have
managed to reduce their costs by spreading
the base of their distribution across more
smaller travel agencies which are less likely to
reach override targets.
Robin Farley, who works for Swiss-based
investment bank UBS, wrote that “cruise lines
have meaningfully shifted share to lower cost
distributors in the past few years”.
She cited statements by both Carnival and
Royal Caribbean about their increasing spread
of business, saying this means that both
operators’ “effective commission rates have
come down without the companies having to
resort to commission cuts as a result of this
share shift to selling through lower-cost
agents”.
In a recent Carnival Corporation statement
the cruise giant noted that “no controlled
group of travel agencies accounted for 10% or
more of their revenues”.
Interestingly, the report also disputes
suggestions that cruise lines are trying to save
costs by increasing direct sales, with US figures
showing that between 70% and 80% of all
cruise holidays are still booked via agents.
Farley also forecast that 2013 would be a
“year of yield recovery for pricing momentum
lost during 2012,” with this year’s fares hit by
the global economic conditions and the Costa
Concordia debacle in Jan.
She cited other positive trends including a
high rate of repeat cruisers, the growth of
homeporting in the USA and below-average
capacity growth across the global industry.