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Old October 15th, 2012, 04:42 PM
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There is a misconception in the first part of the story.

First, if a cruise is selling for $1000 (plus tax), the agent's commission is not based on the $1000.

That $1000 price is actually the total of two different fares; the cruise fare and the non-commissionable fare (NCF's or port fees as they're often called). The agent's commission is based solely on the cruise fare.

So, for argument sake, let's say the NCF's are $150. In this scenario, the cruise fare would then be $850 and the commission on that would be $127.50 - provided the agent's commission rate is actually 15%.

Couple of notes about this; first, if you book this cruise with the cruise line or a large online site, they get to keep the $127.50 and basically provide no services because, as you stated, the client is talking to someone who works in a call center. They are not a certified travel agent, have never been on a cruise, and have not visited any of the ports, so their knowledge is non-existent and they cannot assist with any questions. Their sole purpose is to sell.

If you book it with an agent, they get to keep the $127.50, but they provide personal services and represent you should you have any problems. Their services are free (most of the time) and their expertise can be invaluable. They can answer all of your questions and assist in every part of your vacation.

In other words, you're paying the same, but you get much more for your money by using an agent.

As Warren Buffet says, "Price is what you pay. Value is what you get."

I like to paraphrase that when talking about using an agent and say, "Price is what you pay. Value & service is what you get."

As for the amount of commission, in this scenario we're using 15%. However, that is not the commission rate for all agents all the time. All of the major mass-market cruise lines start the commission rate at 10%. Then, as an agent sells more for that cruise line, their commission percentage increases up to the maximum, which in this case, is 15%. But in order to get to that point, they have to sell alot of cruises. Some cruise lines use the number of cabins sold, while other use a dollar amount - keeping in mind that the dollar amount used for this purpose does not include taxes or port fees. In many instances, especially for the smaller agencies, they never get to the maximum commission. Plus, their commission amounts start anew each year!!

For example, if each cruise line required an agency to sell $400,000 in cruises in order to make the 15% commission, they would have to sell that much for each cruise line. And if they only sold the big 6 (RCCL, Carnival, Princess, Holland, Celebrity, and NCL), that means they would have to sell $2.4million in cruises each year to make the maximum commission for all of these. Since the overwhelming majority of agencies have less than $400,000 in total sales every year, they rarely get to the maximum commission rate with any of the cruise lines. (This is also why some agencies will specialize in certain cruise lines or try to 'push' clients towards one cruise line over another.)

So, in the scenario above, the average agent is only going to make about $85 commission on that $1000 cruise.

Everyone has the misconception that agents make alot of money. We don't. And the one thing that really irritates me the most as an agent is that people automatically expect us to give them some type of 'rebate' in the form of onboard credit, free travel insurance, free gratuities, or gifts. In the scenario above, if an agent gave the client a $50 onboard credit, they are literally giving away 59% of their income. No one expects any other professional service-type people to do this (realtors, accountants, lawyers, doctors, mechanics, etc, etc.) So why do they think the average agent can afford to give away more than half of their salary?

This is where the discounters come into play. They rely on quantity. If they sell 1000 cruises and only make $50 each, they're happy with that. They're betting people will book through the computer, which requires no human interaction at all. The problem is, if you ever need help, they're either no where to be found or unable to help you at all. So, as I always say, they deal in quantity, not quality. Personally, I'd rather deal in quality and not quantity. And if I lose a few clients to an online site who is selling the same cruise for $50 less just to make a sale and not to provide any service, there's not much I can do about that except to continue to provide good service to those clients who appreciate the value. Besides, sometimes when the price goes down, those online sites will charge a fee to reduce your rate, whereas a good agent won't do that. So in the end, you could end up paying a higher price by not working with a good agent.

Luckily, the cruise lines are realizing how the discounters hurt everyone. When a client has a problem with an online site and can't get any help, they call the cruise line. The cruise line can't help them because they're working with an agent. Needless to say, this causes frustrations and problems for everyone, not to mention the fact they have to hire more people to deal with all these problems and this causes higher fares.

Didn't mean to provide a dissertation on the subject, but it's definitely one of those misunderstood areas in the industry.

Pete
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Travel Agent/Cruise Specialist w/12 yrs exp and 47 Cruises on 11 cruise lines! Favorites: Paul Gauguin - Tahiti: Uniworld River Cruises - Europe; Celebrity Solstice-class ships; Holland America - 12-nights Baltics & Russia; RCCL - 14-nights Greek Isles, Turkey, & Croatia; Holland America - 14-day Alaskan cruisetour; 10-night Canada/New England cruise; 21 days Hawaii w/7-night NCL cruise; Oceania - 25 days in Asia; more than 3 months touring Europe by train. And many all-inclusive resorts!
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