FORT LAUDERDALE -- Norwegian Cruise Line said travel agents will earn close to 40% more in commissions through its plan to pay on noncommissionable fees (NCFs) for advance bookings, but company executives made clear at CruiseWorld 2022 Friday that there are strings attached.
"This is a quid pro quo," said Frank Del Rio, CEO of parent company Norwegian Cruise Line Holdings. "As nice as we are, this is not a giveaway. This is not a freebie ... We expect something in return, and what we expect in return is more support from you."
What he expects are more bookings to offset the $20 million it will cost to pay advisors commissions on NCFs. If the strategy works as planned, Del Rio said the rise in bookings will also enable NCL to reduce its advertising expenses.
"I get don't get a kick out of spending millions, tens of millions, on TV ads, radio ads or billboards or direct mail. I'd rather pay you guys," said Del Rio. "The math works wonderfully for everybody."
If this strategy works at NCL, Del Rio said the line's sister companies of Oceania Cruises and Regent Seven Seas Cruises could take the same tactic.
But if additional bookings fail to materialize, this strategy can go away. Asked by Travel Weekly editor in chief Arnie Weissmann if the plan was permanent, Del Rio said, "it could be," hinting that it is not a permanent policy shift.
Advisors cheered the announcement this week, with Nexion president Jackie Friedman saying that the plan was a "game-changer."
A template for advisor marketing plans
The cruise line said Wednesday that that it would pay travel advisors on NCFs when they book at least 120 days in advance, beginning with bookings Jan. 1. Advisors must also submit a marketing plan to NCL to participate.
Todd Hamilton, senior vice president of sales for NCL, said this requirement would encourage advisors to think more about marketing and open a door for the cruise line to engage with agents about their marketing plan, which he said would drive demand.
Agents who want to be paid for NCFs can follow a template to tell the line what they're marketing, how much they're marketing and what they are going to do to drive both, Hamilton said.
"As long as we think that it's pretty darn good, we're gonna say, 'Yep, let's sign you up" for NCF payments, he said.
The competition
In a session with Norwegian Cruise Line Holdings' individual cruise line leaders, NCL chief Harry Sommer said he's not worried about a "me too" reaction from other contemporary cruise lines. Instead, Sommer said, the real competition is with land-based vacations in countries like Mexico and the Dominican Republic, where agents turned during the cruise pause.
With NCL paying commissions on flights, WiFi, beverage packages and shore excursions, he said NCFs are the last thing to go to maximize commissions for agents to make them more lucrative than resorts.
"We provide you with all the tools you need to succeed, you provide us love and support -- we all win," he said.