Tuesday, January 13, 2009

Regent Seven Seas To Give Travel Agents Commissions on "Non-Commissionable Fees"

In a move specifically designed to encourage travel agents to move their clients over to Regent Seven Seas Cruises, the cruise line announced today that it has dropped all Non-Commissionable Fees other than for some limited items such as airfares. 

What does this mean for you, the cruising public?  It may mean something or it may mean nothing.  Let me explain. 

Cruise fares are generally broken down into 3 parts:  base cruise fare, NCFs and taxes.  The term Non-Commissionable Fees started to be used a few years ago when the use of the term "Port Charges" came under fire...and caused some legal issues...because passengers that missed a port started demanding the "port charges" be refunded; and then it was discovered that "Port Charges" were not only charges made by the port.

Over time cruise lines started to use the NCFs as a way to reduce travel agent commissions.  While there always has been a mystery as to how NCFs are determined, two things are certain:  It is more than "port charges" and there is no commission paid.  So what happens is that the cruise line, especially in a time of ever reducing prices, increases the percentage of the total cruise fare which are categorized as NCFs and therefore drive down the amount of commission paid to the travel agent.  [One mass market line (which I do not believe I have ever written about) got so aggressive with NCFs that travel agents were literally looking at commissions of less than $100 on veranda cabins on 7 day cruises...before any agency discounts were given.]

So with Regent eliminating the NCFs the travel agent booking a Regent cruise will, theoretically, receive more commissions.  But, in reality, it does not really amount to huge dollars per cruise.  For example, if a travel agent is making a 10% commission (industry standard base rate) and there are $500 in NCFs suite, it amounts to $50.00 in additional commissions. 

To be fair, Regent is not the first luxury cruise line that has tried to "sweeten the pot" for its travel agents in this struggling economy.  A few months ago Silversea did a similar thing, in a different way, by giving travel agents a 25% commission on certain sailings.

My concern is this:  Why would an honorable travel agent push a client onto a Regent cruise when the one the client desires is on Silversea or Seabourn or Azamara?  Why would a travel agent do it for $50...or $100...or for any amount?  Yes we are in business to earn a living, but to me the key is that we are to "earn" that living; not dupe clients into taking cruises that really do not meet their desires!

I do appreciate that Regent is trying to find a legitimate way to give a nod and a boost to its travel agents...and that is appreciated.  What is of concern to me is that the motivation.  As Mark Conroy, President of Regent, is quoted in Travel Weekly as stating, "We think it gives the agent one more reason to sell us versus the other guy."

I am sorry, for me it does not.  I know it may seem I am oh so skewed toward Seabourn, but try this on for size:  While Regent is trying to increase sales by lining the travel agents' pockets with a little bit more cash, Seabourn is running 60% off sales on its slower selling cruises...keeping more cash in its guests' pockets and generating more commissions for its travel agents through those sales.  (To be fair to Regent, it also has gone "tour inclusive" on some of its 2009, and it was just announced all of its 2010, cruises so there is added value for its guests as well.)

Finally, I do agree with Regent that there should not be any NCFs and most every travel agent will agree with me on this.  I hope all of the cruise lines drop the NCFs...or at least limited them to actual port charges.  But make no mistake, the motivation should be it is a good business practice; not a motivator to push clients one way or another.