For some cruise customers it’s the big dilemma. Is it better – and cheaper – to book direct with a cruise line, or through a travel agent? Unfortunately there is no easy answer. It comes down to the type of cruise holiday you want and where you would like to go.
Cruise lines would love to tempt more customers to book direct, as it would save them millions of pounds in commission payments to travel agencies such as Cruise Thomas Cook, Gill’s Cruise Centre or Bath Travel. But they are realistic and accept that good travel retailers who know the product inside out have their part to play in channelling customers towards the type of cruise that will suit them.
The cruise industry is unusual in this day and age as one of the few holiday sectors where most sales are still through travel agents – generally more than 90 per cent. That used to be the case with the travel industry at large, when package holidays and flights were nearly all sold through retailers.
But over the last decade or so the market has changed irrevocably as hoteliers and airlines have increasingly reached out to customers direct, and tried to force out the middle-man, in this case the travel agent, by drastically cutting commission. Surely it can only be a matter of time before the cruise industry follows suit?
But this isn’t necessarily the case – at least, not yet.
Cruise bosses feel the higher complexity and cost of cruise holidays makes them more of an emotional purchase for customers, with more at stake if things go wrong. They claim it’s not the same as buying a straightforward flight or hotel stay “off-the peg.” However, one factor is inescapable: potential cruisers are increasingly doing their research online before picking up the phone or going face-to-face to make their booking.
Carnival UK, which represents P&O Cruises, Princess Cruises and Cunard Line, reports a clear increase in the amount of information being sourced online, while the proportion of direct
bookings hovers stubbornly around four or five percent.
“For the simpler, lower-cost products, the share rises (to about eight per cent), while for more expensive brands with more complex pricing, it drops to two to three per cent,” explained Carnival UK chief executive David Dingle.
“It could move up in future but, significantly, it still remains at low levels in the US where the concept was embraced earlier, so we do not expect radical change in this pattern any time soon.”
“With cruising, people still appear to prefer the face-to-face transaction,” said Jo Rzymowska, associate vice-president and general manager for Royal Caribbean, in the UK and Ireland.
“We know that people search on our website and we can see our traffic increasing, but when it comes to the transaction, they want to speak to someone” she said.
Rzymowska stressed that the customer was in the driving seat. “There is a proportion who will always want to book with the cruise line directly. It’s about the choice of the individual, and savvy consumers will do their research with the cruise line and travel agency and contact both.”
What are the benefits of online versus third-party sales?
Booking directly with cruise lines doesn’t necessarily mean that you get the cheapest price or the best deal. Some travel agents keep prices low by using their commission to fund discounts; others get cruises at “net” prices from the cruise line and sell them without adding much of a mark-up.
This “pile ’em high, sell ’em cheap” philosophy may work in the short-term, but in a competitive market it can be difficult to sustain, and is a source of frustration for cruise lines who feel their product is being sold too cheaply.
But good news for the customer? Yes; as long as you know you are getting the cruise that suits you best, and they don’t buy solely on price, discovering you’ve made a big mistake when you step on board.
A growing number of resourceful travel agents such as Reader Offers create unique holidays by pairing up a cruise with hotel stays and one-off benefits. Chairman Peter Beadles said: “The key difference between ourselves and a cruise line is that we give independent, client-led advice, not commission-led advice.
“All the ships are different, and if you are spending £4,000 per couple you need advice and someone to talk it through with you. If we put people on the wrong ship we are creating problems for us and problems for them.”
This bespoke service saves customers from the trouble of putting a package together
themselves, but clients need to check where they stand if, for example, something goes wrong. If connecting flights run late, cruise lines may be more likely to wait if they have a party of eager clients who have booked direct than those who have made their own arrangements.
Boosting online bookings
Direct business may be minimal at the moment, but that doesn’t stop major cruise lines from wooing more confident customers with price cuts for online bookings.
Last December, Norwegian Cruise Line unveiled its revamped website at ncl.co.uk with a five per cent discount on all online bookings. The line claims this is the natural development of a site that enables clients to select the staterooms they want to stay in, and other factors. “It’s about giving more power to the consumer,” said UK head of marketing Claire Riches.
And NCL isn’t alone. Royal Caribbean and P&O Cruises offer the same discount to customers booking online. It may be early days for NCL, but Riches said she had been surprised at the “fantastic” response, with bookings topping 100 a week soon after the launch.
Last December, Micky Arison, chairman of Carnival Corporation – the world’s largest cruise company – was quoted saying that direct business in 2009 accounted for 17 percent of the company’s revenue, and he expected 2010 to be similar.
So what does the future hold? Rzymowska confirmed that just two per cent of Royal Caribbean’s UK business came from its website, while around 10 per cent was direct. She was confident direct sales would rise, but in line with the general growth of the UK cruise market.
Selling direct with no regrets
Saga Cruises, like the rest of the Saga brand, sells direct to the public and makes no apology for doing so. It feels this approach gives it more “ownership” over its customers, and a closer relationship that both sides benefit from.
“If something goes wrong, guests can pick up the phone and talk to us direct rather than going through a third party,” explained Robin Shaw, chief executive. “I would like to think the service we give benefits from that.”
With satisfaction ratings of 98 percent and a loyalty factor of 65 percent, Saga is obviously doing something right.
But the line isn’t entirely directsell. Five years ago it teamed up with Thomas Cook Cruise, one of the biggest cruise travel agencies in the UK, as it felt it needed to harness the strength of the Cook name for customers unfamiliar with the Saga brand, and unaware of its cruise product.
It seems that for the time being at least, travel agents offer the most effective route to reach the general public, and a vital way for cruise companies to establish themselves with the wider market.
In the meantime, customers can shop around and enjoy the best of both worlds.