Charlie Funk
It's always interesting to be a part of or overhear conversations about how old people were when they got their first paying job. I'm not talking about an allowance or being paid a quarter to take out the trash. I'm talking about a job with defined responsibilities to be performed at prescribed times for which one received compensation.
I was 8 years old when my mom asked one day if I thought I would like to have a paper route delivering the local Greenville (S.C.) Piedmont. I can't conceive of a parent even thinking about suggesting something like that today, nor can I imagine a company that would consider hiring a kid that young.
So there I was, responsible for delivering 83 newspapers six days a week, collecting money from subscribers, then taking that money downtown to the circulation department to pay my bill. At the time, the newspaper cost five cents, two cents of which was mine, a 40% commission. If I wanted to make more money, it was up to me to sign up new subscribers. I celebrated my 9th birthday delivering newspapers.
Sure, the reader could buy the same newspaper from a rack in a store for the same five cents, but I served a useful purpose and was paid for it. My services were not free.
Between then and now, to make money, I sold shoes, worked in a drugstore, a bank, a hobby shop and a soybean processing plant. I designed and developed rockets and missiles, developed batteries, worked in synthetic-fiber research and development, then created, marketed and sold scientific and process-control instruments before entering the travel industry.
I did all those other things to make a living. I am still an active part of the retail travel industry as a business owner some 11 years after I could have retired, because I love what I do.
But I never worked for free.
I think some of you already know where this is going: Why do so many travel agents feel compelled to proclaim -- writ large -- that their services are "free?"
First, it's a falsehood. Retail services are not free. Why not instead focus on the value that the retailer brings to the process? Be bold enough to make the prospect aware that he or she will pay the same amount (or more), and perhaps not receive onboard amenities that you are able to offer through your consortium. And the prospect definitely won't have an advocate like you become when you're administering their booking.
Plus, the cruise lines, among other suppliers, really appreciate the agents doing all the work, and oftentimes they pay more in the bargain.
Nevertheless, if you insist on telling everyone that your services are free, don't be offended and indignant when people call asking for your advice on a reservation they have already made and expect you to help them gratis.
It's true there have been times in recent years when it seemed to some retailers as if some suppliers were squeezing things to the point where they were nearly working for free.
You'll know how long I have been doing this when I say it doesn't seem that long ago that Princess Cruises protected the original commission on a booking when prices were reduced. Its stated policy was that the retailer had made a reservation in good faith and had no control over the price drop. That being the case, it was only right that commission be paid at the original amount.
Somehow that philosophy faded away, and today the common practice is to reduce commissions as fares tumble.
Not too many years ago, refaring several times over the life of a booking to account for lower prices was relatively common. The administrative costs to refare a booking again and again quickly rendered a reservation unprofitable. So, in that regard, perhaps sometimes retailers really did work for free.
But things are getting better.
Most retailers have had situations with a vacation that went wrong so badly that the supplier offered the traveler an often-substantial future credit for use on another vacation. Even though the retailer was not in any way responsible for the event or events that led to the credit, commission was earned only on the value of the trip, net of the credit. So that $2,000 credit meant the retailer was subsidizing the new trip to the tune of $300 or more.
Last July, Adolfo Perez, Carnival Cruise Line's vice president for sales and trade marketing, announced a policy change: The cruise line would pay commissions on those future cruise credits.
On March 9, Vicki Freed, Royal Caribbean International's senior vice president for sales and trade support, demonstrated the line's support of the retail channel when she announced that commissions on future cruise certificates would be paid. It is all the more noteworthy that agent commissions had already been protected on the canceled bookings that prompted the policy change.
And on March 21, Norwegian Cruise Line announced a similar policy change regarding commissions on future cruise credits.
Perhaps the value of the retailer to the supplier is becoming more universally acknowledged. But why?
Right now, there are 46 newbuild ships planned, on order or under construction for delivery between now and 2025. They range in size from a high of more than 5,400 berths to a low of 1,000. They represent more than 9,250,000 additional passengers, or 34% more capacity for the entire industry.
Every cruise line has to continue finding ways to differentiate its products from those of its competitors. Features that are commonplace and old hat today weren't even dreamed of 10 years ago. Now we have at least 46 ships coming on line that will have even more innovations to learn about and catalog.
Simply keeping track of how ships are evolving can be daunting.
Some 20 years or so, ships had space ratios of between 30 and 33. (The ratio is calculated as gross tons divided by total passengers.) That was considered a huge improvement over first-generation vessels, where ratios were between 25 and 28.
Today, Royal Caribbean newbuilds have ratios that exceed 44, a number that as recently as a few years ago applied only to the most luxurious vessels. To that, we must add all the innovative features and benefits that differentiate one vessel from another.
The reality is that the cruise lines have to rely on a thriving retail travel network. One report suggests that the average cruise passenger typically makes more than five calls to the seller in connection with each booking. Bluntly put, the cruise lines do not have time to deal with so many touches on every reservation, and they do not want to add the necessary staff to be able to do so.
It is imperative that the retail channel become more proficient at what it does best: providing service. Going forward, a true travel professional is going to have to be more dedicated to the business.
It's a little like a bacon-and-egg breakfast: the chicken is a participant, the pig is committed. The time is upon the retail channel when agents need to decide if they are a participant (hobbyist) or committed (putting in as much time as necessary to be a true professional).
It's like this: The travel industry would never have grown by maintaining the status quo. Travel professionals would do well to learn what they need to do to grow. The first step is to decide if you are the chicken or the pig. And stop telling prospects you work for free.